S Corp Compensation and Medical Insurance Issues
5 views
Skip to first unread message
Purty Dorn
Sep 15, 2021, 10:14:21 AM9/15/21
to 'Louis Avalos' via ClientWhysConnect
My Clients (a husband and wife) own an S Corporation. Both of them are 2 percent shareholders and also employees of the Corporation. The Corporation pays medical insurance for these shareholders (the insurance cost covers the shareholder and his family members). There is also another employee in the Corporation, who is not a family member.
Question: does this scenario qualify for Notice 2008-1, where the Corporation deduct the cost by putting it in Box 1 of the 2 percent shareholder's W-2, and the shareholder can deduct the cost above the line? Does the wife being the Corporation's employee make it disqualified?
Any help is greatly appreciated.
Purty Dorn
Lee Reams
Sep 15, 2021, 11:53:14 AM9/15/21
to clientwh...@googlegroups.com
This is a cut and paste from the medical chapter of the Big Book of Taxes. Page 7.02.04. Where did you get the idea if the spouse is also an employee that would disqualify them. I have never heard of such a thing.
--
You are subscribed to the ClientWhysConnect group.
Post Address: clientwh...@googlegroups.com
Unsubscribe Address: clientwhysconn...@googlegroups.com
For more options, visit this group at
http://groups.google.com/group/clientwhysconnect?hl=en?hl=en
Disclaimer --- You use the information shared on ClientWhysConnect.com at your own risk. The information is based upon unsubstantiated member opinions and if you have concerns about the validity of the information you should research the issue thoroughly yourself and arrive at your own conclusions. We will never share any of the information you’ve provided to the ClientWhysConnect.com list with anyone.
---
You received this message because you are subscribed to the Google Groups "ClientWhysConnect" group.
To unsubscribe from this group and stop receiving emails from it, send an email to clientwhysconn...@googlegroups.com.
To view this discussion on the web visit https://groups.google.com/d/msgid/clientwhysconnect/CADpgPD1u_92L6iF7FQJQ5WYL7vzaYPU8JNrAG5Bodd7SpUv6Bg%40mail.gmail.com.
 |
| ||||||||||||
| |||||||||||||
Purty Dorn
Sep 15, 2021, 12:17:29 PM9/15/21
to 'Louis Avalos' via ClientWhysConnect
So, he can get above the line deduction on the medical insurance cost then?
Thank you Lee.
Purty Dorn.
To view this discussion on the web visit https://groups.google.com/d/msgid/clientwhysconnect/D1D25A46-F0FE-48F8-9086-6E87388BC118%40clientwhys.com.
Van Le
Sep 15, 2021, 12:30:15 PM9/15/21
to clientwh...@googlegroups.com
Hmm… Do you want to read about the ACA impact on medical policy covering H and W S employee-shareholders, but excluding other employees?
Lee Reams Sr., BSME, EA
Chief Content Officer
CountingWorks Pro | CountingWorks | TaxBuzz | TaxCPE
p:
w:
Lee Reams
Sep 15, 2021, 12:49:17 PM9/15/21
to clientwh...@googlegroups.com
Are there other employees?
On Sep 15, 2021, at 9:17 AM, Purty Dorn <purt...@gmail.com> wrote:
So, he can get above the line deduction on the medical insurance cost then?Thank you Lee.Purty Dorn.
On Wed, Sep 15, 2021 at 11:53 AM Lee Reams <lee....@clientwhys.com> wrote:
This is a cut and paste from the medical chapter of the Big Book of Taxes. Page 7.02.04. Where did you get the idea if the spouse is also an employee that would disqualify them. I have never heard of such a thing.
<Screen Shot 2021-09-15 at 8.50.50 AM.png>
On Sep 15, 2021, at 7:14 AM, Purty Dorn <purt...@gmail.com> wrote:My Clients (a husband and wife) own an S Corporation. Both of them are 2 percent shareholders and also employees of the Corporation. The Corporation pays medical insurance for these shareholders (the insurance cost covers the shareholder and his family members). There is also another employee in the Corporation, who is not a family member.Question: does this scenario qualify for Notice 2008-1, where the Corporation deduct the cost by putting it in Box 1 of the 2 percent shareholder's W-2, and the shareholder can deduct the cost above the line? Does the wife being the Corporation's employee make it disqualified?Any help is greatly appreciated.Purty Dorn--
You are subscribed to the ClientWhysConnect group.
