Health Insurance Deduction by S-corp
originally posted: 11/22/2006 reposted: 2/18/2011 This post has not been recently reviewed or revised by the author and may be out of date. If in doubt, please send a new question or ask for an update.
Q: I am the only employee of an S-corporation that pays my health insurance. The state insurance requires that individual insurance policies be issued in the name of the individual rather than the business but I use a business check to pay the premium. Is this expense still tax deductible?
A: Yes, as long as your business uses an Health Reimbursement Arrangement or some similar tax-qualified benefit plan to pay the premium. But simply paying the premium with a business check does not make the premium deductible by the business. Nor does having an individual policy exclude you from using the business to pay premiums. There are also other financial planning considerations involved here that can help you maximize the tax benefits. See the latest IRS publication issued just last week on this topic and schedule a brief planning by phone with OnlineAdviser. It might be possible to have your health insurance premium fully tax deductible as an "above the line" deduction to save even more tax.
Summary
More resources:
Freedom Benefits Health Reimbursement Arrangements Health Insurance Covering S-Corporation Shareholders