Health and accident insurance premiums paid on behalf of a greater than 2-percent S corporation shareholder-employee are deductible by the S corporation and reportable as wages on the shareholder-employee’s Form W-2, subject to income tax withholding.

How do I report 2 shareholders to health insurance on my W-2?

The health insurance premiums paid by the S corporation are reported on Form W-2, Box 14 S. This is the amount the shareholder deducts on page 1 of Form 1040, line 29 (Self- employed health insurance deduction)

Is health insurance for 2 shareholder subject to FUTA?

The health insurance premiums paid on behalf of more-than-2% S corporation shareholder-employees are deductible and reportable by the S corporation as wages, the payments are included in the shareholder’s wages for income tax purposes, and the benefits are not subject to Social Security or Medicare (FICA) or …

Can a 2% shareholder have health insurance?

Health Insurance for S Corporation 2% Shareholders. The cost of health insurance premiums paid by an employer is usually excluded from taxable income on the employee’s W-2. A more than 2% shareholder of an S corporation is not eligible for this exclusion.

Where does 2% shareholder medical premium go on W-2?

As you process payroll, enter $10,000 in the “2% Shareholder Medical Premium” column. While the income type is not payable, it will ensure that it will appear in Boxes 1 (Wages, tips, other compensation), 14 (Other) and 16 (State wages, tips, etc.) in his W-2 Form.

Can a shareholder be an employee or a shareholder?

Shareholders can be employees or they can be individuals who do not perform services for the company. If you have employees who own more than 2% of your business’s stock, benefits like health insurance are treated differently. Below, learn how health insurance is treated for regular employees.

What happens when a corporation pays for health insurance?

On the other hand, if the corporation obtains and pays for health insurance in its name, covers the shareholder under the policy, and reports the premiums as W-2 wages to the shareholder, then the shareholder is allowed an above-the-line deduction.