S Corporation Health Insurance Deduction on Form 1120-S
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- Опубликовано: 17 сен 2024
- Does your S corporation pay the health insurance premiums for the principal owners? If so, you may be subject to special reporting obligations.
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Would help a bit if this excellent decoding included how to represent on 941s
Excellent job explaining this, THANKS!
You're very welcome! Thank you for watching!
Great video! Ty! Will look for more!
Glad it was helpful!
If I have an LLC taxed as S-corp and I am the SOLE employee, why bother with this deduction? Why not just pay myself a dispersement (subject to fed income tax only) and then pay for my insurance with that?
@@cruncheraccounting If I am the sole employee of my own S-corp, say I gross 100k and I pay myself a salary of 50k. The 50k is going to be subject to FICA (15.3%) and Fed Income Tax (say, 24%). The other 50k is subject to 24% fed income tax as pass-through. If I deduct 5k in insurance, only 45k is taxed at 24% pass-through, but the 5k gets claimed as a taxable benefit, exempt from FICA, but still subject to my fed income tax rate (24%). The math is the same. I realize, though, in typing this out, that there are state income taxes that may differ, and maybe you would save on those taxes. I don't live in an income tax state, which is while this whole scheme doesn't make sense to me, and it's hard for me to see the math play out.
I agree. I also am also the sole shareholder and sole employee. How is it advantageous is for me to have the Corporation “pay” for my health insurance when maybe I should simply take that same money in a distribution, pay the insurance company and then deduct what’s
allowed on my 1040? Either way the corporation expenses it to me(compensation vs distribution), and I then deduct it on my personal return. Am I right?
Charles Akin
Very interesting topic. Thank you
Glad you liked it!
From IRS.gov: "If you’re an S corporation shareholder, the policy can be in your name or the S corporation’s name and either of you can pay the premiums. If the policy is in your name and you pay the premiums, the S corporation must reimburse you and include the premiums as wage income on your Form W-2."
Thanks Tony. Can you provide a reference to where you saw this?
IRS notice 2008-1
Thanks for very important info. I have a question. If an owner has an Affordable Care Act, is it also considering to take deduction as same rule as you explained? Would you please explain to me? I appreciate you!
Jason -- GREAT video ! 2 questions:
1) As the 100% owner of S Corp stock of Texas Corp -- with 5 employees. I am 72 semi retired. 2 yrs ago wife and I moved to NM ago and still getting wages ... so now I see how to deduct health premium (meaning the medicare supplemental + Rx coverage). But for my wife does she need to have stock also and wages also to add her/deduct her health premium ?
2) re health insurance -- must this be an actual premium or could it be the actual cash out (from high deductible or self insured)? Why- because of the current sublimits and deductibles in our dental and vision ins. -- we are just swapping $... with a surcharge. Could I just create a bank account fund and tally these expenses instead of my S-Corp paying these premiums ?
Many thanks again!! 🙂
Thank you for the great video. just want to make sure I understand correctly. the HI $2000 deducted from S-corp. as expense. also it didn't count as income personally as it's deducted on 1040, is it correct?
1120S page 1, ordinary busines income does not include health insurance deduction on line 18. Can anybody verify which line is the health premium deduction $2000 on 1120S?
It’s on line 7. Wages themselves is $20,000 + $2,000 of insurance. The IRS could confirm this since they got a copy of all W-2’s issued, and the company has to file a form W-3 as well.
@@adamnelson7166 Thanks alots for your help and kindness;)