Question

sch K-1 health insurance family member of shareholder

Forum|Forum|2 years ago
March 4, 2024
1 reply
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Family business changed over from C to S Corp in 2023, I am a family member of a 50% shareholder but I hold no shares personally. I can't figure out how to enter an above the line deduction for health insurance.

M

Mike9241

this is a must to be able for the 2% shareholder to deduct the health insurance

For the S corporation more-than-2-percent shareholder-employee to deduct his or her cost of health insurance, the S corporation has to either pay the premiums to the insurance company or reimburse the more-than-2-percent shareholder-employee for the cost of his or her individually purchased insurance. Notice 2008-1
Now that you have the insurance cost on the S corporation’s books, you take the premiums and
add them to the more-than-2-percent shareholder-employee’s W-2 (box 1). Also report in box 14 of the S-2.

on the corporate return include on the same line as the shareholder's other compensation.

whose return are you asking about? your's? you get no health insurance deduction

when entering the K-1 there should be a question about the premiums and Medicare wages.

if not done properly like no compensation to the s/h/improper method of paying insurance/ failure to properly report on 1120S or W-2/ the deduction is not allowed. However, if it's an issue of putting the properly paid premiums on the wrong line for the 1120s or failure to properly report eligible payments on the w-2 in the proper places, amended returns can be filed.

A

Amber2024Author

Yes, it is my personal tax return. I don't receive a sch. k-1 as I don't own any shares but I was told by our business accountant to enter my self employed health insurance amounts into the K-1 as 50% shareholder but claim 0 business income for top of the line deduction. I have reported as advised 1120S but I'm not sure where to enter the insurance amount to have it calculate my AGI for proper tax bracket. I tried box 13 code M because I read that is the proper box/code but TT has that listed as research activities. I looked through the other codes but am not finding one that fits.

A

AmeliesUncle

The way this works is the company deducts the health insurance on the S corporation tax return as wage income to the qualifying shareholder, then the shareholder adds the wage income on his or her personal tax return, then deducts it as self-employed health insurance to the extent it is allowed for the individual taxpayer. In that way, the insurance deduction comes from the reduced income reported to the shareholder on their K-1 form.

Since you don't have a K-1 form evidently, I don't see how you can take personal advantage of the deduction on your personal tax return, since you report no income from the S corporation on which the deduction would be taken. You would be entering wage income that includes the health insurance premiums and then deducting that amount back out, resulting in no net tax benefit.

If you determine a legal way of qualifying for the health insurance deduction, you would have to enter a K-1 schedule from the company and on the screen that says Other Situations, choose the I personally paid health insurance premiums for myself/family and this S corporation paid me wages:

On the next screen enter your Medicare wages and health insurance payments:

The deduction will appear on line 17 of schedule 1 of your form 1040.

To view your form 1040 and schedule 1 to 3:

Choose Tax Tools from your left menu bar in TurboTax Online
Choose Tools
Choose View Tax Summary
See the Preview my 1040 option in the left menu bar and click on it
Choose the Back option in the left menu bar when you are done

Yes, you can deduct it.

Borrow your mom's K-1 and enter it into your tax return, but enter zeros/blank for all of the income/loss amounts. Then follow the directions that Thomas gave you.

https://www.irs.gov/pub/irs-wd/201912001.pdf