Health insurance premiums for a shareholder of more than 2% of an s corporation are reported in box 14 of the individual’s w-2 wage and tax return form.
to obtain the amount reported in box 14 to transfer to line 16 of the additional income and adjustments to income of the individual’s schedule 1 (form 1040), if you received a schedule k-1 (form 1120-s) participation of the shareholder in income, deductions, credits, etc. , complete the self-employed health insurance deduction worksheet located at the bottom of the program in the list of forms (for desktop users only).
to enter this information into federal questions and answers (and online users):
- From your tax return (online or desktop), click on federal. on smaller devices, click in the upper left corner, then click federal.
- click business income in the federal quick question and answer topic menu to expand, then click corporate income (form 1120s schedule k-1) .
- click + add corporation k-1 schedule to create a new copy of the form or click edit to review an already created form.
- Proceed through the interview process to enter all the appropriate information.
- On the screen titled s-corporation – set up k-1 information, check box 12 – other deductions, then click continue .
- On the screen titled s-corporation – other deductions, click yes.
- On the screen titled s-corporation – self-employed health insurance, click yes.
- On the screen titled s-corporation – health insurance, enter the amount of out-of-market health insurance premiums from box 14 (health insurance premiums) health) and enter form w-2, box 5 amount (if any) as medicare wages from this scorporation since the deduction will be limited to this amount, then click continue .
- On the screen titled Insurance Health Insurance: Qualified Long-Term Care, click yes if you also need to enter information for a long-term care insurance plan qualifying term. otherwise, click no. this will reflect the amount of your self-employment health insurance deduction that will appear on Schedule 1 (Form 1040), line 16.
If you did not receive a Schedule K-1, see Form W-2 – Program Entry.
According to IRS Publication 535 Business Expenses, on page 21:
self-employed health insurance deduction
You may be able to deduct the amount you paid for medical and dental insurance and qualified long-term care insurance for yourself, your spouse, and your dependents. The insurance may also cover your child who was under the age of 27 at the end of 2020, even if the child was not your dependent. a child includes your son, daughter, stepchild, adopted child, or foster child. A foster child is any child placed with you by a licensed placement agency or by judgment, decree, or other order of any court of competent jurisdiction.
one of the following statements must be true.
- You were self-employed and had a net profit for the year reported on Schedule C (Form 1040) or Schedule F (Form 1040).
- was a partner with net earnings from self-employment for the year reported on schedule k-1 (form 1065), box 14, code a.
- Used one of the optional methods to calculate your net earnings from self-employment in the se program.
- received wages in 2020 from a corporation in which you were a more than 2% shareholder. Health insurance premiums paid or reimbursed by the s corporation are shown as wages on the w-2 form.
- For self-employed individuals who file Schedule C (Form 1040) or Schedule F (Form 1040), a policy may be in the name of the company or in the name of the individual.
- For partners, a policy can be in the name of the partnership or in the name of the partner. You can pay the premiums yourself, or the partnership can pay them and report the premium amounts on Schedule K-1 (Form 1065) as guaranteed payments to be included in your gross income. However, if the policy is in your name and you pay the premiums yourself, the partnership must reimburse you and report the premium amounts on Schedule K-1 (Form 1065) as guaranteed payments to be included in your gross income. otherwise, the insurance plan will not be considered established under your business.
- For more than 2% of shareholders, a policy may be in the name of the corporation or in the name of the shareholder. You can pay the premiums yourself, or the corporation can pay them and report the premium amounts on the W-2 form as wages to be included in your gross income. however, if the policy is in your name and you pay the premiums yourself, the corporation must reimburse you and report the premium amounts on the w-2 form in box 1 as wages to be included in your gross income. otherwise, the insurance plan will not be considered established under your business.
The insurance plan must be established, or considered established as explained in the following points, in your business.
Medicare premiums you voluntarily pay to obtain insurance in your name that is similar to qualified private health insurance can be used to figure the deduction. Amounts paid for health insurance coverage of retirement plan distributions that were not taxable because you are a retired public safety officer cannot be used to figure the deduction.
Take the self-employed health insurance deduction on Schedule 1 (Form 1040), line 16.
Please note that any links in the information above are automatically updated each year and will take you to the most current version of the document at the time it is accessed.