As experienced business accountants in Bel Air, we understand S corporation owners’ unique challenges. One area where many business owners need guidance is maximizing their health insurance deductions. Let’s dive into what you need to know to maximize your benefits while staying compliant.
The 3 Critical Steps for S Corporation Health Insurance Deductions
If you’re a business owner with more than 2% ownership in an S corporation, claiming health insurance deductions requires some attention to detail. Be sure you and your team is aware of these 3 steps for S Corp health insurance deductions:
- Corporate Documentation: Ensure the insurance costs are properly recorded in your S corporation’s books.
- W-2 Reporting: The corporation must include health insurance premiums on your W-2 as taxable income (note: these aren’t subject to payroll taxes).
- Personal Tax Return: Claim the health insurance deduction as an above-the-line deduction on Schedule 1 of Form 1040, if eligible.
Family Matters: Health Insurance for Relatives in Your S Corp
As your trusted small business accountant, we often remind clients that these rules extend beyond just the primary owner. The same three-step procedure applies to family members working in your S corporation, including:
- Spouse
- Children
- Grandchildren
- Parents
- Grandparents
- Even great-grandchildren and great-grandparents
Important Insight: Something many business owners don’t realize: even if your family members don’t own any stock, these rules still apply to them.
Common Pitfalls and How to Avoid Them
We’ve seen the consequences of mishandling these deductions:
- Lost health insurance deductions for family members
- Zero deductions for the S corporation
- Potential audit flags due to invalid deductions
Why Choose Expert Guidance?
Getting these deductions right requires in-depth knowledge of tax regulations and S corporation rules. As your dedicated team, we ensure:
- Accurate documentation and reporting
- Maximized legitimate deductions
- Peace of mind knowing your taxes are handled correctly
Need to Correct Past Returns?
If you’re concerned about how you’ve handled these deductions in the past, don’t worry. Our team of experienced CPAs, tax accountants, and consultants can help you:
- Review previous filings
- Amend returns if necessary
- Ensure proper tax deductions moving forward
Contact Your Trusted Bel Air Business Accountant Today
Don’t let confusion about health insurance deductions cost you money. At Plack Group, we’re here to help ensure you’re maximizing your benefits while staying fully compliant with tax regulations.
Ready to Get Expert Help?
Contact our office today for a consultation with a knowledgeable small business accountant. We’re here to help you navigate the complexities of S corporation tax regulations and ensure you’re making the most of your health insurance deductions.
Our firm of expert Bel Air accountants specializes in serving high-income professionals, small business owners, and mid-size business owners. With years of experience in S corporation taxation, we provide the guidance you need to make informed financial decisions for your business.
