S corp health ins for family

[Greenbriar]

Probably a stupid question but the sole s/h in s corp has a family plan for him, wife and two kids. Is the entire medical ins premium added to box 1 of his W2 or just the portion attributable to his coverage? Thanks.

[ChEAr$]

Probably a stupid question but the sole s/h in s corp has a family plan for him, wife and two kids. Is the entire medical ins premium added to box 1 of his W2 or just the portion attributable to his coverage? Thanks.

use the total amount.
(related parties, etc etc)

[Greenbriar]

Makes sense, thanks.

[Greenbriar]

A CPA friend of mine, very reputable, tells me she doesn't add the med preimiums to the S corp owner's salary. Instead, she treats it as a non-deductible expense on Sked K and takes the deduction above the line on the 1040. By keeping the W2 wages at actual compensation, it helps keep down the workers comp insurance which can be very expensive. Anyone else using this method? Any thoughts? Thanks.

[Jiggers]

A CPA friend of mine, very reputable, tells me she doesn't add the med preimiums to the S corp owner's salary. Instead, she treats it as a non-deductible expense on Sked K and takes the deduction above the line on the 1040. By keeping the W2 wages at actual compensation, it helps keep down the workers comp insurance which can be very expensive. Anyone else using this method? Any thoughts? Thanks.

In Texas, it doesn't matter. Normally the officers/shareholders of the corporation are excluded from Workers Compensation Insurance by their carriers.

And, irregardless of what the CPA does and for the reason given, it is wrong and not according to the IRS instructions.

[JohnH]

If there are multiple shareholders with different premiums, this method could invalidate the S-corp election due to there being unequal distributions.

Sure would hate to be in the position of explaining to my client that I blew the S-corp election by using an unauthorized method. And now they can't re-elect S-corp status for 5 years. But, hey, it was simpler for me...

[veritas]

Reputable

A CPA friend of mine, very reputable, tells me she doesn't add the med preimiums to the S corp owner's salary. Instead, she treats it as a non-deductible expense on Sked K and takes the deduction above the line on the 1040. By keeping the W2 wages at actual compensation, it helps keep down the workers comp insurance which can be very expensive. Anyone else using this method? Any thoughts? Thanks.

but wrong.

[Greenbriar]

Agree

I've always done the W2 box 1 route and I'll continue to. Thanks.

[Uncle Sam]

Agree

I agree it's also wrong.

There IS ONE side benefit to the Box 1 inclusion, and I've had this in a prior tax year with a client.
Client (100% S corp owner) was looking to max out her SEP contribution. Even though Box 1 included her health insurance premium (and correspondingly noted in Box 14) - the premium WAS able to be included in the max calculation of the SEP contribution.

[Greenbriar]

Another side benefit

Including the insurance premiums in Box 1 also helps reach the "reasonable" standard for shareholder's salary, right?