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Diane Kennedy's US Tax Aid

S Corporations & Medical Insurance for Owners

S Corporations Medical InsuranceIf your S Corporation pays for medical insurance for employees, it will be a 100% deduction for the company and not taxable for the employee. If you own >2% of the shares of the S Corporation, you don’t get the same tax break. In fact, the amount paid for the medical insurance by the corporation should be added back to the owner’s tax return. The owner then can take a deduction on his Form 1040 (maybe). It’s confusing, and doesn’t make a lot of sense, but...