cpabsd Posted March 10, 2008 Report Share Posted March 10, 2008 I am having a brain freeze. I have a more than 2% shareholder in an S corporation. The health insurance is paid through the business. I know the amount is added to box 1 of the W2. Question - is this amount subject to SS/Medicare? Quote Link to comment Share on other sites More sharing options...
Maribeth Posted March 10, 2008 Report Share Posted March 10, 2008 I am having a brain freeze. I have a more than 2% shareholder in an S corporation. The health insurance is paid through the business. I know the amount is added to box 1 of the W2. Question - is this amount subject to SS/Medicare? No, only subject to FIT. Maribeth Quote Link to comment Share on other sites More sharing options...
cpabsd Posted March 10, 2008 Author Report Share Posted March 10, 2008 Thank you. Quote Link to comment Share on other sites More sharing options...
adamkelly Posted March 10, 2008 Report Share Posted March 10, 2008 No, only subject to FIT. Maribeth And SIT, right? Quote Link to comment Share on other sites More sharing options...
Maribeth Posted March 10, 2008 Report Share Posted March 10, 2008 And SIT, right? You have to check with your State for the taxable. "Usually" the premiums are taxable for SUTA purposes also. Maribeth Quote Link to comment Share on other sites More sharing options...
cpabsd Posted March 10, 2008 Author Report Share Posted March 10, 2008 This client is already over limit for Suta. Not an issue. Thanks for the heads up though. Quote Link to comment Share on other sites More sharing options...
OldJack Posted March 10, 2008 Report Share Posted March 10, 2008 So really what happens if the S-corp does not add the benefit to the W2 and just expenses it as insurance expense? The S-corp profit is reduced on the 1040 and no deduction for self-employment insurance. If added on the W2 it increases wages and self-employment insurance is deducted on 1040 page 1. But the net effect on the 1040 is zero either way. No big deal. Quote Link to comment Share on other sites More sharing options...
Maribeth Posted March 10, 2008 Report Share Posted March 10, 2008 So really what happens if the S-corp does not add the benefit to the W2 and just expenses it as insurance expense? The S-corp profit is reduced on the 1040 and no deduction for self-employment insurance. If added on the W2 it increases wages and self-employment insurance is deducted on 1040 page 1. But the net effect on the 1040 is zero either way. No big deal. However . . . . it is a good way to get officers wages on Page 1 of the 1120s without incurring ss tax. Maribeth Quote Link to comment Share on other sites More sharing options...
mgmea Posted March 10, 2008 Report Share Posted March 10, 2008 So really what happens if the S-corp does not add the benefit to the W2 and just expenses it as insurance expense? The S-corp profit is reduced on the 1040 and no deduction for self-employment insurance. If added on the W2 it increases wages and self-employment insurance is deducted on 1040 page 1. But the net effect on the 1040 is zero either way. No big deal. True, but the IRS is making a big deal out of this. In their recently issued notice, the exact number escapes me right now, they state that if the premium is not on the employee-shareholder's W-2, no deduction is allowed for the corporation. This is on their hit list. The very real possibility of a $5000 penalty on the preparer for disregarding the IRS notice has made a believer out of me. Quote Link to comment Share on other sites More sharing options...
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