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This Web site contains a compilation of more than a thousand consumer finance  columns written by Tony Novak from the 1980s through 2006, updated and reformatted for maximum usefulness today.  New material was added after 2010.

Content is the opinion of the author and does not represent the position of any other person or entity. Information is from sources believed to be reliable but cannot be guaranteed.

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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posted: 11/22/2006  reposted: 2/18/2011 This post has not been recently reviewed or revised by the author and may be out of date.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.


More resources:

Freedom Benefits Health Reimbursement Arrangements Health Insurance Covering S-Corporation Shareholders