We recently discussed the treatment of company health insurance for S corporation owners, which has prompted some reader questions:
If a sub-s corp. has a health ins. plan for all employees which the owner is a part of, do you still have to include the owners share of ins. premiums on a w-2?
Yes. The special S corporation shareholder rules apply to add the premiums to shareholder W-2 income even if all employees are covered by the plan.
The S-corp pays health insurance premiums for all employees. Now, if the wife is an employee of the >2% shareholder, and the policy is in her name, and the >2% shareholder is on her policy, does her premium need to go on her W2 as wages? Or,can her premiums be deducted on the S-corp as an employee fringe benefit the same way the other employees are?
The rules on health insurance for fringe benefits for 2% S corporation shareholders also apply to "relatives" of shareholders, as defined by Sec. 318. This includes spouse, parents and children, for example, but not siblings. So you can't avoid the rules by running the health insurance through a spouse. In this case, the premiums would go on her W-2.
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