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Lev, For a 100 percent shareholder of S corporation with no…

Good afternoon Lev, For a 100...
Good afternoon Lev,
For a 100 percent shareholder of S corporation with no other employees in the corp, could he write in the minutes, that he decides as the corporate main officer that the corporation should pay health insurance not only for him but also for his entire family as well?
If yes, could he also incorporate in the minute books that all the out of pocket medical expenses should be paid for him and his family members?
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Answered in 38 minutes by:
3/7/2018
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 33,115
Experience: Taxes, Immigration, Labor Relations
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He definitely can - but that is not required.

That is allowed for the employee and for dependents.

Assuming you know - these will be reported a wages - correct?

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Customer reply replied 4 months ago
My question is addressed regarding the corporate officer who is the sole employee and of course would report his wages.

Correct - but these are medical experiences for the employee - so medical expenses includes those for the employee, his/her spouse and dependents.

There is no need for specific documents to include the spouse and dependents.

You may write in the minutes - but that is not required and will not be questioned.

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Customer reply replied 4 months ago
In other words, he could have the S corporation pay for the health insurance of his whole family and all the copayment of the family. Is that correct?

Yes - that is correct.

But all these amounts will be reported as wages.

Health insurance premiums may be excluded from social security and Medicare taxes - only include into box 1 W2.

Co-payments and other out-of-pocket medical expenses - are reported in boxes 1,3,5 W2.

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Customer reply replied 4 months ago
what if he only pays health insurance premium and HSA for himself only. Do these benefits would be reported as income on box1 of W2?

Yes - these will be reported in box 1 for all shareholder-employees who owns more than 2%

Specifically

-- HSA contributions are included into box 3 and 5

https://www.irs.gov/pub/irs-drop/n-05-08.pdf

--see also page 16

https://www.irs.gov/pub/irs-pdf/p15b.pdf

Partnerships and S corporations. Partners and 2% shareholders of an S corporation aren't eligible for salary reduction (pre-tax) contributions to an HSA.

Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 33,115
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