Go ahead: Deduct health insurance paid by your S corporation — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily
  • LinkedIn
  • YouTube
  • Twitter
  • Facebook
  • Google+

Go ahead: Deduct health insurance paid by your S corporation

Get PDF file

by on
in Employee Benefits Program,Human Resources

Does your S corporation directly pay for or reimburse you for your health insurance premiums? In 2006, the IRS indicated on its web site that you can’t deduct such costs “above-the-line” if the health insurance is purchased in your own name.

Strategy: Claim above-the-line deductions for ’07. A new IRS Notice gives certain S corporation owners official approval. (IRS Notice 2008-1)

The whole story: For fringe benefits, the IRS treats a 2%-or-more shareholder of an S corporation like a partner in a partnership. So corporate health insurance premium payments aren’t tax-free to you, like they are to other employees. Report the payments as taxable income.

A tax-law provision allows a self-employed individual who is not treated as an employee to deduct health insurance—including amounts paid for dependents—up to the amount of his or her earned income from the business. (IRC Sec. 162(l)) The above-the-line deduction isn’...(register to read more)

To read the rest of this article you must first register with your email address.

Email Address:

Leave a Comment

Previous post:

Next post: