S corp HI - wife is employee

[oceanlovin'ea]

I know this subject has been discussed to death. But this situation I think is a little different and if it's not, just clarify it for me.

Husband has single shareholder s corp. His wife does bookkeeping for him and he had to put her on the payroll last December so that she could be covered by the health insurance through Blue Cross.

I know that, as an officer, his health insurance is added to his W-2. But what about hers? She is just an employee. So I see three scenarios:
1) Is it also added to her wages also?
2) Is it considered a medical reimbursement plan, if they have put that in writing?
3) Or is it just a draw and he is paying a personal expense?

Need help since I am getting ready to do 941's and have to report correct gross income.

Thanks

Linda F

[JohnH]

I think it follows stock ownership & K-1 reporting. You say it's a single-shareholder corp, so if the K-1 is issued in his name only then she would be an employee and her insurance premiums would be a company expense. On the other hand, if the election to issue the K-1 in both names has been made, then her medical insurance premiums would be an insurance premium payment on behalf of an over-2% shareholder, added to the W-2 goss wages and then deducted above the line on the 1040.

[JON]

Not like C.

She is considered a 2% stockholder. The health insurance HAS to be reported on the W-2s. It can be both or his, I do not think that matters. The total of both insurances is an above the line deduction. It only gets to the above the line if it is included on W-2(s), for an S Corp.

[oceanlovin'ea]

related party

Oh, is that the related party rule? Because she is related to the shareholder, what he owns is considered hers also.

But do I have to put her part of the insurance premium on her W-2 and his on his W-2 or can I put it all on his because he is paying it for his family?

Linda F

[ChEAr$]

First

Oh, is that the related party rule? Because she is related to the shareholder, what he owns is considered hers also.

But do I have to put her part of the insurance premium on her W-2 and his on his W-2 or can I put it all on his because he is paying it for his family?

Linda F

tell us if 1. she is covered under her own right as an employee, or.
2. she is covered under his policy as a family member?

I got impression from your OP that it is the former, therefore the premiums paid by
the corporation for her would go on her W2.

[oceanlovin'ea]

As employee

At the end of the year, they were applying for the insurance and she had to be an employee to be covered by the medical insurance.

So it is on her employment so it will go on her W-2.

Another point, the state unemployment compensation reports have to match the 941's (which is just totals on the 941). How do you list their wages so that they don't pay unemployment compensation on the medical insurance?

Linda F