Can a 2 shareholder deduct health insurance?

As long as health insurance premiums are paid and reported correctly, 2 percent shareholders can take a line deduction for their health insurance plan on Form 1040—the Self-Employed Health Insurance Deduction.

How do you treat two shareholders in health insurance?

Treating Medical Insurance Premiums as Wages Health and accident insurance premiums paid on behalf of a greater than 2-percent S corporation shareholder-employee are deductible by the S corporation and reportable as wages on the shareholder-employee’s Form W-2, subject to income tax withholding.

What is included in 2 shareholder health insurance?

If you provide health insurance to employees who own more than 2% of stock in your S Corp, the premiums are tax deductible for your company. You must include the amount of the S Corp shareholder health insurance premium in the employee’s taxable wages. …

How do I report 2 shareholders to health insurance on my w2?

The health insurance premiums paid by the S corporation are reported on Form W-2, Box 14 S. This is the amount the shareholder deducts on page 1 of Form 1040, line 29 (Self- employed health insurance deduction)

Can a 2% shareholder have health insurance?

Health Insurance for S Corporation 2% Shareholders. The cost of health insurance premiums paid by an employer is usually excluded from taxable income on the employee’s W-2. A more than 2% shareholder of an S corporation is not eligible for this exclusion.

What are the rules for 2%’s shareholders?

Fringe Benefit Rules for 2% S Corporation Shareholders. Employee fringe benefits paid on behalf of a 2% S corporation shareholder are subject to special rules. A 2% shareholder is one who owns more than 2% of the corporation’s outstanding stock on any day of the corporation’s tax year, considering direct and constructive ownership.

How are health and accident insurance premiums reported to shareholders?

Health and accident insurance premiums paid on behalf of a 2% shareholder are reported as additional compensation to the shareholder. The value (normally cost) of the fringe benefit is added to the 2% shareholder’s wages.

Can a 2% shareholder claim a fringe benefit?

Since the 2% shareholder is not considered an employee for fringe benefit purposes, he or she cannot exclude the cost of the health insurance premiums from gross income as employer-provided coverage. However, the 2% shareholder may be able to claim the self-employed health insurance deduction.

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