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Are Health insurance premiums and SEP IRA contributions included in W-2's Box 1, 3, and 5 as Taxable Wages for "LLC - Filing as Chapter S" Employees > 2% owners?

Forum|Forum|7 years ago
June 1, 2019
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Best answer by dmertz

Health insurance premiums paid by the S corporation for > 2% owners must be included in boxes 1, 3 and 5 of that individual's W-2.

Except for elective deferrals to a SARSEP established before 1997, SEP-IRA contributions are employer contributions, not employee contributions, and appear nowhere on a W-2. They are deductible on the S corporation's tax return.

D

dmertzAnswer

Employee

Health insurance premiums paid by the S corporation for > 2% owners must be included in boxes 1, 3 and 5 of that individual's W-2.

Except for elective deferrals to a SARSEP established before 1997, SEP-IRA contributions are employer contributions, not employee contributions, and appear nowhere on a W-2. They are deductible on the S corporation's tax return.

L

latravers

That is incorrect. Health insurance premiums for 2% shareholders should be reported in Box 1 of the W2 only. NOT in boxes 3 or 5.

Q

qbteachmt

Employee

It depends on the payment terms:

However, these additional wages are not subject to Social Security, or Medicare (FICA), or Unemployment (FUTA) taxes if the payments of premiums are made to or on behalf of an employee under a plan or system that makes provision for all or a class of employees (or employees and their dependents). Therefore, the additional compensation is included in the shareholder-employee’s Box 1 (Wages) of Form W-2, Wage and Tax Statement, but is not included in Boxes 3 and 5 of Form W-2.