Is there a way for me to deduct my health insurance premiums paid through an s-corp without having a K-1? The premium amount is included on line 1 of my W-2.

[reisender1673]

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?

[TaxGuyBill]

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).

[reisender1673]

Thanks for your response. That's helpful. I may try the second option first since I like using the online version and e-filing.

[IreneS]

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.

[reisender1673]

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.

[IreneS]

Got it.  Yes it should have3 been reported in box 14 of your W-2.  Follow TaxGuyBill's good advice.

[reisender1673]

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?

[TaxGuyBill]

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.

[estutes720]

What is my parents business tax return has not been filed yet ?

[s7cJeremy0]

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.

[s7cJeremy0]

I did use TaxGuyBill's second solution of filing a $0 Form K-1, and it seems to have worked. Thanks!

[reisender1673]

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.

[TaxGuyBill]

@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'.

[reisender1673]

@TaxGuyBill I am definitely doing it as an S-corp. I just double-checked.

[reisender1673]

@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....