S-Corp Health Insurance Worksheet

Premium Tracking & W-2 Reporting Calculator

P1Foundation

How This Strategy Works

As a 2%+ S-Corp shareholder, you can deduct health insurance premiums above-the-line on your personal return (Form 1040, Schedule 1, Line 17). The premiums are added to your W-2 wages in Box 1, but are NOT subject to FICA taxes (excluded from Boxes 3 and 5).

When both spouses are >2% shareholders, each shareholder needs separate W-2 reporting with premiums allocated to the correct W-2. If either spouse has access to subsidized employer coverage through outside employment, that spouse is disqualified from this deduction.

Net Effect: You get a full income tax deduction without paying the 15.3% payroll tax on those premiums — saving $1,500 to $5,000+ annually per qualifying shareholder.
Entity Information

Joint bracket used for combined tax savings calculation

Shareholders

Select "Husband & Wife" if both spouses are >2% shareholders

Must own more than 2% to qualify

Annual Insurance Premiums

Enter annual amounts. Include premiums for shareholder, spouse, and dependents covered under the policy.

Tax Benefit Summary

Total Annual Premiums
$0
Income Tax Savings
$0
FICA Avoided (15.3%)
$0
Total Tax Benefit
$0

W-2 Reporting Instructions

Health insurance premiums for >2% shareholders must be reported correctly on Form W-2:

Box 1
✓ INCLUDE
$0
Wages, tips, other comp
Box 3
✗ EXCLUDE
$0
Social Security wages
Box 5
✗ EXCLUDE
$0
Medicare wages
Box 14
OPTIONAL
$0
Label as "SEHI"

Compliance Checklist

IRC Authority & Guidance

IRC §162(l) — Self-employed health insurance deduction
IRC §1372 — Treatment of S-Corp shareholders as partners for fringe benefits
Notice 2008-1 — IRS guidance on S-Corp health insurance arrangements
Rev. Rul. 91-26 — Treatment of accident and health insurance premiums

Key Requirement: Premiums must be included in shareholder's gross income (W-2 Box 1) to qualify for the above-the-line deduction. The exclusion from FICA wages (Boxes 3/5) is automatic when properly reported.