Drake Accounting®: I am trying to set up Health Insurance for a 2% S Corporation Shareholder. Where is this information entered?
To set up Health Insurance for a 2% Shareholder, follow the steps below:
- Go to Employees > Deductions & Benefits, select the Benefits tab and click the icon to create a new benefit.
- In the Taxing and Income Options drop list, select Taxed - Apply to Gross only. This will automatically place it in W2 box 1 and 941 box 2.
- Edit the other information as needed, including descriptions, accounts, etc. Click Save.
- Activate the benefit for each shareholder employee by going to Employee > Employee Setup.
- Select the employee and click the Benefits tab. Select the benefit, then click the icon.
- Double click on the benefit on the right side, enter the amount in the activated data entry fields, then click Save.
For more information about 2% s-corporation shareholder health insurance, see Publication 15:
"Health insurance plans. If you pay the cost of an accident or health insurance plan for your employees, including an employee's spouse and dependents, your payments aren't wages and aren't subject to social security,
Medicare, and FUTA taxes, or federal income tax withholding. Generally, this exclusion also applies to qualified
long-term care insurance contracts. However, for income
tax withholding, the value of health insurance benefits
must be included in the wages of S corporation employees who own more than 2% of the S corporation (2%
shareholders). For social security, Medicare, and FUTA
taxes, the health insurance benefits are excluded from the
2% shareholder's wages.