I do not have a K-1 because I am not actually a part-owner of the s-corp. I am the son of one of the owners, and therefore for tax purposes, I am unable to qualify for pre-tax health insurance payroll deductions. So the company is paying 100% of my premiums and including it in box 1 of my W-2. Do I need a K-1 to deduct these premiums?
While you should qualify for the Self Employed Health Insurance deduction, TurboTax is not really set up for your situation.
One option is to use the CD/downloaded version and override Line 29 on your Form 1040. However, that will void TurboTax's accuracy guarantee and you will not be able to e-file.
Another possible option is to enter the 'fake' K-1 (using your parent's K-1) with all zeros. In the K-1 interview, you could then check the box about health insurance, and it will ask you for some information from your W-2 again (box 5).
Thanks for your response. That's helpful. I may try the second option first since I like using the online version and e-filing.
Are you a shareholder-employee of the S-Corp [you have an ownership interest] or just an employee? And if you are, do you own 2% of more of the shares? This can affect how you report the health insurance premiums paid.
I just thought of another piece of info that is relevant: the amount of premiums paid was reported on field 14 on my W-2 labelled SCorp MP.
TurboTaxIrene, I am not actually a shareholder-employee of this S-Corp; I am solely an employee. But because I am the son of an owner, I am considered a 2% owner for the purposes of qualifying for a pre-tax health insurance plan--I am unqualified for it just as a standard 2% owner of an scorp is.
Got it. Yes it should have3 been reported in box 14 of your W-2. Follow TaxGuyBill's good advice.
If I go through the K-1 section, entering zeroes, will the software think that I’m actually a part owner for other purposes and skew my filing in other ways?
It may create a Schedule E and show up on page two of that form, but it would not affect any other calculations on the tax return.
What is my parents business tax return has not been filed yet ?
I have the same situation. I've used Turbo Tax for preliminary calculations, but have filed using paper forms for the last several years for this same reason. I've been unable to find a way to correctly report my taxed with TurboTax.
I did use TaxGuyBill's second solution of filing a $0 Form K-1, and it seems to have worked. Thanks!
I'm getting an error when trying to do TaxGuyBill's method this year (it seemed to have worked last year). This year, the software is telling me that because the business profit was $0 in the K-1, I don't qualify to deduct on line 29.... Are you seeing this issue, s7cJeremy0? The software is wanting to therefore place these health insurance premiums paid as a personal deduction rather than a line 29 reduction.
@reisender1673 You are entering a S-corporation K-1 (Form 1120-S), right? Double check that you are not entering it as a Partnership (Form 1065). For a S-corporation, the K-1 does NOT require any profit to receive the deduction, so if the program is telling you that, the program has a 'bug'.
@TaxGuyBill I am definitely doing it as an S-corp. I just double-checked.
@TaxGuyBill that would explain why I was able to do this last year and make it work and it doesn't work this year. Bug was introduced between then and now....
So I've used TurboTax for 20+ years and the last several years I used over-ride of box 29, and I paper file. It worked! This year (2018) I cannot figure out how to deduct my health insurance premiums as the son of a 5% owner. Please help. Is there some box that I can over-ride? I really don't want to hire a CPA.
Has anyone figured out how to bypass this bug? I cannot get the system to deduct my insurance premiums on line 29. The system is throwing them into itemized deductions. I believe this is because the K1 shows a loss for the year greater than the premiums. However, I did get a W2 for the premiums paid. @TaxGuyBill @TurboTaxIrene
I actually did get this fixed this year. Paid the $80 for live support and I finally talked to someone who helped me figure it out. I was leaving the field in the K-1 blank that asked for I think line 3 from W-2 or something like that. If you enter the amount from your W-2 there instead of leaving that blank, it properly deducts premiums paid from line 29. If you leave it blank, it thinks that you made $0; thus, it doesn't allow you to use line 29 deduction. @lisa.mathews00 @ryantlynch1
Ha! That worked! Thank you so much! Although, the reality of it is that box 5 for Medicare is $0 on my W-2 because insurance premiums are not Medicare taxable. But, by adding income there is filled in the box properly! Sweet! Thanks again! @reisender1673
I don't mean to be rude, but did either of you read Irene's answer below? That specifically tells you to do that.
@TaxGuyBill Right, I did see that. But, there were NO Medicare taxable wages paid to me as insurance premiums are not Medicare taxable, so I had rightfully left that blank. My wages show in box 1 and 14. I didn't "get" that was were the "bug" was until I saw @reisender1673 's reply to me. So, yes, I did read it. Thank you and I do appreciate Irene's message. It was just that it didn't spell out that you "had" to put something in "Medicare wages" regardless of whether or not your W-2 actually had an amount in that box. 🙂
@lisa.mathews00 No, you NEED to have Medicare wages in Box 5 of your W-2. If you don't, you DON'T qualify for the Self Employed Health Insurance deduction.
This is one of the resources I read: <a rel="nofollow" target="_blank" href="http://loopholelewy.com/loopholelewy/01-tax-basics-for-startups/s-corporations-08-deducting-health-insurance.htm">http://loopholelewy.com/loopholelewy/01-tax-basics-for-startups/s-corporations-08-deducting-health-insurance.htm</a> I do qualify because the premiums were included on my W2 from my S-corp. It just so happens that the premiums are the only wages reported, and, as such box 5 was left empty because the premiums are not Medicare taxable. Again, the wages were reported in box 1 and 14 (S/E Health).
You still need 'other' wages. You DON'T qualify.
On that link, scroll down to the heading "Earned Income From Trade or Business Limitation", which says you must have earned income from that business (which means wages other than the health insurance reimbursement).
<a rel="nofollow" target="_blank" href="https://www.irs.gov/credits-deductions/individuals/earned-income-tax-credit/earned-income">https://www.irs.gov/credits-deductions/individuals/earned-income-tax-credit/earned-income</a> We can agree to disagree. I do appreciate your input. My wages are taxable and I did earn them and they are reported on my W2. 🙂