Discussion Archives:S Corp Owner Health Insurance (circa 2006)

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Discussion Forum Index --> Tax Questions --> S Corp Owner Health Insurance (circa 2006)

This discussion is from 2006

Leann (talk|edits) said:

1 April 2006
If a single owner of an S-corp, with no employees other then the owner, takes out a health insurance policy in their individual name, can the S-corp take the deduction for the health insurance or should the owner take the deduction on their 1040? If it needs to go on the 1040 - should it go on Line 28 (page 1) or Schedule A?

JDACPA (talk|edits) said:

2 April 2006
Should be added to shareholder W-2 at year end, corp deducts as additional comp, then shareholder deducts on 1040 page 1, line 29.

Taxref (talk|edits) said:

2 April 2006
JDACPA is correct. I would only add that the amount added to the shareholder's W2 is not subject to Fica taxes.

MsManage (talk|edits) said:

5 March 2009
Just to clarify, health insurance is deducted on the 1120S, as add'l comp not subject to FICA so it is reported in Box 14 of the W2. Then it's bassically a wash at the shareholder level who picks it up as income (from the W2) and deducts on page 1 of the 1040. oh that's not complicated.

Arman barsamian (talk|edits) said:

5 March 2009
As far as Line 28 AGI or Schedule A is concerned:

If the shareholder does not have enough Medicare Wages or S-E wages then the excess S-E health insurance over Medicare/S-E wages would go to Schedule A.

Blrgcpa (talk|edits) said:

5 March 2009
It's also included in box 1 of the W-2.

Arman barsamian (talk|edits) said:

5 March 2009
Correct, however box 1 is not Medicare/S-E earnings.

For the simplest example:

Shareholder-employee health insurance: $4,000

Box 1 $4,000 Box 2 and 3 -0-

There would not be enough medicare wages to deduct this as self-employed health insurance.

-Or- Box 1 $6,000 Box 2 and 3 $2,000 There would be enough to deduct $2,000 on Line 28, per Section 162(l), and the remaining $2,000 in health insurance premium would go to Schedule A.

Illini (talk|edits) said:

5 March 2009
I thought shareholders had to include medical insurance on FICA and Medicare wages -- only rank and file employees (non-highly compensated) exclude medical insurance from FICA and Medicare wages - or did something change?

Arman barsamian (talk|edits) said:

6 March 2009

S-Corp and C-Corp employees, officers, etc include medical insurance only in Box 1.

Only Partners (1065) and Sole Props (Sch C) pay self-employment tax on self-employed health insurance. S-Corp and C-Corp employees, of any type, avoid OASDI and HI on Section 105 health insurance. Note, however, that Federal withholding tax is due on on most amounts reported in box 1, including shareholder-employee health insurance.

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