Deductions & credits
TurboTax is calculating QBI correctly for S Corporations that adhere to the IRS rules for reporting shareholder compensation by including in shareholder box 1 W-2 income and Form 1120S wages the amount of health insurance premiums paid for “more than 2% shareholders”. When the W-2 and Form 1120S are prepared correctly, the self-employed health insurance is deducted one time for TurboTax QBI calculations.
Note that under the IRS rules, an S Corp taxpayer is eligible for the self-employed health insurance deduction only if the S Corp either pays the policy directly, or reimburses the shareholder for premiums paid directly by the shareholder (for a policy in the shareholder’s name). In either case, the S Corp is required to include the health insurance premiums in the shareholder W-2 box 1 wages and report those health insurance premiums as wages on the Form 1120S. So, the self-employed health insurance premiums are already deducted from the income being reported as income on the shareholder K-1.
S Corps that have not complied with the IRS rules to report “more than 2% shareholder health insurance premiums” as W-2 wages need to file corrected W-2 forms for these more than 2% shareholders. Note that only wages reported to the SSA within 60 days of the deadline are eligible to be counted as wages for QBI purposes. Also, the S-Corp should report these health insurance premiums for more than 2% shareholders as wages on Form 1120S and the shareholder K-1 as part of Section 199A wage reporting.
See this example demonstrating why TurboTax is appropriately calculating QBI for S Corp shareholders who have an accurate Form 1120S and shareholder W-2 forms:
For more information, see these IRS websites:
https://www.irs.gov/pub/irs-drop/td-reg-107892-18.pdf
https://www.irs.gov/pub/irs-drop/rp-19-11.pdf
