Prepaying 2022 Medical and Dental Premiums - Single Employee LLC - w S-Corp

[tschapira]

Hi Turbo Tax Experts, 

I'm a single employee LLC with S-Corp tax status with a calendar year fiscal reporting. For 2021, I want to maximize my business deductions and was curious if I can pre-pay my 2022 medical and dental premiums as a business expense. 

From my research, I believe I can do so but I'd like to check with the community. Please Let me know! TY

Tom

 @DoninGA  @James-B @candaceat @Hal_Al 

[Carl]

I'm a single employee LLC with S-Corp tax status

Just for clarity, when it comes to taxes (I reiterate, WHEN IT COMES TO TAXES, AND ONLY TAXES) you do not have an LLC. You have an S-Corp. Period. I clarify that, because the owner of an LLC can not be an employee of that LLC. However, having filed IRS Form 2553 to have the IRS treat your LLC "like an S-Corp" for tax purposes, means that on the tax front, your LLC-turned-S-Corp can have the owner as a W-2 employee.

curious if I can pre-pay my 2022 medical and dental premiums as a business expense

Qualified deductions can be claimed in the tax year they are paid. On some things there are limits though. For example, if you pre-pay 5 years worth of premiums, then you may be limited to claiming the amount paid for each year, in the tax year that payment applies to.

[tschapira]

Understood @Carl 

I did have W2 wages in 2021 and I had ACA health insurance but paid that with personal funds, and not thru the firm.

For 2022 I'm off the ACA and have a group health insurance plan

So it seems it's not possible to prepay a single year, 2022? 

[Carl]

I did have W2 wages in 2021 and I had ACA health insurance but paid that with personal funds, and not thru the firm.

That's a SCH A itemized deduction on your personal 1040 tax return.

For 2022 I'm off the ACA and have a group health insurance plan. So it seems it's not possible to prepay a single year, 2022?

Depends on the rules of the plan, of which the plan administrator should be able to give you a definitive answer on that. For example, I would expect that if plan coverage begins on Jan 1, you would have to make at least one payment prior to that. But from my extremely limited experience with employer provided healthcare (and I mean very limited) plan coverage generally will start at the end of the 1QFY or the start of the 2QFY, which is the March-April timeframe for a business that does calendar year fiscals. But you really need to talk with the plan administrator, as I've been "out of touch" with this stuff for well over 15 years now.

[tschapira]

As the business owner, I chose BCBS to be effective January 1st. Does that mean I need to contact BCBS to see if they would allow me to pay in advance? 

My thought was to call them before year-end and make a large 1-time payment for my premiums in 2022. Same for dental. 

Thoughts?

[Carl]

Our thoughts don't matter here really. Again, it depends on the rules of the plan. The plan administrator should know.