S Corp Fringe Benefit Health Ins

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  • Safire
    Senior Member
    • Jun 2005
    • 253

    #1

    S Corp Fringe Benefit Health Ins

    I have one that we failed to add back the Health Insurance paid by the S Corp into his W-2.

    Rather than amend, wouldn't we have the same outcome by simply not taking the deduction on the S Corp Return?

    He would be eligible to use the Premiums as SE health, so it seems that is would be the same bottom line, unless I am missing something with my line ot thinking.
    Last edited by Safire; 03-07-2006, 11:54 AM.
  • rosieea
    Senior Member
    • Jan 2006
    • 270

    #2
    Originally posted by Safire
    I have one that we failed to add back the Health Insurance paid by the S Corp into his W-2.

    Rather than amend, wouldn't we have the same outcome by simply not taking the deduction on the S Corp Return?

    He would be eligible to use the Premiums as SE health, so it seems that is would be the same bottom line, unless I am missing something with my line ot thinking.
    Under these circumstances, I have treated the premium payments as distributions - not deductible by the S Corps. And yes, they are deductible on the SE health insurance line of the 1040.

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    • Safire
      Senior Member
      • Jun 2005
      • 253

      #3
      Thanks! I had not thought of that option.

      Comment

      • Matt Sova
        Senior Member
        • Jun 2005
        • 645

        #4
        Schedule K

        I put it on the Schedule K as Other Deductions then, as long as they have SS Wages > Insurance premiums they get the SE HI deduction.
        I would put a favorite quote in here, but it would get me banned from the board.

        Comment

        • Safire
          Senior Member
          • Jun 2005
          • 253

          #5
          Matt, thaks, if I do it that way I don't have to count it as a distribution right? That would help in this case.

          Do you write in there "health ins paid for shareholder" or something like that?

          Comment

          • rosieea
            Senior Member
            • Jan 2006
            • 270

            #6
            Originally posted by Matt Sova
            I put it on the Schedule K as Other Deductions then, as long as they have SS Wages > Insurance premiums they get the SE HI deduction.
            Matt - are you saying that you deduct the payments, even though they are not included in the shareholder's W-2 income? I don't believe that such payments can be deductible by an S-Corps for a >2% shareholder. And if they are deducted, that would mean that the shareholder's pass-through income would be reduced by that amount, so how could he deduct the premiums on the 1040 if he never paid for them? I think that if such payments are not characterized as distributions, then they could only be otherwise classified as non-deductible expenses. In that case, the shareholder would, in effect, have paid the premiums and would be entitled to deduct them on the 1040.

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