Terry D EA Posted March 8, 2015 Report Share Posted March 8, 2015 (edited) I know this has been discussed many times here but as everyone else, i am too tired to research right now. I have a single S-Corp owner/shareholder that the S-Corp provides health insurance and life insurance. Does the amount paid for the health insurance go on the shareholder's W-2 form or is this an expense to the S-Corp. Also, if the amount paid goes on the W-2 then it is deductible on page 1 of form 1040 correct? What to do with the life insurance? Thanks in advance for helping me with this. BTW- I did not prepare the W-2 form nor have I seen it yet. If the amount of health insurance paid goes on the W-2 and if it wasn't on the original W-2 then I guess I would need to issue a corrected copy correct? Edited March 8, 2015 by Terry D Quote Link to comment Share on other sites More sharing options...
NECPA in NEBRASKA Posted March 8, 2015 Report Share Posted March 8, 2015 Terry, I'm so confused on the S-Corp health insurance, that I won't even try to answer. There are way smarter people than me on here. The life insurance should be officer's life insurance and is not tax deductible. It should be a Schedule M-1 item. 2 Quote Link to comment Share on other sites More sharing options...
jklcpa Posted March 8, 2015 Report Share Posted March 8, 2015 Terry, the way I understand it, for companies having less than 2 employees, continue to treat it as it was in 2013. After the guidance was issued in 2015-17, health insurance paid or reimbursed for the more-than-2% shareholder is to be treated as wages subject to FWT, reported in box 1 only, NOT subject to FICA or Medicare in boxes 3 or 5. It is also allowed as a deduction on page 1 of the 1040 as SEHI. This last topic discussed that, especially toward the end, and has a link to the 2015-17. At least that is how I think it is now. Nothing like working with shifting sands underfoot, eh? I agree with NECPA about the officer's life insurance. Not deductible. 2 Quote Link to comment Share on other sites More sharing options...
Terry D EA Posted March 8, 2015 Author Report Share Posted March 8, 2015 Thanks NECPA and Judy. My initial thinking was correct with the health insurance added to the W-2 form just as Judy stated. Even though the life insurance is not deductible, doesn't it still get placed on the K-1 as a non-deductible item? I did this with a partnership and I am assuming it is the same with the S-corp. Also, if the bookkeeper did not include the health insurance properly on the W-2, then I will need to issue a corrected copy right? I just can't add it to the officer's wages and deduct it from the 1040 without doing so. Quote Link to comment Share on other sites More sharing options...
jklcpa Posted March 8, 2015 Report Share Posted March 8, 2015 Terry, yes, the n/d life insurance would be on 1120, pg 3, line 16c; on the M-1 line 3; and on the K-1, box 16, code C. Also yes, the total compensation paid + health insurance should agree with the 1120S, lines 7 and 8, unless some portion of those are reported in COGS. The total of all of that should agree with box 1 of the W-2s, and those should tie in to the 941s. That should be true unless the company also has a retirement plan that allows deferrals such as a 401K, SEP, or SIMPLE IRA plan that would be reported elsewhere on the 1120S. You might have to amend the 4th qtr 941 and W-2s if they were prepared incorrectly. 3 Quote Link to comment Share on other sites More sharing options...
Abby Normal Posted March 8, 2015 Report Share Posted March 8, 2015 We're back to the old rules on S corp shareholders and health insurance thru 2015, with the hopes that Congress will get their act together and make it permanent. http://www.calt.iastate.edu/article/irs-notice-2015-17-provides-some-limited-aca-penalty-relief-small-employers 1 Quote Link to comment Share on other sites More sharing options...
Abby Normal Posted March 8, 2015 Report Share Posted March 8, 2015 Does the amount paid for the health insurance go on the shareholder's W-2 form or is this an expense to the S-Corp. Both. You deduct it as wages instead of health insurance on the 1120S. Then the shareholder deducts it as an adjustment on 1040 Self-employed health insurance. Quote Link to comment Share on other sites More sharing options...
jshtax Posted March 8, 2015 Report Share Posted March 8, 2015 Wow once again the way I have always treated it is the way the irs finally wakes up and makes it official. Only difference I've just left in insurance as k1 reduction. Makes absolutely no difference however I kinda like box 1 inclusion because it will inflate compensation for lending purposes. Quote Link to comment Share on other sites More sharing options...
Terry D EA Posted March 8, 2015 Author Report Share Posted March 8, 2015 Thanks to all who responded. It is greatly apprecited Quote Link to comment Share on other sites More sharing options...
NECPA in NEBRASKA Posted March 8, 2015 Report Share Posted March 8, 2015 One of my S Corps brought in their W-2s to amend for their health insurance and also brought in their 1095 from the exchange for their personal return. I told them to stop paying the health insurance out of the S Corp immediately. Now we have to check and make sure that our client's are not getting their insurance from the exchange. Mine were also getting premium credit. This is such a pain! Quote Link to comment Share on other sites More sharing options...
jshtax Posted March 9, 2015 Report Share Posted March 9, 2015 They can pay it all they want but not as an expense since under the ACA a company can't pay individual plans as a reimbursement unless its a 1 person business if I am not mistaken. 1 Quote Link to comment Share on other sites More sharing options...
NECPA in NEBRASKA Posted March 9, 2015 Report Share Posted March 9, 2015 I guess I could have heard wrong from my classes, but I understood that no individual policies from the exchange were allowed from a corporation, especially if you are getting premium subsidiaries. I can't remember anything anymore. Quote Link to comment Share on other sites More sharing options...
Recommended Posts
Join the conversation
You can post now and register later. If you have an account, sign in now to post with your account.