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Can I deduct health insurance premiums as an S Corporation shareholder?

SOLVEDby TurboTax186Updated January 13, 2023

You may be able to use the Self-Employed Health Insurance (SEHI) deduction if you're at least a 2% shareholder in an S Corporation. To claim this deduction, the health insurance premiums must be paid or reimbursed by the S corporation and reported as taxable compensation in box 1 of your W-2.

The S Corporation can either purchase the policy in your name or reimburse you for the premiums you paid. The policy can also cover your spouse, dependents, and any nondependent children under the age of 27.

The SEHI deduction is generally more advantageous than claiming it as a "regular" itemized deduction. The SEHI deduction will appear on line 17 of Schedule 1 and may not exceed your W-2, box 5 amount.

To claim the SEHI deduction in TurboTax, you'll need the K-1 that the S Corporation sent you. Here's how to enter it and claim the deduction:

  1. With your return open in TurboTax, search for K-1 and select the Jump to link
  2. Select Yes to Did you receive any Schedules K-1 or Q?
  3. Select Start or Update next to S corporations (Form 1120S) and follow the screens, filling out info as you go
  4. On the Check boxes that have an amount or are checked on the form screen, select Box 17 Info and any other boxes that contain info on your K-1
  5. Select Continue
  6. On the Enter Box 17 Info screen, select AD - Other Information in the Enter Code field
  7. Enter the amount and select Continue
  8. Select Continue to skip the first Enter Code AD Detail screen
  9. On the second Enter Code AD Detail screen, enter Shareholder's Health Insurance Premiums in the Description field
  10. Enter the amount and select Continue
  11. Select Continue to skip the How to Enter Code AD Information screen
  12. On the Other Situations screen, select I personally paid health insurance... and then Continue
  13. On the Self-Employed Health Insurance screen, fill in the W-2 box 5 amount and the amount of health insurance premiums you paid (this may be on your W-2 in box 14)
    • If you purchased insurance through Healthcare.gov or your state marketplace, leave the second box blank
  14. Select Continue
  15. On the Long-Term Care Insurance screen, enter any long-term care premiums and select Continue
  16. Select Yes or No to Does your K-1 have a code V in Box 17?
    • If you selected Yes, follow the screens until you reach the S Corporation K-1 Summary

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