I have a client who owns 100% of an S-Corp. The S-Corp provides health insurance to it's employees. The owner's wife is also a full time employee of the S-Corp and has the health insurance through her provided by the S-Corp and has the family plan which her husband is on. I know 2% or more shareholders must include in their W-2 wages the amount the S-Corp pays for the health insurance. Since they are husband and wife the wife constructively owns 100% of the S-Corp as well. My question is can the wife report the health insurance amount on her W-2 wages or does it have to go on the husband's W-2 wages?
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medical benefits
pd by partnership/s corp are rpt'd to shareholders. A more than 2% holder/employee treats benefits as taxable wages in box 1 of w2. Also put ID in box 14. See TMI pages 13-25, 26 for more info. I'm just a bit confused over your statement of wife is "constructive owner" & owns 100%. Then the husband is an employee? and not an owner?
Larry M -
>2% SH
A > 2% SH of an S Corp has to add benefits to his W-2. These include benefits for family members like spouse, children, grandchildren and parents - see page 13-25 of TTB.I would put a favorite quote in here, but it would get me banned from the board.Comment
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The husband is the 100% shareholder. Since they are a married couple, the IRS treats the wife as also being a 100% shareholder by simply being married to the owner of the S-Corp other wise known as contructive ownership.
From Kleinrock's 1120S reference manual - Stock owned directly or indirectly by a person's spouse (unless legally separated under a decree of divorce or separate maintenance), children (including those legally adopted), grandchildren, or parents is considered to be owned by that person.
Since the wife took the insurance benefits from the S-Corp in her name, can she report the health benefits amount on her W-2 instead of the husband?Comment
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I would
think that you would put 50% on each W-2. Since husband/wife are owners and are probably(?) going to file MFJ, that it ends up in the wash. I'm sorry, but am I missing something here?
I would also suggest you log in with a name. I think you might get more help from others then. I'm by far the least knowledgeable of persons on this board and you would benefit from the expertise of Old Jack, Jainen, Bees Knees, etc.
Larry MComment
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I would be inclined to put all the premiums on the wife's w2 since she is the insured.Comment
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TTB, page 13-25 says, "A more than 2% shareholder of an S corporation also includes members of the shareholder's family, including a spouse, children, grandchildren, and parents."
It then goes on to say, "a more than 2% shareholder of an S corporation performing services as an employee treats medical benefits as taxable wages. Report in box 1, Form W-2."
So in other words, if the wife of a more than 2% shareholder is an employee of the S corporation, she is treated as a more than 2% shareholder, and so any health insurance provided by the S corporation for her as an employee would be added to her W-2, box 1.
However, if she is not an employee, she obviously would not be given a W-2. The only way she could be provided health insurance as a non-employee would be as the spouse of the husband, who is an employee. So therefore, in that case, the insurance benefit provided to her as a spouse would be added to the husband's W-2 wage, along with the benefits he receives as an employee.Comment
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Bees
Thanks for putting it in a very clear mannor. Sorry I missed you at the Roseville seminar. I've got all my credits (33) now for the year. So, maybe next year . . . .
(Older than Jack) Larry MComment
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