Announcement

Collapse
No announcement yet.

+2% Sub S owner health insurance

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

    +2% Sub S owner health insurance

    Facts:
    1. 100% Sub S owner reimburses himself for health insurance premiums, adds to W-2 and takes above line deduction on 1040.
    2. The other two non-family employees are not provided health insurance.
    Questions:
    1. Is this a discrimination issue for fringe benefits and therefore not a deduction for the S Corp?
    2. Is there an issue with ACA regarding the $100 excise tax?
    3. Is there an update to Notice 2015-17 granting relief to the excise tax? I can't find one.

    #2
    1) Sort-of, not really. If discrimination exists, the reimbursement becomes taxable compensation (for income tax) to the employee and is added to box 1 of the W-2. That is done anyways, so it doesn't make a difference. Either way, it is deductible to the corporation. I can't find it now, but prior research showed me that discrimination ONLY added to box 1 (income tax), and does not affect boxes 3 and 5 (Social Security and Medicare).

    2 & 3) Notice 2015-7 grants the no penalty 'until further notice' and no, there hasn't been an update to that yet. That means the ACA $100 excise tax does not come into play.

    Comment


      #3
      Thanks TaxGuyBill

      Comment

      Working...
      X