Discussion:S-Corp HSA
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Discussion Forum Index --> Basic Tax Questions --> S-Corp HSA
Discussion Forum Index --> Tax Questions --> S-Corp HSA
| 4 December 2009 | |
| Elementary Question, but I'm unsure and can't find any support:
Is it permissible to have an S-corp write a check to fund an HSA for its employees? Or would the owner need to fund the HSA? Considered a distribution if so? Thanks! | |
| 4 December 2009 | |
| Is the only sticking point the 2% owner rule? Can't fund the owner, correct? | |
| 4 December 2009 | |
| An S Corp can provide benefits for employees who are less than 2% owners just like any other company can. The 2% or more owners are not permitted pre-tax benefits. You'd need to look up the proper treatment of those payments for them but I suspect they are W-2 taxable income and the shareholder may be able to deduct on their own 1040 similar to medical insurance. If that is so, you'd also need to confirm treatment for social security/medicare taxes. | |
| 4 December 2009 | |
| Thanks Kathi - so the contributions made to fund the plan (we both suppose) would hit the employees W-2, correct? | |
| 4 December 2009 | |
| Sorry, I meant hits the owners W-2, then gets deducted as SE health. | |
| 4 December 2009 | |
| Not deducted as SE health, potential HSA deduction on the 1040. Not 100% positive of this so take with a grain of salt. | |
| 4 December 2009 | |
| Fairly confident it IS SE health....
However, if one was to have no employees, there wouldn't be any tax associated with it, correct? Just reated as a distribution... | |
| 4 December 2009 | |
| Wondering if you are talking about a Section 105 plan. Not the same as an HSA. If so, not permitted to 2% or more shareholders. Must take distributions and pay medical expenses personally. | |
| 4 December 2009 | |
| Found that for S Corp 2% or more shareholders must take as taxable W-2 wages subject to all payroll taxes or treat as pro-rata distributions. Then makes personal payment to their HSA plan and deducts on their own 1040 as an HSA. This amount is not the same as SE medical insurance. It does however have to be partnered with specific high deductible medical insurance and that premium is the SE medical insurance amount.
Here is a link to some Q&A: | |
| 4 December 2009 | |
| Forgot to ask why you would say "no employees". You must have at least one in the person of the shareholder who takes reasonable comp on a W-2. | |
JasmineCPA (talk|edits) said: | 4 December 2009 |
| Probably owner = sole employee | |
| 5 December 2009 | |
| If the company makes the HSA contribution to the 2% (or more) owner's HSA, then this is NOT a self-employed health premium deduction. Instead , it is reported in Box 1 of the W-2 and then the corp can deduct the expense (bascially a wash on the 1040 when you consider the pass through expense and the same amount in the W-2 on line 7 (Salaries).
Then the amount should be reported on Form 8889 on the 1040 so that the owner can deduct it. | |
| 14 April 2010 | |
| Yes, Umk395 you are correct. Except I can not for the life of me get the amounts to flow correctly from the Form 8889 to line 25 of the 1040 in Proseries unless I input the amount from w2 box 12 on line 2 of the Form 8889 and override the amount on line 9 where the program automatically has the contribution going. If I override the amount then the deduction flows properly to the 1040 line 25, however, I am unable to e-fle then. Considering it is now April 14th I would much prefer to be able to efile. Anyone have any suggestions who has dealt with a similar situation in Proseries? | |
| 15 April 2010 | |
| There is stuff in the pub that makes me think the ER payments to the HSA should be treated like SEHI.
Check the yellow box, I described what I thought the treatment was in a thread about a month ago. It is eligible to more than 2% shareholders. Fully deductible. | |
| 15 April 2010 | |
| Thank you Doug. Yes, I agree the contributions the way they have been reported are deductible. However, it is the mechanics of the Form 8889 in Pro Series that I am having trouble with. I can override however I might not be able to efile if I do that. | |
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