medical insurance for officers paid by s -corp company
Total Views: 56
can you have medical insurance pd to officers in s corp without having them be employees. it does not have inventory. puts stripes on new cars in dealerships.
Answer
Officers of an S-Corp are employees and the medical insurance paid on their behalf must be added to their W-2 wages.
Answer
The specific ruling applies to more than 2% owners of the corporation. If policies are included as benefits to all the employees, including the owners, it would be a non-taxable fringe benefit, deductible to the corporation and treated as all other medical insurance paid for an employee by an employer, as a pre-tax deduction.
Please mark this question as solved. Thank you.
Answer
Section 106 provides an exclusion from the gross income of an employee for employer-provided coverage under an accident and health plan. A 2-percent shareholder is not an employee for purposes of §106. Treas. Reg. §1.106-1; section 1372(a). Accordingly, the premiums are not excludible from the 2-percent shareholder-employee’s gross income under §106.
The above is from this link http://www.irs.gov/irb/2008-02_IRB/ar10.html
Publication 15-B says 2% shareholders are NOT considered employees for purposes of cafeteria plans
http://www.irs.gov/publication...
