Question

Can my husbands S corp "pay" his health insurance premiums for tax break? He has 100 shares with only 1 employee/himself. I am listed only as an officer with 0 shares.

Forum|Forum|7 years ago
June 3, 2019
1 reply
0 views

IRS states a Scorp needs 2 or more employees to purchase insurance on the Healthcare Exchange. I did find this article on the IRS website: https://www.irs.gov/businesses/small-businesses-self-employed/s-corporation-compensation-and-medical-insurance-issues#.WRtYYSwP8lY.gmail

Towards the bottom of the page where it says in RED BOLD: "FEWER THAN TWO PARTICIPANTS WHO ARE CURRENT EMPLOYEES EXCEPTION"

It looks like the company can pay for my husbands health insurance premium that's in his name and take it as a deduction?

Only 2 people are listed as officers in the company (my husband and myself), but my husband has 100% share ownership in the company. I have my own insurance (Medicare) because I am disabled.

Thank you for your help.

T

TaxGuyBill

Employee

Yes, that is allowed, and that is probably the main reason for having a S-corporation.

Because it seems like you and your husband are not too familiar with how to use the S-corporation, it would really be to your advantage to go to a tax professional to learn how it operates, and to prepare at least the first corporate return.

M

mniccolaAuthor

Well, we have a tax guy but its been 2 weeks since they were not responding and now out of the blue they want to charge us a consultation fee all of a sudden for this answer... The IRS is "closed" right now but again I did find that IRS link about the exception rule...but was left unsure.
So in essence my husband can keep his insurance with the exchange as it currently is but instead of the monthly premium being deducted from his person checking account it can be deducted from his business checking and that will count as some sort of deduction/tax break for the business then?
(Btw, we are in the State of Illinois.)

Thanks so much for responding. I really appreciate this.