Ohhhh! OK, that's super helpful. Thank you.
I just re-read that section in Turbo Tax, "Enter Insurance and Other Benefits"
- Officers who own 2% or less.
- Shareholders who are not officers and own 2% or more.
- All other employees.
Jean is an officer who owns >2%, so not included here. It's noted in fine print (should be bold, really) "For officers who are >2% owners, make sure you've included the amounts in their compensation", which is it since it's included on her W-2 paycheck as "S-Corp Healthcare Insurance".
I've done this return myself for for a few years now. I totally missed that delineation there. Thank you! : )
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Follow up question, if I may: The business buys the insurance and that generates a tax deduction against K-1 income, *but, it goes on Jean's paycheck as income, taxed at the normal rate plus payroll taxes. The result seems to be that she is paying payroll taxes on the healthcare benefits. (?)
Would it be more advantageous for Jean to buy the insurance personally, outside the business, then? If not, where is the tax advantage?
Thank you!
