In 2008, the IRS provided guidance on how to deduct Shareholder Health Insurance on an S Corporation. The only way to deduct this is to treat the insurance as salary (not subject to payroll tax withholdings) and put this on the shareholder’s W2. Then the insurance can be deducted on the taxpayer’s individual tax return as self employed health insurance. You need to stick to this procedure to be able to deduct the insurance, otherwise the IRS will disallow! Feel free to call or email with questions.
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