S-Corporation - Health Ins Adj

CRITICAL FOR TAXES:  If you are filing taxes as a S-corporation you have to adjust the officer payroll for Health Insurance fringe benefits.

WHAT IS THIS?

The IRS has specific reporting requirements in order to deduct your health insurance premiums for S-Corporations.  As long as the S corporation pays the premiums of the shareholder, or reimburses the premiums to the shareholder, then the shareholder qualifies for the self-employed health insurance deduction on the front of the 1040 if the S-corporation reports the amounts in Box 1 of the W-2 for the same year.

WHAT DO YOU NEED TO DO?

You will need to calculate the TOTAL AMOUNT of your health insurance premiums to be paid for the current year by the company. You will need this amount to complete your payroll for the year.

IMPORTANT NOTE: If this health insurance is not added to your Wage Reporting and W-2, the IRS will DISALLOW your deduction for health insurance premiums.  You need to add it if you manage your payroll or request your payroll company add it for you.  Surepay instructions https://www.cillierscpa.com/surepay.php

WHAT IF I HAVE NOT TAKEN A WAGE?

If you have paid health insurance premiums and want them to be 100% deductible, you will need to have a WAGE from your corporation of AT LEAST the amount of the annual premium.

WHAT ACCOUNT SHOULD MY HEALTH PREMIUMS BE PAID FROM?

Your health insurance premiums should be paid by your corporation. By doing this, you will ensure the 100% deductibility of these premiums.

IF YOU HAVE PAID YOUR PREMIUMS OUT OF YOUR PERSONAL ACCOUNT – Your Corporation will need to reimburse you for the total amount of your premiums paid.

If you do not have enough funds in the corporation to reimburse yourself, you will need to reclassify other distributions as a reimbursement for this insurance.

WHAT IF I HAVE OTHER EMPLOYEES I AM PAYING?

If you have other employees in your company, you will need to be sure you are meeting the requirements to avoid the discrimination rules. The benefit your corporation provides to you – you may have to offer to your employees.  NOTE – This does not apply to hiring your spouse or your children in the business.

WHAT IS INCLUDED IN THE HEALTH INSURANCE PREMIUM TOTAL?

You will need to include the following types of insurance premiums paid (or to be paid) between Janaury and December:

• Health Insurance Premiums
• Dental Insurance Premiums
• Medicare Part B, C, and D Premiums – These are deducted from you Social Security check. You will need to remember to be reimbursed by your S-Corporation for these premiums. Include Medicare Supplemental Insurance Premiums.

Be sure to account for changes in your premiums that occur throughout the year and in the month of December.

Action:  Use the worksheet below to calculate the premiums you have paid or will have paid:

• The amount reported should only be amounts paid for you, your spouse, and your children that were paid for by the S-Corporation.
• This does NOT include any premiums paid from spouse’s work or any other pre-tax deducted premium.
• The amount reported does not include medical expenses, only insurance premiums 
• Make sure to account for December premium changes or premiums paid in December for January
• Use this to enter the insurance in your payroll or contact your payroll company to do it for you
• Surepay instructions https://www.cillierscpa.com/surepay.php

Worksheet to help calculate the payroll adjustment.   (2024 example)

NAME(S) OF INSURED: ________________________________

A. HEALTH PREMIUMS PAID JANUARY TO NOVEMBER(NOT MEDICARE):                $_____________________

B. HEALTH PREMIUMS FOR DECEMBER 2024(NOT MEDICARE):                                $_____________________

(THIS AMOUNT MAY DIFFER FROM YOUR PRIOR MONTHS PAYMENTS)

C. TOTAL DENTAL PREMIUMS FOR 2024(NOT MEDICARE):                                           $_____________________

D. TOTAL MEDICARE PART B, C, AND D PREMIUMS FOR 2024:                                    $_____________________

(INCLUDE MEDICARE SUPPLEMENTAL INSURANCE ON THIS LINE)

TOTAL OF ALL PREMIUMS FOR 2024(ADD A, B, C, & D):                                                 $_____________________

IF YOU HAD LONG TERM CARE PREMIUMS FOR 2024 PLEASE ENTER THE AMOUNT BELOW:

LONG TERM CARE PREMIUMS FOR 2024 - TAXPAYER:                                                    $_____________________

LONG TERM CARE PREMIUMS FOR 2024 - SPOUSE:                                                         $_____________________