How Is S Corp Health Insurance Taxed On W2?

The cost of health insurance premiums paid by the S corporation for a 2% shareholder is included in the shareholder's W-2 as Box 1 taxable income. The amount is subject to

federal income tax withholding

.

How does S Corp handle health insurance on W-2?

The amount of the premiums must be included in your employee wages on your annual Form W-2, and you must include the amount as wages on your Form 1040.

Your S corporation deducts the amount as employee compensation on its own return

.

Where do I report S corp health insurance on W-2?

The health insurance premiums paid by the S corporation are reported on Form W-2,

Box 14 S

. This is the amount the shareholder deducts on page 1 of Form 1040, line 29 (Self- employed health insurance deduction)

Is S corp owners health insurance taxable?

S-corporations can provide health insurance as a tax-free benefit to its non-owner employees

. This means the company offers group health insurance to employees and deducts the cost as a business expense, paying no taxes on the insurance premiums.

Is 2% shareholder health insurance taxable?

The cost of health insurance premiums paid by the S corporation for a 2% shareholder is included in the shareholder's W-2 as Box 1 taxable income.

The amount is subject to federal income tax withholding

.

Can I deduct health insurance premiums as an S corporation shareholder?

Specifically,

S-corp owners can take a personal income tax deduction on the health insurance premiums paid by the business

. For S-corp owners to qualify for the deduction, their health insurance policy must be established by the business and not by the S-corp owner personally.

Is health insurance included in Box 1 of W-2?

The premiums are included on the Form W-2 in Box 1 (wages subject to federal withholding)

and Box 14 (other information) but are not included in Box 3 or Box 5 (wages subject to Social Security and Medicare).

Is S corp health insurance subject to FICA?

Certainly, S corporations that pay or reimburse health insurance for their more-than-2-percent shareholder-employees must include the payments or reimbursements in their W-2 wages as income subject to federal income taxes.

What is Box 14 on the W-2 for?

Box 14:

Your employer may report additional tax information

here. If any amounts are reported in Box 14, they should include a brief description of what they're for. For example, union dues, employer-paid tuition assistance or after-tax contributions to a retirement plan may be reported here.

Can you deduct shareholder health insurance on 1120S?

The premiums paid by the business can be deducted on your Form 1040 (line 29) and as a business expense on Form 1120S

.

How does self-employed health insurance deduction work?

The self-employed health insurance deduction

lowers your adjusted gross income, or AGI

. Your AGI determines how much of your income will be taxed on your Form 1040. Your deduction lowers your overall taxable income, which equals tax savings for you.

What is included in 2% shareholder health insurance?

Premiums Must Be Included on the Shareholder's W-2

As mentioned, for income tax withholding purposes, accident and health insurance premiums need to be treated as shareholder compensation—which means that premiums for the shareholder's health benefits need to be included as wages on the shareholder's form W-2.

How do I report an S-corp shareholder to an HSA?

Health Savings Accounts (HSA)

If the S Corporation contributes to the HSA on behalf of a greater than 2% owner, these contributions are treated as income and added to the shareholder's wages. They are reported in

box 1 of the form W-2 as wages

.

How do I pay my S-corp taxes?

S corporations don't pay corporate income tax. Instead, S corporations enjoy

pass-through taxation

in which the company's owners pay taxes on their portion of the company's earnings based on their individual tax rates.

Does Box 3 on W-2 include health insurance?

FICA Taxes

Therefore, when you get your W-2, your box 3, income subject to Social Security taxes, and box 5, income subject to Medicare taxes,

will include your pretax health insurance premiums

.

Is health insurance a business expense?

Generally speaking,

any expenses an employer incurs related to health insurance (for employees or for dependents) are 100% tax-deductible as ordinary business expenses

, on both state and federal income taxes.

Can an S Corp owner take self-employed health insurance deduction?

If the medical insurance paid for by the S corp is properly reported on the shareholder's Form W-2, the greater than 2 percent shareholder should be able to take the self-employed health insurance deduction on their personal return. The S corp can deduct the expenses as wages.

Is employee portion of health insurance taxable?

Employer-paid premiums for health insurance are exempt from federal income and payroll taxes. Additionally, the portion of premiums employees pay is

typically excluded from taxable income

.

Why is Box 1 and 16 different?

If retirement contributions are exempt from state income tax, Boxes 1 and 16 may be the same.

If contributions are subject to state income tax, Box 16 may be higher than Box 1

. For example, Pennsylvania requires employees to pay state income tax on retirement contributions.

Is S Corp shareholder health insurance subject to FUTA?

The health insurance premiums paid on behalf of more-than-2% S corporation shareholder-employees are deductible and reportable by the S corporation as wages, the payments are included in the shareholder's wages for income tax purposes, and

the benefits are not subject to Social Security or Medicare (FICA) or

…

What is S Corp 2% owner?

(A 2-percent shareholder is

someone who owns more than 2 percent of the outstanding stock of the corporation or stock possessing more than 2 percent of the total combined voting power of all stock of the corporation

.)