How to pass Sub-S above the line health insurance deduction to personal return?

[terryl_tt]

Hi:

Health insurance premiums paid by my wholly owned sub-S can be deducted on my personal return, reducing Adjusted Gross Income.  They are included in box 1 of the W2 I generated with Business TurboTax and they are included in box 14 with the label "Health Ins".  I enter the W2 into my personal return with TurboTax Premium, but no reduction of my AGI appears.  How do I make my 1040 reflect that?  Do I enter it somewhere else in my personal return?  Or do I need to make it somehow appear on my K-1?

Thanks in advance for your assistance!

[AmeliesUncle]

If the health insurance was NOT through the Healthcare Marketplace (with a 1095-A), then go through the section where you enter your K-1.  Look for the check-box that asks about health insurance, then check that and answer ALL of the followup questions.

[Irene2805 · Accepted solution]

Enter the health insurance premiums paid by your S-Corp in the K-1 section of TurboTax.

To enter the K-1 from your S-Corp into your personal 1040 return, please follow these steps:

1. Click on Federal Taxes > Wages & Income [In TT Self-Employed:  Personal > Personal Income > I'll choose what I work on].
2. Under S-corps, Partnerships, and Trusts [in desktop:  Business Investment and Trust Income], click on the Update box next to Schedule K-1. 
3. On the Tell Us About Your Schedules K-1 screen, click on the Start/Update box next to S corporations (Form 1120S).  
4. If you have already entered K-1 SCorp information, you will see the SCorp. K-1 Summary screen.  Click Add Another K-1 to enter your information  (or click on Edit to continue with the existing form entry).  
5. If you haven't started enter K-1S information, continue through the screens, entering the requested information.
6. When you come to the Other Situations screen, mark the box I personally paid health insurance and/or long-term care insurance premiums . . .
7. On the next screen, Self-Employed Health Insurance, enter your Medicare wages and the health Insurance Premiums you paid personally.

The premiums will show on Schedule 1 of the 1040 as an subtraction to income.

[terryl_tt]

Thank you so much, Irene!  The AGI is reduced as I desire.  One follow-on question, however.  Since this is in the K-1 section, I assume the insurance amount should appear on the K-1 generated by my Sub-S.  The health insurance appears in box 14 of my W-2 and is included in box 1, but I don’t know how to get it to appear on my K-1.  So can you help me one more time so that I can maneuver through TurboTax Business and get the health insurance on to my K-1?

Thanks again.

Terry

[Irene2805 · Accepted solution]

While a K-1 for a partnership would have an entry for health insurance, S-Corp K-1s do not.  The insurance amount is shown on the shareholder's W-2 (as yours has).

According to the IRS Instructions for Form 1120S (p. 16):

Report amounts paid for health insurance coverage for a more-than-2% shareholder (including that shareholder's spouse, dependents, and any children under age 27 who aren't dependents) as an information item in box 14 of that shareholder's Form W-2. A more-than-2% shareholder may be allowed to deduct such amounts on Schedule 1 (Form 1040), line 16. To find out if the shareholder can claim this deduction, see Self-Employed Health Insurance Deduction in chapter 6 of Pub. 535, Business Expenses.

 

[terryl_tt]

Thanks again, Irene.  These little subtleties are hard to find online.  I am impressed with the knowledge you have at your fingertips.  You have solved a major issue for me.

Terry

[bradkuhl]

Hello @Irene2805 , my situation is a bit different I think but would appreciate your insight.

I am the son of shareholders for a sub-s corp and receive fringe benefits as an employee (w-2) of the s-corp. This is the first year that our accountant has included me in the de-facto "2% shareholder" group and my Simple IRA and health insurance premiums now show as income on my w-2 and need to be entered as an above the line deduction . How do I do this in turbotax home & business 2021 desktop without a K-1? I do not own any shares of the s-corp but I am an officer if it matters. I see lines 16 & 17 of Form 1040 Schedule 1 is where the deductible amounts need to show up. 

Thank you for your help,

[JillS56]

Yes, you would report the health insurance on Line 17 and the IRA on Line 16.

Reporting 2% Defacto Shareholder Health Insurance

[bradkuhl]

The question is more "How Do I use TurboTax step-by-step to enter the number so it shows up on line 17 of schedule 1?"

This is  a calculated field and a worksheet is needed. I figured out how to pull the form "Health LTC Wks" into the file, but I am wanting to use the step-by-step feature to do this for piece of mind that its getting put in all the places to prompt me for more info later if needed.

Thank you!

[AmeliesUncle]

---

@bradkuhl wrote:

The question is more "How Do I use TurboTax step-by-step to enter the number so it shows up on line 17 of schedule 1?"

---

Enter a K-1.

I know that you don't have a K-1, but that is what you need to do.  Borrow a copy of your relative's K-1 so you can enter the name, address and ID number of the S-corporation.  But then enter zero for the income.

While in the K-1 section, there will be question about health insurance.  Check that box, and answer all of the followup questions (be sure to answer the question about Box 5 of your W-2).

[bradkuhl]

Thank you, i had resolved to myself that i did, infact need or should have a K-1 at this point. I will have to see what i can do. Thank you.