What is a highly compensated shareholder?
I am looking for clarification on taxable health insurance paid by the S-corp for a shareholder.
PA states that health insurance paid for a more than 5% shareholder is a taxable wage IF the shareholder is a highly compensated employee.
I asked for clarification on what exactly a highly compensated employee is and can get no definite answer from the state. They gave me verbatim what their law says: health insurance paid for a more than 5% shareholder is a taxable wage IF the shareholder is a highly compensated employee.
Is highly compensated mean double the wage paid of the highest paid other employees? Or triple the wage paid ?? Just how much higher does a shareholder wage have to be to be considered a "highly compensated" employee????
I have a shareholder who is paid $ 52,000 a year wages and has health insurance for the family paid by the S-corp in the amount of $ 8000.
The highest paid "other employee" makes $ 25,000 and gets health insurance from the employer but pays for rest of the family's health in this plan.
The health insurance from what I understand is NOT under a sec-125 café plan (although the client informed me that a previous insurance company told that the health was not taxable. They since have changed insurances and state this insurance company told them to ask their accountant) and there are NO other benefits.
But my question is:
I say that this shareholder is a highly compensated employee and the $ 8000 for health is taxable wages and his w-2 should reflect his PA wage as $ 60,000 same as his Federal wage line 1 on the w-2.
PA will not tell me what it takes to be considered a highly compensated employee …..
I would appreciate your opinions and/or if anyone knows where I can get written clarification on the law from the state.
I am looking for clarification on taxable health insurance paid by the S-corp for a shareholder.
PA states that health insurance paid for a more than 5% shareholder is a taxable wage IF the shareholder is a highly compensated employee.
I asked for clarification on what exactly a highly compensated employee is and can get no definite answer from the state. They gave me verbatim what their law says: health insurance paid for a more than 5% shareholder is a taxable wage IF the shareholder is a highly compensated employee.
Is highly compensated mean double the wage paid of the highest paid other employees? Or triple the wage paid ?? Just how much higher does a shareholder wage have to be to be considered a "highly compensated" employee????
I have a shareholder who is paid $ 52,000 a year wages and has health insurance for the family paid by the S-corp in the amount of $ 8000.
The highest paid "other employee" makes $ 25,000 and gets health insurance from the employer but pays for rest of the family's health in this plan.
The health insurance from what I understand is NOT under a sec-125 café plan (although the client informed me that a previous insurance company told that the health was not taxable. They since have changed insurances and state this insurance company told them to ask their accountant) and there are NO other benefits.
But my question is:
I say that this shareholder is a highly compensated employee and the $ 8000 for health is taxable wages and his w-2 should reflect his PA wage as $ 60,000 same as his Federal wage line 1 on the w-2.
PA will not tell me what it takes to be considered a highly compensated employee …..
I would appreciate your opinions and/or if anyone knows where I can get written clarification on the law from the state.
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