S Corp Paid Medical Insurance

Greg Hatfield Updated by Greg Hatfield

An income item is provided by the program for S Corp Paid Medical Insurance. To add this item for an employer, go to the Payroll Setup tab on the Edit Employer/Payer Information screen. Under the Income Items list click the Add button. Scroll down the Full Name list to find S Corp Paid Medical Insurance. See Income Items for more information on adding income items.

The S Corp Paid Medical Insurance income item provided is set to be subject to income taxes only. It is the user's responsibility to determine if the taxability settings are correct for their purposes.

Below is an excerpt from Pub 15 (Circular E) Employer's Tax Guide, Wages and Other Compensation.

Health insurance plans. If you pay the cost of an accident or health insurance plan for your employees, including an employee’s spouse and dependents, your payments are not wages and are not subject to social security, Medicare, and FUTA taxes, or federal income tax withholding. Generally, this exclusion also applies to qualified long-term care insurance contracts. However, for income tax withholding, the value of health insurance benefits must be included in the wages of S corporation employees who own more than 2% of the S corporation (2% shareholders). For social security, Medicare, and FUTA taxes, the health insurance benefits are excluded from the wages only for employees and their dependents or for a class or classes of employees and their dependents. See Announcement 92-16 for more information. You can find Announcement 92-16 on page 53 of Internal Revenue Bulletin 1992-5.

How did we do?

Reordering the columns on the Payroll Data Grid

Setting up paycheck items