Post Address: clientwh...@googlegroups.com
Unsubscribe Address: clientwhysconn...@googlegroups.com
For more options, visit this group at
http://groups.google.com/group/clientwhysconnect?hl=en?hl=en
Disclaimer --- You use the information shared on ClientWhysConnect.com at your own risk. The information is based upon unsubstantiated member opinions and if you have concerns about the validity of the information you should research the issue thoroughly yourself and arrive at your own conclusions. We will never share any of the information you’ve provided to the ClientWhysConnect.com list with anyone.
---
You received this message because you are subscribed to the Google Groups "ClientWhysConnect" group.
To unsubscribe from this group and stop receiving emails from it, send an email to clientwhysconn...@googlegroups.com.
To view this discussion on the web visit https://groups.google.com/d/msgid/clientwhysconnect/CADpgPD1u_92L6iF7FQJQ5WYL7vzaYPU8JNrAG5Bodd7SpUv6Bg%40mail.gmail.com.
<PastedGraphic-2.tiff>
Lee Reams Sr., BSME, EA Chief Content Officer CountingWorks Pro | CountingWorks | TaxBuzz | TaxCPE p: 1.800.442.2477 x240 w: www.countingworkspro.com/ e: lee....@countingworks.com ![]()
![]()
![]()
See how CountingWorks can grow your practice.
--
You are subscribed to the ClientWhysConnect group.
Post Address: clientwh...@googlegroups.com
Unsubscribe Address: clientwhysconn...@googlegroups.com
For more options, visit this group at
http://groups.google.com/group/clientwhysconnect?hl=en?hl=en
Disclaimer --- You use the information shared on ClientWhysConnect.com at your own risk. The information is based upon unsubstantiated member opinions and if you have concerns about the validity of the information you should research the issue thoroughly yourself and arrive at your own conclusions. We will never share any of the information you’ve provided to the ClientWhysConnect.com list with anyone.
---
You received this message because you are subscribed to the Google Groups "ClientWhysConnect" group.
To unsubscribe from this group and stop receiving emails from it, send an email to clientwhysconn...@googlegroups.com.
To view this discussion on the web visit https://groups.google.com/d/msgid/clientwhysconnect/D1D25A46-F0FE-48F8-9086-6E87388BC118%40clientwhys.com.
--
You are subscribed to the ClientWhysConnect group.
Post Address: clientwh...@googlegroups.com
Unsubscribe Address: clientwhysconn...@googlegroups.com
For more options, visit this group at
http://groups.google.com/group/clientwhysconnect?hl=en?hl=en
Disclaimer --- You use the information shared on ClientWhysConnect.com at your own risk. The information is based upon unsubstantiated member opinions and if you have concerns about the validity of the information you should research the issue thoroughly yourself and arrive at your own conclusions. We will never share any of the information you’ve provided to the ClientWhysConnect.com list with anyone.
---
You received this message because you are subscribed to the Google Groups "ClientWhysConnect" group.
To unsubscribe from this group and stop receiving emails from it, send an email to clientwhysconn...@googlegroups.com.
To view this discussion on the web visit https://groups.google.com/d/msgid/clientwhysconnect/CADpgPD0E5DZXi%3D0YKspUDe1Lbe6iRn4U4ythv2fb2e1JTphdhA%40mail.gmail.com.
Purty Dorn
Sep 15, 2021, 12:52:53 PM9/15/21
to 'Louis Avalos' via ClientWhysConnect
Yes. There is another employee.
Purty.
To view this discussion on the web visit https://groups.google.com/d/msgid/clientwhysconnect/941B0172-AE07-400C-B8C4-DAEFE81B2D07%40clientwhys.com.
Lee T Reams
Sep 15, 2021, 1:01:55 PM9/15/21
to clientwh...@googlegroups.com
Are they proving insurance for the other employee?
