Is S Corp shareholder health insurance subject to FICA?

You must include the amount of the S Corp shareholder health insurance premium in the employee’s taxable wages. However, these contributions are not subject to Social Security and Medicare (FICA) taxes or unemployment tax.

Is shareholder health insurance taxable?

Premiums Must Be Included on the Shareholder’s W-2 If health insurance premiums are excluded from the shareholder’s taxable income and are not included as additional compensation/wages on form W-2, the shareholder’s premiums will not be considered deductible for that tax year.

Is S Corp insurance taxable?

You must pay income tax on the health insurance premium payments made by your S corporation. However, such payments are not subject to Social Security and Medicare taxes if (1) you’re the only employee of your S corporation, or (2) your corporation has other non-owner employees and provides them with health insurance.

How is health insurance for S corporation 2% shareholders treated?

Tax treatment by the company Health Insurance for S Corporation 2% Shareholders: Reporting to the shareholder The cost of health insurance premiums paid by the S corporation for a 2% shareholder is included in the shareholder’s W-2 as Box 1 taxable income. The amount is subject to federal income tax withholding.

Where does health insurance go on S Corp tax return?

If you correctly followed the steps above, healthcare costs shouldn’t be included in boxes three and five, which list your wages subject to FICA taxes. S Corp shareholders of 2% or more include their company-paid health insurance premiums in box one on Form W-2. Source: irs.gov.

Can A S-Corporation owner claim employee health insurance?

While S-corporation employees can claim employee health insurance as a tax-free benefit, shareholders who own more than 2% of the company stock cannot. For these individuals, the path to tax-advantaged health insurance is more complicated.

Do you have to pay taxes on shareholders health insurance?

Contributions made to a shareholder-employee’s health benefits plan are subject to state and federal income tax withholding. However, these contributions are not subject to Social Security and Medicare ( FICA ) taxes or unemployment tax .