topic Worker's Compensation - Deductible to S-Corp? in Business & farm

Worker's Compensation - Deductible to S-Corp?

troy1 — Mon, 29 Jul 2019 18:58:26 GMT

If an S-Corp pays worker's compensation for its employees, is this expense deductible?

Re: Worker's Compensation - Deductible to S-Corp?

Anonymous — Mon, 29 Jul 2019 19:32:23 GMT

workers compensation or premiums for workers comp insurance (deductible). most states require companies to carry w/c insurance on employees unless company gets approval by state to be self-insured. in such case, w/c payments would be deductible. now if state requires a business to carry w/c ins but it doesn't and has to pay w/c settlement , then to be deductible under IRC 162 the payment would have to be ordinary and necessary. This might not be the case if the company is violating the law by not carrying required W/c insurance.

Re: Worker's Compensation - Deductible to S-Corp?

Carl — Tue, 30 Jul 2019 04:00:11 GMT

That's all taken care of for you on the IRS Form 940 which is usually filed separate from the 1120-S. The unemployment compensation paid by the S-Corp is generally referred to as the "U.C. Tax" and is included in the amount on line 12 of the 1120-S.

Re: Worker's Compensation - Deductible to S-Corp?

troy1 — Tue, 30 Jul 2019 13:14:11 GMT

I thought 940 was unemployment insurance (not worker's compensation)?

Re: Worker's Compensation - Deductible to S-Corp?

Critter — Sat, 03 Aug 2019 23:23:28 GMT

If you are doing payroll for your employees then you need to either use a payroll company so you get all the forms correct OR get educated on the federal & state requirements :

https://www.fundera.com/blog/payroll-taxes

Re: Worker's Compensation - Deductible to S-Corp?

Anonymous_ — Sat, 03 Aug 2019 23:27:43 GMT

@troy1 wrote:
I thought 940 was unemployment insurance (not worker's compensation)?

It is - Form 940 is used to report your annual Federal Unemployment Tax Act (FUTA) tax.

Re: Worker's Compensation - Deductible to S-Corp?

Anonymous — Sun, 04 Aug 2019 05:45:43 GMT

the question is about workmen's compensation not unemployment compensation taxes

Re: Worker's Compensation - Deductible to S-Corp?

Critter — Wed, 07 Aug 2019 13:00:29 GMT

Workman's comp is a deductible payroll expense to the employer.