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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 29516
Experience:  Taxes, Immigration, Labor Relations
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I am the only shareholder of an s corporation. My wife works

Customer Question

I am the only shareholder of an s corporation. My wife works in the business as an employee. We have 2 other employees in the business. We have a health insurance plan (for myself, my wife and children) that is paid for by the corporation. 1) Do I report
the entire health insurance premium on my W-2 in box 1 or do I need to divide between my wife and my W-2? 2) How will it be reported on the tax return - Form 1120S?
Submitted: 1 year ago.
Category: Tax
Expert:  Lev replied 1 year ago.

You may report the cost of health insurance as your income or as your spouse's income - that makes no difference for tax treatment.

Your spouse is treated as indirect owner of S-corporation.
Several issues...

1.S-corporation wants to deduct the cost health insurance premiums - correct?

If yes - these expenses must be reported as wages for more than 2% shareholder-employee - and deducted as wages.

Otherwise - there is no deduction.

2.The shareholder- employer might want to deduct that cost on his/her tax return - correct?

If yes - that amount must be reported as wages on W2 form..

So that woudl be for the taxpayer's advantage to report health insurance premiums in box 1 as wages (but do not include that amount in boxes 3 and 5)