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R. Greg Paszkiewicz
R. Greg Paszkiewicz, Enrolled Agent
Category: Tax
Satisfied Customers: 357
Experience:  9 years preparing tax returns - Marietta, GA
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SELF EMPLOYMENT HEALTH INS. LINE 31 ON 1040

Customer Question

I AM A 50% STOCKHOLDER IN AN S-CORP. I RECEIVE A K-1 FORM FOR REPORTING ON 1040 PERSONAL TAX. I HAVE PAID HEALTH INS. PREMINUMS EUQAL TO EMPLOYEES. CAN I DEDUCT THESE PREMINUMS ON LINE 31 AS SELF EMPLOYMENT INS?
Submitted: 11 years ago.
Category: Tax
Expert:  R. Greg Paszkiewicz replied 11 years ago.
See exceprt below from IRS regarding S corp owners and health insurance. You can deduct health insurance that is included in your W-2.


S Corp Shareholder-Employees - Reporting Health & Accident Insurance Premiums

Headliner Volume 41
February 12, 2003

This TEC “Headliner Package” describes the Correct IRS Forms for Reporting Health & Accident Insurance Premiums for greater than 2% S Corp Shareholder-Employees. The recommendation for this Headliner came from the SB/SE subgroup of IRPAC (Information Reporting Program Advisory Committee).

The IRS would like to clarify the proper reporting of S corporation payments of health and accident insurance premiums made on behalf of its greater than 2% shareholder-employees continues in the manner reflected in Revenue Ruling 91-26, 1991-1 CB 184, as clarified in IRS Announcement 92-16, 1992-5 IRB 53.

The cost of these health and accident insurance premiums paid on behalf of the greater than 2% S corporation shareholder-employee (hereafter referred to as “shareholder”) is deductible by the S corporation and reportable as additional compensation to the shareholder.

This additional compensation is included in Box 1 (Wages) of the Form W-2, Wage and Tax Statement issued to the shareholder. If these payments are made under a “plan” for the S corporation employees and their dependents, the amount would only be subject to income tax withholding, and would not be included in Boxes 3 or 5 of Form W-2 wages for Social Security or Medicare, nor would it be subject to the FUTA tax. Form K-1 (1120S) and Form 1099 should not be used as an alternative to the Form W-2 to report this additional compensation.

The payments of the health and accident insurance premiums on behalf of the shareholder may be further identified in Box 14 (Other) of the Form W-2.



R. Greg Paszkiewicz, Enrolled Agent
Category: Tax
Satisfied Customers: 357
Experience: 9 years preparing tax returns - Marietta, GA
R. Greg Paszkiewicz and 2 other Tax Specialists are ready to help you
Customer: replied 11 years ago.
Reply to R. Greg Paszkiewicz's Post: SO FAR SO GOOD.   BUT THIS DOES NOT ANSWER MY QUESTION. MY QUESTION IS CAN THIS HEALTH INS.
BE CLAIMED AS A DEDUCTION ON LINE 31 OF 1040, OR DOES IT NEED TO BE INCLUDED IN MEDICAL SECTION OF DEDUCTIONS OF SCHEDULE A.

IF IT IS DEDUCTIBLE ON LINE 31 OF 1040, DO I NEED A SPECIAL FORM? IF SO WHICH ONE.

THANK YOU
Expert:  R. Greg Paszkiewicz replied 11 years ago.
If the insurance was included in your W-2 you can deduct on line 31. You determine the entry on line 31 with the self-employed health insurance worksheet which does not need to be filed with the return.

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