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S Corporation Health Insurance Reminder

Posted by McDonald & Osborne Posted on Dec 14 2016

ShareholdersAs we get closer to year end, we want to take this opportunity to remind our S Corporation shareholders of some important items to keep in mind.

S Corporation shareholders who own a 2% or greater interest in their corporation must include the following (company-paid) fringe benefits on their Form W-2 as additional wages:


1.  Health Insurance - when included on Form W-2, the health insurance is deductible as wages by the corporation.  The shareholder receives a self-employed health insurance deduction on page 1 of their personal return equal to the amount included as wages.  Failure to include the health insurance on Form W-2 results in NO deduction for the Corporation.

2.  Contributions to an HSA - like health insurance, HSA contributions are included on Form W-2 and deductible as wages by the corporation and the individual receives a deduction on page 1 of their personal return.

3.  It is important to remember that a 2% or greater shareholder of an S Corporation is NOT eligible for cafeteria plan benefits.

If you are currently using a payroll service, please provide them with your health insurance and HSA information as soon as possible.  Please contact us if you have any questions.