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Business Owners May Need to Report Medical Insurance Premiums as Wages

By November 10, 2020December 16th, 2022Legal

Business owners who are covering their health insurance premiums through a company in which they are a greater than 2% S-Corp shareholder-employee need to remember that these premiums are deductible by the S-Corp and therefore reportable as wages on the shareholder-employee’s Form W-2 and subject to income tax withholding. You’ll find this additional compensation included in the shareholder-employee’s Box 1 (Wages) of Form W-2, Wage and Tax Statement, but is not included in Boxes 3 and 5 of Form W-2 as these additional wages are not subject to SSI, FICA or FUTA tax.

A 2% shareholder is someone who owns more than 2% of the business or controls more than 2% of voting power of all stock of the corporation. Not sure if you’re a more than 2% owner? Ask your comptroller, then make sure this compensation is reported appropriately. For more details, visit:

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