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DanielleCPA
DanielleCPA, Certified Public Accountant (CPA)
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Experience:  Years of Experience in Business & Personal Taxes
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How are fringe benefits (health insurance premiums) paid by

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How are fringe benefits (health insurance premiums) paid by S corp on behalf of a 2%+ shareholder (sole shareholder) handled? Added to wages on W-2 line 1 but what about Form 941??FUTA Tax??
Gigi
Submitted: 9 months ago.
Category: Tax
Expert:  DanielleCPA replied 9 months ago.

Welcome and thanks for your question!

As you already mentioned, S Corp Health insurance premiums are added to wages on W-2, line 1. Accordingly, they are reported 2 on Form 941.

S Corp Health Insurance wages are not subject to Social Security or Medicare tax, so are NOT reported on W-2 boxes 3 or 5. Likewise, they are NOT reported on Lines 5a and 5c of Form 941.

 

Keep in mind that the amount of the premiums added to wages should also be reported in Box 14 of the W-2 so the taxpayer gets the deduction on their 1040.

On Form 940, the amount added to wages is included on line 3 and also as an exempt payment on line 4. The fringe benefits box for line 4 should be checked.

Please let me know if you have any follow-up questions or if you need any clarification and I will gladly assist you. Thanks and have a wonderful evening!

DanielleCPA, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 683
Experience: Years of Experience in Business & Personal Taxes
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