Discussion:Sub S health care

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Discussion Forum Index --> Basic Tax Questions --> Sub S health care

Discussion Forum Index --> Tax Questions --> Sub S health care

Jctmstx (talk|edits) said:

13 January 2009
This subject has been discussed in many threads but still leaves some questions in my mind. I have read section 3121 may times.I guess the question of whether its taxable for FICA and Medicare depends turns on whether they meet the employee class or classes question. Two different scenarios!

1)Sole owner with employees. Only the owner is covered. I think this meets the test since it covers an employee class limited to a shareholder. Does anyone agree? 2)Sole owner with employees. The owner and only one employee is covered. I say this does not meet the generally test. Does anyone agree?

Blrgcpa (talk|edits) said:

13 January 2009
The shareholder who owns more than 2% of the s corp has the se health insurance added to the w-2, not subject to any taxes. However the 941 and all quarterly filings must reflect the increase in the gross. Adjust the 4th quarter.

How are the employees covered? Is the health ins a fringe benefit paid by the employer? Is the employee paying for it with after tax dollars? Is the employee paying for it with pre-tax dollars? Is the ex[pense shared between the employer and the employee?

Kendrick (talk|edits) said:

13 January 2009
I say NONE of the HI premiums included in salary is subject to FICA MED. At least that is how I have decided to do it. To hell with them - when they can't write the stuff more clearly, we need to wait until a court case completes where it, hopefully, WILL be explained morely clearly.

A non-owner employee sure doesn't pay any FICA MED on the HI premiums the company pays for him or her!

I do warn my clients about the murkiness of this subject, and that if they want to be ultra conserative and pay the FICA MED, I give them the option. I am sure you can guess hands down what choice 100% of my clients have chosen.

Jctmstx (talk|edits) said:

13 January 2009
I agree the language in the code is clear as mud; thus this post. In one of the enormous posts the general consenses was a sole owner and employee health care premiums paid by the corporation were not subject to Fica/med. reporting. In the second scenario I neglected to mention a referral to only the owner/employee not the employee.

Riley2 (talk|edits) said:

13 January 2009
The shareholder class is not a class of employees, but instead is a class of owners.

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