How do I set up an S-Corp Owners Health Insurance in a paycheck's NET Pay?

FFS_AJ · ‎October 12, 2022

We are a Scorp. The sole shareholder purchased the health insurance in his name (he is the company's only employee and is paid by Direct Deposit). We need to reimburse the shareholder for the health insurance and include the premium payment in his W2 (Boxes 1 and 14).

I've followed the steps below already.

The point is, following these steps doesn't change the NET Pay in the paycheck.
I'll show an example with an illustrative paycheck.

I believe that if the company directly paid for the health insurance, the steps in Image 1 would be enough. However, since the shareholder will pay the premium with his funds, we must reimburse him. How do I do that? Following the steps of Image 1 doesn't actually "transfers" him any money.

Any help will be more than appreciated!
Thanks!

AMAcpa · ‎October 12, 2022

Healthcare added to an S Corporate owner\officer does not affect the Net Pay.

It is to increase BOX 1 - Federal Wages on the 941 and W2 forms only. There is no tax benefit - its just compliance.

I suggest on the last pay, add the annual amount paid on the last paycheck or run a payroll adjustment.

This should wash through the expense account used to pay the health insurance, such that you'll see an increase and decrease for the same amount. The decrease is what is reported in Box 14

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How do I set up an S-Corp Owners Health Insurance in a paycheck's NET Pay?

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