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

Health Insurance for YOUR BUSINESS - PART 3 | Incite Tax #irssucks

10 Aug 2023 · 1 min

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In this segment, the speaker explains the correct way for S‑corporation owners to handle health‑insurance premiums. The business should pay the premium directly and record it as a health‑insurance expense. For owners who hold more than a 2% stake, the amount of the premium must be added to their W‑2 as taxable wages. Because many owners are not equipped to manage payroll intricacies, the speaker advises using a professional payroll service to ensure the premium is reported correctly and the corporation remains in full compliance with IRS rules.

Chapters

I do want to give you the answer to how you use this in your business, specifically if you're an S corporation, because we see this done incorrectly all the time, and we do our best to help our clients be in compliance when they made a mistake and then get them to fix the future so that they are completely in compliance. You do pay for your health insurance out of your business as an S corporation. Pay the premium out of your business, book it as health insurance expense. As the owner of the S corp, assuming you own more than 2%, which in our case, all of our clients do, you have to pick up your insurance amount on your W-2 as W-2 income. And if that sounds complicated to you, it probably should because you aren't in the business of running payroll. Use a payroll company, make sure it's done correctly.