S-Corp owner health insurance through domestic partner's employer's plan

[jh86243111]

I have a very unique situation and have not been able to find a clear answer to it. 

I am a s-corp owner >2%. I am considering canceling my own individual health insurance plan and get coverage through my domestic partner's work plan (better coverage). Because we are not married this will increase his income by the fair market value of the premium the company contributes and he will have to pay income/payroll taxes on the imputed income. Currently, I am able to take the self employed health insurance premium deduction on my taxes for the plan I currently pay for.  If I change, I will be reimbursing my partner for the additional premium they will deduct from his paycheck along with the additional income/payroll taxes he will have to pay on the imputed income he will incur for my coverage. Can I deduct the cost of the premium and taxes I reimburse him for? Because the company he works for nor he will get any tax benefit from this, I would think I can still take the deduction as it is the cost to secure health insurance as a self employed person.  Thanks for any insight you can share. 

[Critter-3]

No ... because the policy must be in the S-Corp's  name t be deductible AND you have to be a waged employee of your corp and issue yourself a W-2.    

[jh86243111]

Critter-3 while I appreciate your response that is not entirely true. I am a waged employee and I can deduct the premiums if the policy is in my name. It is a reimbursement, reported in my gross income on my w-2 and noted as HI-2%.

Please see IRS Notice 2008-1 Part III – Administrative, Procedural, and Miscellaneous
Special Rules for Health Insurance Costs of 2-Percent Shareholder-Employees (Example 4).

https://www.irs.gov/pub/irs-drop/n-08-01.pdf 

Because the situation with the domestic partnership is a newer benefit offering through business, I believe the IRS did not clarify this situation in the Notice. So, I am looking for advise from someone who is familiar with Notice 2008-1 and knows if there have been any clarifications on the "reimbursement" rules.

Sorry, should have noted all this info in my original post 🙂 

[Critter-3]

But the insurance policy is not in your  corporation name so you no longer get the same deduction even if you use the corporation's check book to pay back your partner.    You are technically getting a policy thru your partner's employer and even if you are "paying" the cost by reimbursing your partner for the extra cost it is NOT your insurance policy  to deduct.   The good news is that you only have to pay the extra tax on the imputed  premiums and not the full cost of the premium but to get this benefit you don't also get to deduct the premiums as you have in the past.  

@Hal_Al   what is your take on this ?

[jh86243111]

Just to clarify, the insurance policy is not in the s-corps name. It is in my name. I understand the pros/cons of the two options. I have to do some calculations to determine which one is fiscally better. I just want to confirm whether my s-corp can reimburse me for the my share of the premium/taxes (total costs) for the coverage through my partner's company or not. Since I can be reimbursed for the policy I already have in my personal name, the question is, can I be reimbursed for the the costs associated with alternative policy. I believe this is new unchartered territory so I want to see if the IRS has made a determination for this scenario. My partner is a high incomer earner so the taxes on the benefits may be higher than the benefit I get from keeping and deducting my own policy. That is why I have to look at all the details in the calculation. Again, really appreciate your insight 🙂

[Mike9241]

nothing has changed. if the policy is in your name to get an above the line deduction the corporation must pay or reimburse you for the premiums. and that's from my 2021 tax reference manual which still refers to Notice 2008-1.   the amount so paid must be reported in box 1 of the w-2 and should be noted in box 14 so the s/h can deduct it.  the is a line on the 

in step-by-step mode for the k-1 check the box for health insurance and on the next screen enter the amount. it does nor carry from the w-2

[Critter-3]

How can a policy possibly be in YOUR name if it is going thru your partner's employer on their payroll ?    You are not the owner of the policy ... you are being added as a family member to your partner's employer's plan for your partner.  I still cannot see how this can possibly be your policy or your corp's policy so this cannot be a deduction for you.    Good luck.