Discussion:Shareholder Health Insurance Not on W-2
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Discussion Forum Index --> Tax Questions --> Shareholder Health Insurance Not on W-2
| 22 March 2007 | |
| Hello-
I have a client/shareholder that did not include his health insurance premiums paid by the s corp in his W-2. The plan is in his name and insurance is not offered to all employees. The premiums were not deducted on the 1120S and were recorded as distributions to him. Can he deduct these premiums on page 1 of his 1040? Also, since the health insurance is only paid for a handful of employees (managers) shouldn't the premiums be included on the manager's W-2s? If these premiums were not included on the manager's W-2s, can they be deducted on the 1120S still? Thanks for your help. | |
Chucknewberry (talk|edits) said: | 23 March 2007 |
| Does anyone have an answer on this? I am curious as well. | |
| March 23, 2007 | |
| Yes. They should be on a W2 but often aren't. No biggie. Deduct on p1 as usual. Never, ever deduct on the 1120S for s/h premiums. | |
| 23 March 2007 | |
| According to IRS Headliner Volume 163 dated May 15, 2006, health insurance for S corp stockholders can only be deducted on page 1 when the insurance is purchased in the name of the corporation. If purchased in the name of the stockholder, it can only go on Schedule A. Check out the Headliner at IRS.gov. | |
| March 23, 2007 | |
| Again, not authoritative in any way. Proceed as usual. Search other threads. | |
| 23 March 2007 | |
| I just got off the phone with one of the CPA firms I babysit regarding protective 1040X filing on 2003 demutualization proceeds. For those of you who feel you have to take IRS pronouncements such as the referenced headliner as gospel, think how many of these protective claims you are going to file for your S Corp clients as this sucker proceeds. | |
| March 23, 2007 | |
| Let's hope there's some resolution soon. In the meantime, a 105 plan solves the problem easily and inexpensively. | |
| 23 March 2007 | |
| Employees health ins is deducted as an employee benefit if it is paid by the s corp. If there is a 125 plan, and the employees contribute to it, it comes off the top of the gross p/r and is not taxable. If the s corp doesn't have a 125 plan and the employees contribute to it, it is paid with after tax dollars and s/b reported on the W-2.
The only way the shareholder can deduct the se health ins is by adding it to the W-2, no tax involved. If it's not on the W-2, correct it. There's a right way and a wrong way way. Do it the right way. | |
| March 23, 2007 | |
| Wondering what the proportions are, on this board, of the number of S's who do include on W2's and those who have already long ago done the W2's before it's time to do taxwork, and therefore it doesn't get on there. . . | |
| 23 March 2007 | |
| I would think many JR. If they didn't include it in W-2 wages, I still take it on page one of the 1040...why should they be penalized for not doing it correctly when it is a zero additional tax liability?
For those who did not include it in w-2 wages in prior years, I let them know and tell them to include it next year and the next, etc. But why put to Sch A if they can't even itemize? When they were Sch C they could take it...now they are S corp and need to report it correctly, but many times they do not know until long after the fact...in that case, I let them take it on page one as they always have and then start doing it correctly.... | |
