S-Corp Health Insurance Worksheet

Premium Tracking & W-2 Reporting Calculator

#2 P1: Foundation

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, 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).

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.
Shareholder Information

Must own more than 2% to qualify for this treatment

Used to calculate income tax savings

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.