What You Need to Know?
Are you an S Corporation owner? You must learn how to deduct health insurance premiums and why deducting these premiums is so important for your company. These deductions are a great way to maximize your tax benefits. The IRS lets shareholder-employees (the ones owning more than 2% of the company) claim an above-the-line deduction for health insurance premiums, but only if those shareholder-employees meet certain conditions.
If you wish to qualify for these deductions, your S Corporation has to pay or reimburse these insurance premiums, reporting the paid amount as income in Box 1 of your W-2. In other words, you’ll add these health premiums to your taxable wages for income tax purposes. However, they won’t be subject to Social Security, Medicare (FICA), federal unemployment (FUTA), or anything else. As a result, you may deduct these premiums on line 10 of your Form 1040. It’ll reduce your adjusted gross income. That’s how easy it is to deduct premiums!
But here’s a catch: If you haven’t reported health insurance premiums properly on your W-2, you won’t be eligible for these deductions. Make sure your payroll provider or accountant handles this correctly each year. That’s how you can take advantage of this great tax-saving opportunity. As an S Corporation owner, you can now manage your health insurance costs, a valuable strategy for small business tax planning in 2025
