Year End: 2% Shareholder Insurance (S-Corp)

% Shareholder Insurance Premiums

Health and accident insurance premiums paid on behalf of a greater than 2-percent S corporation shareholder-employee are deductible by the S corporation and reportable as wages on the shareholder-employee’s Form W-2.

How to set up 2% Shareholder Insurance Premium earning code:

Navigate to the following path to add the earning:

If the code isn’t already setup on the company, click in the upper right corner.

In the Roll up Earning box, select “Custom Taxable Fringe”. You should now see this box:

Select Rename the Earning code, and change the W2 Box Type to the following setting:

Click In the Tax Settings box, click   

For Federal taxes, 2% Shareholder Insurance Premiums are exempt from FICA and FUTA, and taxable for everything else. Code accordingly:

Each state’s income tax, local tax, and worker’s compensation taxation varies – get the taxability from the client.

How to input in payroll

Because 2% Shareholder is only subject to FIT, the amount can be input as a separate manual check on the payroll.

YE 2% Shareholder Ins (S-Corp)