S corp health insurance

[Earl]

S Corporation. Only completing 1040.

Corporation pays health insurance and is included on W2. I know to take deduction for SE health insurance on front of 1040 but does this also decrease self-employed income for Form SE.

Also does it make a difference if corp is eligible small business entitled to ESB health insurance credit.

Forget above. Was not thinking early this morning.

[appelman]

How is this SE insurance?

Isn't it being paid for an employee of the corp?

[JohnH]

It's a situation unique to S-Corporation shareholder/employees whose health insurance is paid by the corp. The premiums must be added to gross income on the W-2 and then deducted in the same manner as Medical Insurance premiums for self-employed people on the 1040.

It's a bit of a round-about process, but it prevents a situation wherein there are unequal distributions which could invalidate the S-corp election when there are multiple shareholders.

[appelman]

Live and learn!

Fascinating! But there would be no self-employment tax involved unless Earl's shareholder/employee has SE income from some other source. If the latter is true, it does raise an interesting question. I would think that the deduction for this "quasi-SE" insurance would not reduce the SE tax attributable to another source, but I wonder if the issue has been specifically addressed.

[Earl]

Wasn't thinking when I posted early this morning. I knew there was on self-employed income and so no self-employment tax to deduct the health premiums from. Dumb!!!!!

[BHoffman]

Post before coffee at your own risk

[JohnH]

(there are 4 of those for a very good reason)