Okay, so Workers Comp premiums paid for a more-than-2% shareholder of an S-Corp are taxable income exempt from FICA, just like the treatment for health insurance (IRS Pub 535).
A single-member LLC wholly owned by a S-Corp is disregarded for most tax purposes but is a separate employer under state law and is required to withhold and file its own payroll taxes for its employees.
Certain benefits, principally qualified plans such as 401(k)s, are subject to controlled-group rules that require coverage for all employees of a parent-subsidiary group, and the ACA also uses this standard to define "large employer" for purposes of health-insurance requirements.
Now --
Tom is a more-than-2% shareholder of an S-Corp that does business consulting and also an employee of its subsidiary, which does construction. Tom's Workers Comp premiums for his consulting work are clearly taxable income reported in Box 1 of the W2 he gets from the parent company. Tom is also covered by a separate Workers Comp policy for the work that he does for the construction subsidiary.
1. Are the Workers Comp premiums paid by the subsidiary for his construction work reportable in Box 1 of his W2 from the subsidiary?
2. Why or why not?
I've come up with a few plausible rationales for either answer but I really want to get some additional opinions on this (unless someone can cite a clear rule, which is the best outcome).
Thanks lots.
A single-member LLC wholly owned by a S-Corp is disregarded for most tax purposes but is a separate employer under state law and is required to withhold and file its own payroll taxes for its employees.
Certain benefits, principally qualified plans such as 401(k)s, are subject to controlled-group rules that require coverage for all employees of a parent-subsidiary group, and the ACA also uses this standard to define "large employer" for purposes of health-insurance requirements.
Now --
Tom is a more-than-2% shareholder of an S-Corp that does business consulting and also an employee of its subsidiary, which does construction. Tom's Workers Comp premiums for his consulting work are clearly taxable income reported in Box 1 of the W2 he gets from the parent company. Tom is also covered by a separate Workers Comp policy for the work that he does for the construction subsidiary.
1. Are the Workers Comp premiums paid by the subsidiary for his construction work reportable in Box 1 of his W2 from the subsidiary?
2. Why or why not?
I've come up with a few plausible rationales for either answer but I really want to get some additional opinions on this (unless someone can cite a clear rule, which is the best outcome).
Thanks lots.