How to report medical insurance premiums for S-corporation shareholder



hi everyone my name is Natalia Ito and I'm a certified public accountant with Colorado business CPA today I would like to address the topic about when you are S corporation shareholder and you pay four year old and your family you know health insurance how do you need to report it correctly on your w-2 form in order for you to take immediate deduction you know which you can deduct your health insurance premiums basically dollar for dollar instead of the health insurance premiums would go to the schedule eight so how do you do that for example let's say you have a $6,000 or they have health care insurance so when your S corporation reimburses you for your health insurance premiums or when you pay for health insurance directly from the S corporation and you are two percent or more shareholder the S corporation you have to report this on your w-2 form in order to take the deduction so the as 6,000 let's say you have $6,000 health insurance and the $6,000 will be added to your wages in that $6,000 will be subject to income tax however as you can see the $6,000 and health insurance is not going to be subject to Social Security and Medicare FICA wages as you can see for example you know you have you our salaries $40,000 $6,000 health insurance therefore you say it's a forty six thousand dollars for income tax purposes for Social Security and Medicare wages for five part axes it's still forty thousand dollars then you need to put that six thousand dollars as shareholder health insurance and box 14 and then of course also you know your wages for state and local Ruby but subject to you know the subject to the healthy health insurance so make sure your payroll company prepares the w-2 form with the health insurance premiums reported on your w-2 and the reason is it because by doing that then you show that in your box one of the form 1040 and then the six thousand dollars will go to pay each one or form 1040 s an adjustment to a gross income and therefore you will be able to deduct your health insurance otherwise if it's not reported on w2 IRS might argue and we classify your health insurance premiums on a Schedule A where as you remember the schedule a deduction would be subject to a 10% Lenora limitation threshold of the adjusted gross income the most likely you're not going to be able to take that health insurance premiums as a deduction well I hope you enjoyed this episode and I will talk to you that you know if you have any questions feel free to call us it's one eight hundred fifty forty EPA and our website is Colorado business CPA calm thank you so much

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