Discussion:S-Corp Health No Wages For Owner
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Discussion Forum Index --> Tax Questions --> S-Corp Health No Wages For Owner
| 14 September 2007 | |
| I have an S-Corp. with one owner who reported no wages. The corporation paid $11,000 of health insurance for him. Company did not pay health insurance for other employees. Should I record the health insurance as a non-deductible expense or as a distribution to the owner? Either way I assume it should be reported as a schedule A item on his 1040. | |
TheTinCook (talk|edits) said: | 14 September 2007 |
| This is one of those things that has been discussed many times here.
Use the searchbox---> The value of the health insurance for a 2% shareholder-employee is treated as part of wages. | |
| 14 September 2007 | |
| Also check Publication 15 (still referred to by us oldtimers as Circular E).
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| September 14, 2007 | |
| I disagree with one part of Taxref's post, except I can't tell you what it is. I am trying my hardest to not re-answer questions that have already been answered multiple times. Lest, I be accused of dumb answers. | |
| 14 September 2007 | |
| LOL well the suspense is killing me PVV...write the answer under a different name (CPAPVV?)so that nobody knows its you. | |
Death&Taxes (talk|edits) said: | 14 September 2007 |
| Or post it as a message on my page. | |
Death&Taxes (talk|edits) said: | 14 September 2007 |
| Hey, Ref, my copy of Publication 15 still has (Circular E) in big, bold letters on it. Wait around a couple of years and then tell the wet-behind-the-ears about Package X. I have them for eight to ten years, waiting for me to buy a new wood stove. They'll burn well by then. | |
| September 14, 2007 | |
| Very funny D&T. Then it would be a secret for sure. I could always sign it off as another user. | |
| 15 September 2007 | |
| Taxref, I see no SE Health Insurance deduction here since the deduction is limited to the FICA wages from the S corporation. I believe that the FICA wages in this case will be zero. | |
Southernbellecpa (talk|edits) said: | 15 September 2007 |
| Riley2: I believe you, but would like to see a cite. You are saying that there is no SEHI deduction unless there are FICA wages from the S-corp? In other words, wages in excess of the 'insurance-wages', which are not subject to FICA? | |
| 15 September 2007 | |
| I've had that situation. I issued a W-2 and the only item on it was the s/e heaalth ins. The tax boxes were -0-. Box 14 = box 1. The taxpayer did get a letter questioning the W-2, to which I sent a written response. The IRS accepted the response and the matter was closed in favor of the taxpayer.
Do a W-2 and complete a 941 for the 4th quarter. It may be questioned, but that's the only correct way to do it. Deduct the s/e health ins on pg 1 of the 1040. | |
Southernbellecpa (talk|edits) said: | 16 September 2007 |
| Birg: But I think Riley is saying that you cannot take the SEHI deduction as an adjustment on p.1 of the 1040 UNLESS you have other wages from the S-corp over and above the W-2 that was just for the insurance amount. | |
| September 17, 2007 | |
| The OP stated that the employees were not covered. This would make it a discriminatory plan, which would make the $11K subject to FICA. | |
WIBadgerCPA (talk|edits) said: | 17 September 2007 |
| Does health insurance have to be non discriminatory? | |
Southernbellecpa (talk|edits) said: | 17 September 2007 |
| Very good eye, PVVCPA! A more than 2% S/H cannot receive a benefit that discriminates against other ee's. So, since these 'wages' are subject to FICA, then this would allow SEHI deduction as an adjustment on 1040? | |
