Health Insurance Premiums Paid for S-Corporation Shareholders

Health Insurance Premiums Paid for S-Corporation Shareholders

Download: Health Insurance Premiums Paid for S-Corporation Shareholders.

To comply with the Internal Revenue Service regulations regarding health insurance provided to an employee who owns a 2% or greater interest in an S-Corporation (a “2% shareholder-employee”), the health insurance premiums for the 2% shareholder-employee must be reported on the shareholder’s Form W-2. In addition, the health insurance policy should be issued under the Corporation’s name.

Under these regulations, the S-Corporation will be entitled to deduct the insurance premiums, and the 2% shareholder-employee will be entitled to deduct, as an adjustment to gross income, the amount reported on the W-2. The amount of the health insurance premiums included in the 2% shareholder-employee’s W-2 will be subject to income tax, but will not be subject to Social Security, Medicare or Federal and State Unemployment taxes.

If we prepare your payroll, please provide us with the health insurance premiums paid on behalf of 2% shareholder-employees. We will include this amount in the Corporation’s 4^th quarter and annual payroll reports on the W-2s.

If we do not prepare your payroll, please provide your payroll service with the amount of health insurance you have paid in 2025 on behalf of a 2% shareholder-employee (and their dependents).

If you have any questions, please contact our office at (858) 483-7500 or you can email us at inbox@reasontax.com.

Disclosure

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any company names noted herein are for educational purposes only.

All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. All economic and performance data is historical and not indicative of future results. Market indices discussed are unmanaged. Investors cannot invest in unmanaged indices. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards.

Investing in securities in emerging markets involves special risks due to specific factors such as increased volatility, currency fluctuations and differences in auditing and other financial standards. Securities in emerging markets are volatile and can decline significantly in response to adverse issuer, political, regulatory, market, or economic developments.

An index is a statistical measure of change in an economy or a securities market. In the case of financial markets, an index is an imaginary portfolio of securities representing a particular market or a portion of it. Each index has its own calculation methodology and is usually expressed in terms of a change from a base value. Thus, the percentage change is more important than the actual numeric value. An investment cannot be made directly into an index.

Investing in fixed income securities involves credit and interest rate risk. When interest rates rise, bond prices generally fall. Investing in commodities may involve greater volatility and is not suitable for all investors. Investing in a non-diversified fund that concentrates holdings into fewer securities or industries involves greater risk than investing in a more diversified fund. The equity securities of small companies may not be traded as often as equity securities of large companies so they may be difficult or impossible to sell. Neither diversification nor asset allocation assure a profit or protect against a loss in declining markets. Past performance is not an indicator of future results.

Financial Planning offered through Reason Financial, a state Registered Investment Advisor. Investment advice offered through Merit Financial Group, LLC an SEC Registered Investment Advisor. Merit Financial Group and Reason Financial are separate entities. Tax related services offered through Reason Tax Group. Reason Tax Group is a separate legal entity and not affiliated with Merit Financial Group, LLC. Sean P. Storck CA Insurance Lic#OF25995 and Steven W. Pollock CA Insurance Lic#OE98073

Health Insurance Premiums Paid for S-Corporation Shareholders

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