Adding a One-Time S Corp Shareholder Health Premium Update

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Adding a One-Time S Corp Shareholder Health Premium Update

Background

Greater than 2% shareholder employees of an S corporation must have company-paid health, disability, or accident insurance premiums reported as taxable wages to the shareholder, subject to federal and state income tax withholding.  However, these wages are not subject to FICA (Social Security and Medicare) or unemployment taxes.  

To Enter a Lump Sum For The Year

If you have already run payrolls for the shareholder this year, and need to enter a lump sum of health insurance premiums at the end of the year in order for taxable wages to be correct on their W-2, follow the steps below.  You can also set up a recurring contribution to happen each time the shareholder employee is paid.  For details, see How To Add S Corp Health Insurance Premiums To Each Payroll.

  • Settings > Payroll Settings > Update S Corp Owner Health Insurance
  • Select the employee’s name.
  • The effective date of this entry will be December 31st of the current year.  You also have from January 1st until January 10th of the following year to add a lump sum for the previous year.  After January 10th, the update will be made for the current year.
  • Enter the dollar amount of company-paid premiums.
  • Click Save.  

If you need to make additional updates for the year, you can come back to this page, and add more entries.  Each entry you make will appear on the Payroll Details report for this employee.  If you need to make a correction that requires subtracting premiums, please contact Support and they will make the correction for you.

Viewing Year-To-Date S Corp Contributions

You can view the year-to-date S Corp contributions entered for this employee on the Payroll Details Report.  Any entries you make with the lump sum page will have an effective date of December 31st of that year, so when running the report, be sure the end date is set to 12/31.

Viewing S Corp Contributions on Form W-2

When you run the W-2 Summary Report and create the actual W-2 forms, the federal and state taxable wages will increase by the amount of the contribution.  Box 14 will also show the amount of the contribution with a label of “SEHI” for Shareholder Employee Health Insurance.

 

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