S Corp Fringe Benefit Health Ins

[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.

[rosieea]

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.

[Safire]

Thanks! I had not thought of that option.

[Matt Sova]

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.

[Safire]

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?

[rosieea]

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.