Employee benefits

1. The health insurance is deductible, but with a specific process.
   • The S-Corp must pay for the premiums directly to the provider or reimburse the owner. This amount must be included in your W-2 Box 1 wages. These "wages" are subject to federal income tax but are exempt from Social Security and Medicare taxes.
   • Then, on your personal income tax return, you can take an "above the line" deduction for the health insurance premiums, which is highly beneficial because it allows a deduction without having to itemize.
   • The S-Corp cannot deduct other healthcare expenses besides insurance, but you may be able to deduct qualified medical expenses on Schedule A of your personal income tax return if you itemize.
2. Dental insurance would have the same answer as what I answered in #1 above.
3. The S-Corp cannot contribute to an HSA on a pre-tax basis for the owner and spouse. Instead, the owner and spouse can establish their own HSAs and make contributions with after-tax dollars, and then take a deduction for the allowable contributions on their personal income tax return. This is, of course, assuming they have a HSA-eligible High Deductible Health Plan.
4. No, a Dependent Care Flex Spending Account is not allowed for S-Corp owners.
5. Flex Spending Account: same answer as #4, disallowed.
6. A Solo 401(k) is allowed and the S-Corp can indeed provide an employer match of up to 25% of the W-2 wages.

I hope these answers help! Please feel free to post again with any follow-up questions.