Ryan VaughnCOO of Incite Tax & Accounting. Ask me anything about your taxes.

Health Insurance for YOUR BUSINESS - PART 4 | Incite Tax #irssucks

11 Aug 2023 · 1 min

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In this segment, the speaker outlines the correct procedure for S‑corporation owners to handle health insurance premiums so they are treated as pre‑tax dollars. The three‑step process involves (1) paying the premiums directly through the S‑corp, (2) reporting the premium amount as wages on the owner’s W‑2, and (3) claiming the same amount as an “adjustments to income” deduction on the personal tax return, thereby reducing taxable income. The speaker highlights two frequent errors: failing to pay the premiums through the business and neglecting to include the amount on the W‑2. He advises consulting a qualified accountant to ensure compliance and maximize the tax benefit, and ends with a motivational reminder that profit is a choice.

Chapters

So I pay for the health insurance out of my S corp. I pick up the health insurance amount on my W-2. Then when I file my personal tax return, there is a spot on your personal tax return. It's called adjustments to income, and you put your health insurance amount there so that it is reducing your taxable income. Those are the steps you need to take in order to make sure that those are pre-income tax dollars that you're using because you do get a tax benefit for it. The two biggest mistakes we see is they're either not paying for it out of their business or they're not picking. picking it up on their W-2. Again, get a good qualified accounting professional to help you do that the right way. It's very easy to do for an accountant, but like I just explained, there are 3 steps to make sure that happens the right way so you get the max benefit without getting in trouble by doing it the wrong way. That is how you do health insurance. Remember, profit is a choice. Have the courage and wisdom to choose it.