Be sure to follow the special IRS rules that allow you to deduct your health insurance premiums.
These rules are particularly important if your S corporation employs your parents and/or non-dependent children who don’t own any stock in your corporation.
And be alert: Your family will be out the money paid for the health insurance if you will handle things in the wrong way.
That’s true. You’d get a significant fat zero deduction if your S-corporation claimed an insurance deduction for the cost of health insurance premiums to cover your non-stock-owning relatives.
Our fact-filled article can help you in three ways:
1. S corporation owner insurance basics.
If you own more than 2-percent of an S corporation and you want to deduct health-insurance premiums, you need to follow three vitally essential steps. We’ll explain all three levels in easy-to-understand language.
2. We’ll explain the “family member surprise.”
The surprise is that your family members who work for your S corporation are deemed (by tax code Section 318 attribution rules) to own the same percentage of stock as you do! And this means that the rules that govern how you deduct your health insurance also apply to individual family members. Are you confused? We’ll un-confuse you.
3. We’ll explain stock ownership by “attribution.”
In recent guidance, the IRS concluded that you could take the self-employed health insurance deduction if you own the stock solely by attribution (provided you meet all the other requirements). We’ll explain them to you in a language you can understand. And if you’ve messed up, we’ll show you how to fix the errors you made.