Health and accident insurance premiums paid by your corporation on your behalf must be reported as income on your annual Form W-2. If the insurance premiums are not included in the W-2 then the IRS will not allow the corporation to deduct them. The Shareholder, in most cases, is allowed to have an equal deduction on their individual tax returns. At the end of the day, there is no impact other than the additional headache of getting the amounts reported correctly on the W-2.
One thing to be aware of is that amounts added to the W-2 should not be subject to any payroll taxes.
If this affects you and you would like additional information on how to report company paid health insurance premiums, or if you are a greater than two percent S corporation shareholder receiving this taxable income and would like information about what this means to you, please contact us at info@tysllp.com.
