Tax Update Blog: Permalink
« Previous · Tax Update Blog Home · Next »
More S corporation fringe benefit questions answered!
January 28, 2009
Considering the amount of search engine traffic we get at our old posts on S corporation health insurance, the issue must be perplexing to business owners. The old posts still get questions. We tackled one yesterday. Today we do three:
I'd also like to know how it should be disclosed on the financial statements because of the difference in gross wages shown on the financials vs. the higher gross wages per payroll tax reports and W-2s.
Normally fringe benefits, including shareholder health insurance, will be under the "employee health insurance" line on internal financial statements, unless you have a separate line for shareholder health insurance.
If I add this amount to the taxable fed and state on the W-2, do I also have to account for this on the 941?
Form 941, the Employer's Quarterly Federal Tax Return, has a line for "Wages, tips, and other compensation." The total of Box 1 on your employee W-2s should tie to the total of this line on your four 2008 Forms 941 -- so yes, it should be reflected on the 941.
When adding my health premiums to my W-2 form on line 1 and 14 do i also have to increase the amount for state income on line 16? I live in Michigan if that matters.
I am not aware of any state that taxes S corporation health insurance differently than the federal government (Update: I am now - Pennsylvania). It appears that Michigan makes no such modification to federal W-2 income, so the federal and Michigan treatment would be the same.
Link: Tax Update posts on S corporation shareholder health insurance
Bookmark: del.icio.us • Digg • reddit
Tax Updates
Subscribe to Tax Updates
The items included in the Tax Update Blog are informational only and are not meant as tax advice. Consult with your tax advisor to determine how any item applies to your situation.
Joe Kristan writes the Tax Update items, and any opinions expressed or implied are not neccesarily shared by anyone else at Roth & Company, P.C. Address questions or comments on Tax Updates to
Search Tax Updates
Friends and Neighbors
Economics Nerds
Hard-Core Tax Nerds
Gigablogs
Insurance Folk
Goners
Legislation
Tax Update Data Feeds
Comments
Pennsylvania, whose individual tax code is NOT connected to federal in any way (we have an actual flat tax as well), considers S corporation health insurance just the same as C corporation health insurance -- that is, deductible by the corporation as a business expense but not taxable income to the shareholder. This also applies to PA municipalites under Act 511.
Posted by: Mary Lew Kehm, CPA | January 28, 2009 2:44 PM