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Thread: 2% shareholder health benefits

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  1. #1
    Join Date
    Jun 2005
    Calif moved to No Carolina

    Default 2% shareholder health benefits

    I am processing W-2's for a S Corp. There is a 2% shareholder, that the S Corp is paying 50% of the health insurance premiums.

    When this company set up their payroll, for this 2% shareholder they have 50% of premium being deducted pre-tax and not paying fica/mcare, etc. and then showing the S Corp health benefit, but it neither amount is showing in wages.

    I didn't think a 2% shareholder could reduce their taxable wages, health insurance pre-tax? Shouldn't the 2% shareholder's amount be subject to FICA/Mcare,

    And somehow I need to correct as well, the S Corp payment to be included on W-2 wages, not subject to Fica/Mcare/State Disability? correct

    And each of these amounts added to the Wage box?

    Any suggestions for QB entries to correct this. None has been reported on the Quarterly form 941 or State.


    Last edited by S T; 01-13-2008 at 06:50 PM.

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