S-Corp Health Insurance Premiums Deductions
As an S-Corp Shareholder/employee, can I deduct insurance premiums paid by the S-Corp?
Hey folks, today I wanna chat about how you can save some money on your taxes as an S-Corp owner by deducting health insurance premiums. whoop whoop.
So here's the deal - premiums paid by your S-Corp for you, your spouse, and dependents are not automatically tax-free like they are for employees. Bummer, I know.
But here's what you can do - have your S-Corp include the cost of those premiums to your W-2 income as reasonable compensation. Make sure you have a written policy spelling that out.
Now, since S-Corp owners are considered self-employed, you get to deduct those premiums personally on your personal tax return, Form 1040 as self-employment health insurance, rather than as a business expense. Pretty sweet tax hack if you ask me.
Keep all your premium invoices and whatnot in case the IRS comes knocking. You know how they are.
Speaking of IRS, if your Scorp pays the health insurance premiums and they are not included in your wages then they would be considered distributions. An as an S-corp owner you don't want to take more in distributions than you do in wages. That would be a very costly mistake triggering back payroll taxes, penalties, and interest.
Oh and if you're over 65, looks like you can potentially deduct Medicare and other medical expenses too. Saved you some Googling there.
So in a nutshell, with the right setup, S-Corp owners can deduct health premiums paid by your company and keep more of your hard-earned money. But definitely consult your accountant to make sure you've checked all the boxes.
Alright, that's my quick guide on how to save on taxes by deducting health insurance premiums as an S-Corp owner.
You can learn more about this and other topics on our blog at MyAccountingCrew.com/blog
