2% 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 setup 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.
