Question

sch K-1 health insurance family member of shareholder

Forum|Forum|2 years ago
March 4, 2024
1 reply
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Family business changed over from C to S Corp in 2023, I am a family member of a 50% shareholder but I hold no shares personally. I can't figure out how to enter an above the line deduction for health insurance.

M

Mike9241

this is a must to be able for the 2% shareholder to deduct the health insurance

For the S corporation more-than-2-percent shareholder-employee to deduct his or her cost of health insurance, the S corporation has to either pay the premiums to the insurance company or reimburse the more-than-2-percent shareholder-employee for the cost of his or her individually purchased insurance. Notice 2008-1
Now that you have the insurance cost on the S corporation’s books, you take the premiums and
add them to the more-than-2-percent shareholder-employee’s W-2 (box 1). Also report in box 14 of the S-2.

on the corporate return include on the same line as the shareholder's other compensation.

whose return are you asking about? your's? you get no health insurance deduction

when entering the K-1 there should be a question about the premiums and Medicare wages.

if not done properly like no compensation to the s/h/improper method of paying insurance/ failure to properly report on 1120S or W-2/ the deduction is not allowed. However, if it's an issue of putting the properly paid premiums on the wrong line for the 1120s or failure to properly report eligible payments on the w-2 in the proper places, amended returns can be filed.

A

Amber2024Author

Yes, it is my personal tax return. I don't receive a sch. k-1 as I don't own any shares but I was told by our business accountant to enter my self employed health insurance amounts into the K-1 as 50% shareholder but claim 0 business income for top of the line deduction. I have reported as advised 1120S but I'm not sure where to enter the insurance amount to have it calculate my AGI for proper tax bracket. I tried box 13 code M because I read that is the proper box/code but TT has that listed as research activities. I looked through the other codes but am not finding one that fits.

DaveF1006

To clarify, you mention family business but what specifically is your ownership interest in the S-Corp? You mention you don't own shares and to deduct health insurance premiums, you would need to be at least a 2% owner of the S-Corp.

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