Lee Reams, EA
On Sep 15, 2021, at 9:52 AM, Purty Dorn <purt...@gmail.com> wrote:
To view this discussion on the web visit https://groups.google.com/d/msgid/clientwhysconnect/941B0172-AE07-400C-B8C4-DAEFE81B2D07%40clientwhys.com.
--
You are subscribed to the ClientWhysConnect group.
Post Address: clientwh...@googlegroups.com
Unsubscribe Address: clientwhysconn...@googlegroups.com
For more options, visit this group at
http://groups.google.com/group/clientwhysconnect?hl=en?hl=en
Disclaimer --- You use the information shared on ClientWhysConnect.com at your own risk. The information is based upon unsubstantiated member opinions and if you have concerns about the validity of the information you should research the issue thoroughly yourself and arrive at your own conclusions. We will never share any of the information you’ve provided to the ClientWhysConnect.com list with anyone.
---
You received this message because you are subscribed to the Google Groups "ClientWhysConnect" group.
To unsubscribe from this group and stop receiving emails from it, send an email to clientwhysconn...@googlegroups.com.
To view this discussion on the web visit https://groups.google.com/d/msgid/clientwhysconnect/CADpgPD28gTOEkpXGrfrPf92f4Yva05UFBYCbPCa4AXSuB7FUbw%40mail.gmail.com.
Purty Dorn
Sep 15, 2021, 1:03:03 PM9/15/21
to 'Louis Avalos' via ClientWhysConnect
No they are not.
To view this discussion on the web visit https://groups.google.com/d/msgid/clientwhysconnect/4657719D-FA17-41A0-B6A8-5936010DCF72%40clientwhys.com.
Purty Dorn
Sep 15, 2021, 1:03:55 PM9/15/21
to 'Louis Avalos' via ClientWhysConnect
The other employee is not a shareholder.
On Wed, Sep 15, 2021 at 1:01 PM Lee T Reams <lee....@clientwhys.com> wrote:
To view this discussion on the web visit https://groups.google.com/d/msgid/clientwhysconnect/4657719D-FA17-41A0-B6A8-5936010DCF72%40clientwhys.com.
Lee Reams
Sep 15, 2021, 9:29:49 PM9/15/21
to clientwh...@googlegroups.com
Van provided me with some notes from a class she took which triggered the answer to your question. Only employers with 50 or more employees are required to provide their employees with medical insurance. Thus, in your case where there is only employee who is not a stock holder the owners can discriminate and reimburse themselves following these rules:
· S-Corporation Shareholder - Be a more-than-2% S corporation shareholder, the shareholder's wages (i.e., the Medicare wages from box 5 of Form W-2) from the S corporation are treated as his earned income, and the premiums paid or reimbursed by the S corporation are shown as wages on Form W-2. The policy can be either in the name of the S corporation or in the name of the shareholder.
o If the S corporation pays the premiums, the premium amounts are included on Form W-2 as wages.
o If the shareholder pays the premiums, and the policy is in the shareholder's name, the S corporation must reimburse the shareholder and report the premium amounts on the W-2 as wages. Otherwise, the insurance plan won't be considered established under the business.
To view this discussion on the web visit https://groups.google.com/d/msgid/clientwhysconnect/CADpgPD2tGMJh3MvGJDkXqdFCWGARYZjB%3DdJM7%2BNH9vXXzjZ34A%40mail.gmail.com.
Purty Dorn
Sep 15, 2021, 10:19:16 PM9/15/21
to Lee Reams, 'Louis Avalos' via ClientWhysConnect
Wonderful. Thank you so much for the help Lee.
In my client case, the Corp pays the Health Insurance;
So, the amount will be treated as the 2% shareholder's income, and be posted on W-2 Box-5 only?
This means that the shareholder does not have to pay income tax on the amount?
Do I get it correctly?
Purty Dorn.
Lee Reams
Sep 15, 2021, 10:19:54 PM9/15/21
to clientwh...@googlegroups.com
And Van...
To view this discussion on the web visit https://groups.google.com/d/msgid/clientwhysconnect/CADpgPD0o1OCqK0%3DTiPWrC7SJUHWPZQW3oYj34baqNH0fjPcENw%40mail.gmail.com.
Reply all
Reply to author
Forward
0 new messages