As a follow-up to my post of the other day when I talked about how to deduct shareholder health insurance on an S-Corporation, the ACA has complicated the waters somewhat. I want to clarify what happens when a corporation reimburses an individual health insurance plan to a more than 2 percent shareholder. If the corporation has a group health plan compliant with the ACA, everything is the same as it has always been. Put the insurance on the W2 and deduct on the personal return as self-employed health insurance. The problem comes in when the corporation reimburses the insurance. If the shareholder is the only employee in the corporation, there is an exception for a single employee that does not require compliance with the ACA; do the above and everything is fine. The problem comes in if there are more than the one employee. If that employee gets their health insurance reimbursed, then the corporation is not in compliance with the ACA. This is BAD – the corporation is subject to a maximum $100 a day penalty ($36,500 per year – AHHH!) What if the other corporate employees don’t get their individual insurance reimbursed to them? Then the reimbursement to [...]
CPA Tax Musings: How to Get a Copy of Your Prior Year Tax Information
If you need to get your previous years federal tax information (either complete tax returns or transcripts), you can get them from the IRS. See this tip from the Service about the details: http://content.govdelivery.com/accounts/USIRS/bulletins/f01e9f?reqfrom=share Figure that it will take 5-10 business days for transcripts ordered online or by phone to be delivered to you. Transcripts ordered by mail will take about 30 days and complete tax returns (up to six years back) have to be ordered by mail and cost fifty dollars; they will take around 75 days to be delivered. At least there is a way to get the information beyond the taxpayer or a previous preparer. For financial, accounting and tax musings, You can count on us to count for you! Email: bstonercpa@sbcglobal.net Phone: 818-317-6035 Website: www.briantstonercpa.com Android and the IPhone: Has been Featured On https://twitter.com/bstonercpa
Burbank CPA Tax Musings: Make Sure Your S-Corporation Can Deduct Shareholder Health Insurance
Well, it is almost time to file your W2s with the government again (you should have already have gotten the employees their copies). Just remember that if you own an S-Corporation you have to jump through extra hoops to be able to deduct your shareholder health insurance (every shareholder owning more than 2% of the S-Corp and their families insurance either paid through a corporate group plan or an individual plan reimbursed by the corporation.) This rule was devised by the IRS in 2008 and only applies to S-Corporations. The shareholders named above have to have their insurance included on their W2s as salary that is only taxable for federal and state income taxes (not subject to FICA, Medicare and any state disability or most local taxes), so box 1 and 16 of the 2014 W2s have to be increased by the insurance, and usually can be disclosed as ’2% SH Ins” in box 14 (but not required). Then the additional salary will be reduced by a “Self Employed Health Insurance” deduction in the adjustments section on page 1 of the form 1040. This effectively allows the S-Corporation to deduct the insurance without any tax consequences to the shareholder. This is the ONLY [...]