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Wow, I'm impressed with the quality of responses in this group. Therefore, I want to solicit some opinions:

I have an S-Corp that I formed last year and have been paying health insurance premiums from the business checking account. I am the only owner of the company and am aware of the 60% deductible limit for 2% shareholders. But, my question is, what, exactly, do I do to report the premiums. Do I put it on the W-2 for myself as an employee or do I make a 1099 for myself as an officer of the company? Then, if I do that, since I, as an individual, am paying taxes on that amount, do I then claim it as an expense in the business account? If I didn't, it seems to me that the money would be taxed twice....

Any comment?

Thanks in advance,
Steve
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Payments of medical insurance premiums for S-Corp shareholder-employees who own more than 2% of the company stock should be treated as additional compensation. Add the amount of the preiums paid to the compensation deducted on page 1, line 7 ("Compensation of officers") of your corporate tax return. The premiums are then reported on your W-2. Note that although these premiums are treated as additional compensation, they are NOT subject to FICA or FUTA. They are however subject to federal and state withholding.

You could also issue a 1099 instead of a W-2. If you do that, make sure that when you pick up the income up on your personal tax return that you don't compute self-employment tax on the amount.
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Add the amount of the preiums paid to the compensation deducted on page 1, line 7 ("Compensation of officers") of your corporate tax return. The premiums are then reported on your W-2.

Great, thanks! A couple of followups:

1) Do I need two W-2's, one for myself as an employee and one for myself as an officer?

2) Where do I report the compensation of the officer (for the health insurance) on the W-2? Do I add the compensation to the amount in Box 1 (Wages, tips, other compensation) and then also record the amount in Box 12 (Benefits included in box 1)?

Thanks,
Steve
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Great, thanks! A couple of followups:

1) Do I need two W-2's, one for myself as an employee and one for myself as an officer?

No, you only need one W-2.


2) Where do I report the compensation of the officer (for the health insurance) on the W-2? Do I add the compensation to the amount in Box 1 (Wages, tips, other compensation) and then also record the amount in Box 12 (Benefits included in box 1)?

The amount of the health insurance premiums is added to your compensation in box 1. DO NOT add the health insurance premiums to your social security wages (box 3) or to your Medicare wages (box 5). You do not have to report anything in Box 12 (you can report the amount of the premiums there if you want, but you are not required to).

Good luck.
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