imjulier Posted December 2, 2013 Report Share Posted December 2, 2013 Hey- Just looking for verification that I am recalling the rules correctly. I have been treating the health insurance of S-corp SH as not subject to Social Security and Medicare withholding. Is this accurate? Thanks, Julie Quote Link to comment Share on other sites More sharing options...
Guest Taxed Posted December 2, 2013 Report Share Posted December 2, 2013 You are correct. Health insurance premiums paid on behalf of the greater than two percent S corporation shareholder-employee are deductible and reportable by the S corporation as wages for income tax withholding purposes on the shareholder-employee’s Form W-2. These benefits are not subject to Social Security or Medicare (FICA) or Unemployment (FUTA) taxes. The additional compensation is included in Box 1 (Wages) of the Form W-2, Wage and Tax Statement, issued to the shareholder-employee, but would not be included in Boxes 3 and 5 of Form W-2. Quote Link to comment Share on other sites More sharing options...
Pacun Posted December 2, 2013 Report Share Posted December 2, 2013 I guess TAXED drew faster. I was asking who the health insurance was for, but Taxed answer the question already. Quote Link to comment Share on other sites More sharing options...
Guest Taxed Posted December 2, 2013 Report Share Posted December 2, 2013 I guess TAXED drew faster. I was asking who the health insurance was for, but Taxed answer the question already. Next question you go first. Quote Link to comment Share on other sites More sharing options...
Pacun Posted December 2, 2013 Report Share Posted December 2, 2013 lol Quote Link to comment Share on other sites More sharing options...
Randall Posted December 2, 2013 Report Share Posted December 2, 2013 Remember too that the 1040 p. one deduction is only to the extent of W2 wages subject to Medicare tax (which would exclude the health insurance amount). Quote Link to comment Share on other sites More sharing options...
imjulier Posted December 2, 2013 Author Report Share Posted December 2, 2013 Good morning- You are all a wealth of information. Thanks for the responses. Julie Quote Link to comment Share on other sites More sharing options...
joelgilb Posted January 18, 2014 Report Share Posted January 18, 2014 bringing this discussion back up for an additional issue. Any body know how the additional .9% medicare tax withholding works here? Although the medical ins (wage) is not subject to SS or reg medicare, is it subject to the additional .9% WH? Quote Link to comment Share on other sites More sharing options...
TAXMAN Posted January 20, 2014 Report Share Posted January 20, 2014 Shareholder is a 50% owner and retired. S corp pays health insurance and puts on W-2 as wages. No SS or MT wages or withholding. Is tp entitled to tha 1040 pg 1 deduction? Brain dead this AM. Quote Link to comment Share on other sites More sharing options...
Mr. Pencil Posted January 20, 2014 Report Share Posted January 20, 2014 Although the medical ins (wage) is not subject to SS or reg medicare, is it subject to the additional .9% WH? No. See the chart on page 36 of Pub 15. Quote Link to comment Share on other sites More sharing options...
joelgilb Posted January 20, 2014 Report Share Posted January 20, 2014 You know, I looked at that chart a dozen times on Saturday and for the life of me kept missing that one section. Thx for pointing me back to it. And Now that I am fresh and rested I see it! Now if only I could get my payroll software to correctly calculate it! lol 1 Quote Link to comment Share on other sites More sharing options...
NECPA in NEBRASKA Posted January 21, 2014 Report Share Posted January 21, 2014 I have another twist, but I don't know if it matters who the check is paid to. My new client, 100% shareholder in an S corp has to reimburse his ex-wife for his kid's health insurance that is paid by her employer. It is group health taken out of her check. I am sure that it is pre-tax, because it's a large bank. Is he able to write the check to his ex out of the corporation and add it to his W2? Maybe I am just thinking about it too hard, but with the new changes from the ACA, I don't want to jump the gun. To make things worse, only one of the kids is allowed on his tax return. Thank you to anyone that chimes in. Quote Link to comment Share on other sites More sharing options...
Lee B Posted January 21, 2014 Report Share Posted January 21, 2014 I had a very similar situation arise recently. My client is the 100% owner of an S Corp. His wife is not an owner and isn't involved in the business. She has a separate job which provides health insurance for the two of them. Short Answer: No, the health insurance has to be in the shareholder's name. Quote Link to comment Share on other sites More sharing options...
NECPA in NEBRASKA Posted January 21, 2014 Report Share Posted January 21, 2014 Thanks. That was what I told him, but he said his old tax preparer let him. His old tax preparer let him do anything that he wanted and has now passed away so he didn't have to worry about Circ 230. He had all kinds of personal stuff in the corp that I told him is not deductible. He will probably want to find someone new again. Quote Link to comment Share on other sites More sharing options...
easytax Posted January 22, 2014 Report Share Posted January 22, 2014 I have another twist, but I don't know if it matters who the check is paid to. My new client, 100% shareholder in an S corp has to reimburse his ex-wife for his kid's health insurance that is paid by her employer. It is group health taken out of her check. I am sure that it is pre-tax, because it's a large bank. Is he able to write the check to his ex out of the corporation and add it to his W2? Maybe I am just thinking about it too hard, but with the new changes from the ACA, I don't want to jump the gun. To make things worse, only one of the kids is allowed on his tax return. Thank you to anyone that chimes in. Just some thoughts ---- 1/ Is this payable as child support or as alimony --- one is deductible -- one not? 2/ Is he "happy" with ex ---- possibly he might want to know that the "reimbursement" depending on how done would be "income" to her as if health care from a big corp. --- she has already benefited from possibly pre-tax on that amount. My job is done --- more muddy waters. Have a good season. 1 Quote Link to comment Share on other sites More sharing options...
NECPA in NEBRASKA Posted January 22, 2014 Report Share Posted January 22, 2014 Thank you. He says that it is part of his child support. 1 Quote Link to comment Share on other sites More sharing options...
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