Discussion:Life Insurance Premiums Deductible by S Corp?
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| Revision as of 19:37, 27 August 2006 Chase (Talk | contribs) (I just read an a) ← Previous diff |
Revision as of 22:20, 27 August 2006 Jc (Talk | contribs) (That's pretty mu) Next diff → |
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| Do I understand this correctly?}} | Do I understand this correctly?}} | ||
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| + | {{ForumReplyPost|UserID=Jc|Date=27 August 2006|Text=That's pretty much word for word what the IRS says, so yeah. It sounds to me like the employer is still going to be liable for its portion of FICA tax on the premiums reported as wages. Can someone confirm whether this is the case or not?}} | ||
Revision as of 22:20, 27 August 2006
Discussion Forum Index --> Tax Questions --> Life Insurance Premiums Deductible by S Corp?
| 27 August 2006 | |
| Are life insurance premiums paid by the S Corportion on behalf of the more tha 2% shareholders deductible by the S Corporation? If the amounts have not been included in the shareholders' wages on the W-2, how would you handle this? Where would you include them on the individualss tax returns? | |
| 27 August 2006 | |
| If the shareholders are employees, the answer is yes, the amounts are deductible.
Fringe benefits paid to a more than 2% shareholder should be treated as wages to the extent that the amounts paid are not in excess of a reasonable salary. Wages that are inadvertently omitted from the W-2 form should nevertheless be reported on line 7 of the 1040. | |
| 27 August 2006 | |
| I just read an article on the IRS website which came out in May 2006 regarding S Corporation and medical insurance coverage. What I gather from that article is that 2 shareholders of an S Corp (both with more than 2% ownership)must include health insurance premiums paid by the S Corp on their behalf as wages. The S Corporation may deduct the premiums as compensation to the shareholders.
It seems that the shareholder's treatment of the medical insurance premiums depends upon whether or not the S/H has any other coverage available to them, either through another employer or a spouse. If there are no issues with this, then we look to see in whose name the insurance was purchased. If purchased under the shareholder's name, then they would be able to deduct as an itemized deduction subject to limitations. Otherwise, they could deduct these premiums as an above the line deduction. Do I understand this correctly? | |
| 27 August 2006 | |
| That's pretty much word for word what the IRS says, so yeah. It sounds to me like the employer is still going to be liable for its portion of FICA tax on the premiums reported as wages. Can someone confirm whether this is the case or not? | |
