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This Just In... New Rules for S-Corps Shareholders Deducting Health Premiums

By now most S-Corps shareholders have heard about IRS Headliner 163. This said S-Corp shareholders with >2% ownership in the corporation could not take the same deduction to gross income for self-employed health insurance premiums as sole-proprietors or partners unless there was a policy written in the company's name.

This created a proverbial Catch-22 if you and/or your spouse are the only employees of the corporation. Insurance regulations in many states specifically prevented insurers from writing business policies with just one member. Instead these people were required to get individual health insurance plans.

The IRS has finally cleared this inconsistency with the recent publishing of Notice 2008-01. Catchy title, almost as good as Headliner 163. :)

For those of you how don't want to try to read "taxlish", here's the upshot: Effective 2008, if you are a >2% shareholder of an S-Corporation whether your health insurance policy is in your personal name or the company's you can deduct the value of the premiums as an adjustment to gross income as long as the value is included in your W-2 wages. Either the corporation can pay the premiums directly or you can have them reimbursed. If you don't include the premiums in your wages you can't take the deduction.

While it's nice that the IRS has evened the playing field for the sole-proprietors, partners & S-Corp shareholders in this regard, I still think the HRA has more advantages than simply deducting your health care premiums. I don't know about you're plan, by mine still leaves doctor co-pays, deductibles, labs and other costs I have to pay out of pocket. These kind of expenses don't apply to the deduction to gross income. Unless they are part of a reimbursement plan, like an HRA.

The one good thing Headliner 163 did was bring HRAs and the under utilized tax section 106 out of the medicine closet.

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Hi Linda I'm the 100%

Hi Linda

I'm the 100% shareholder of an S-Corp and recently made my wife a W-2 employee so we could qualify for a group health plan. I was leaning toward an HSA high-deductible plan since we very rarely visit the doctor, the premium is lower, and we could both contribute tax free dollars to an HSA to use for medical expenses;

or at least I thought, what I'm reading is that as the employer/owner, I can't make tax free contributions since I own > 2% of the company? Would it be better to go with a standard PPO and pay the extra $100/mo in premiums?

I'm looking for the best plan "tax wise".

Thanks

Charles

Hi Linda I'm the 100%

Hi Linda

I'm the 100% shareholder of a sub chaper S-corp and I recently made my wife a w-2 employee so we could sign up for an HSA group health plan but I just found out that I won't be able to contribute any tax-free dollars to the HSA since I own >2% of the shares.

Is that true and would it be more beneficial tax wise to just do a group PPO plan since I lose the tax-free contribution advantage of the HSA? The different in premium for the HSA is only about $100/mo.

Thanks in advance!

Charles

I think that you cannot

by Vicky, I think that you cannot ammend hubby's W-2 to include the medical reimbursements as wages so they can be deducted with the medical insurance premiums, at least I couldn't do this. But I might be wrong.

Cynthia, you are wrong, a

Cynthia, you are wrong, a few days ago I had a talk with my school colleague according to whom she can ammend hubby's W-2.

Form W2c

Yes, use Form W-2c to correct a W-2. Keep in mind you will likely need to amend other payroll tax returns as well.

L:)

HDHP/HSA - am I missing anything?

So my question sounds like many others here, but like the others we just can't wrap ourselves around the answers provided to everyone else. We all think we are unique, though probably have the same setup!

Just started a corp, tax accountant suggested making S election. I own 99%, another Scorp that Wife and I are 50/50 in owns the other 1%. We have 1 other employee besides ourselves.

Just obtained a HDHP policy in the business's name to insure other employee plus us as family (listed with Wife as primary insured and me as spouse). Business will pay the whole premium to Insurance agency, with Wife and other employee having portion of premium cost deducted from W2 wages pre-tax. Want to setup HSA and have IRS max also deducted from Wife's W2 wages pretax. I would only take W2 wages quarterly as appropriate with cash flow and business income. We process payroll through ADP.

Is there anything in the way this is setup that would make any of the business paid premiums, or employee deducted portion of premiums, or employee HSA deduction not tax deductible? Is tax deductibility affected if business contributes some $ to employee HSAs instead of employee contributing 100%?

Many thanks for your advice. Just when we think we have things figured out I read someone else's post and start wondering if I have a disconnect somewhere that will lead to paying additional tax unnecessarily.

HRA - W-2 Error

Back ground:
Husband is 100% shareholder for S-corp
I am a full time employee for S-corp.
Set up a HRA (DIY) for 2009. Reimbursed myself for out of pocket medical. (thinking I was eligible as an employee they were not put on any W-2)
S-corp paid Insurance premiums and it went on W-2 as wages, but not SS or Med.
Turned in taxes to accountant, now he says the reimbursments to me have to be treated as distribution and put on Sch A subject to 7.5% limits = won't get to deduct them.

Can I ammend hubby's W-2 to include the medical reimbursements as wages so they can be deducted with the medical insurance premiums or am I screwed?

I think that you cannot

I think that you cannot ammend hubby's W-2 to include the medical reimbursements as wages so they can be deducted with the medical insurance premiums, at least I couldn't do this. But I might be wrong.

Cynthia, you are wrong, a

Cynthia, you are wrong, a few days ago I had a talk with my school colleague according to whom she can ammend hubby's W-2.

S Corp, Sole Employee, Health Insurance Deductions

Hi, Linda.

I'm sorry if I'm slow, but can you please help me understand the following:

Assuming: S Corp status, single employee (me), with an individual health insurance policy.

Can you please explain what Headline 163 means by our being able to take a "deduction to gross income"? Is this the same as an itemized deduction on your 1040 for healthcare expenses?

If you could explain the exact accounting treatment that would be great.

Thank you.

Deducting Medical Costs for S-Corp

Linda,
I am the sole member of an LLC / S-Corp. My wife and I are employees. I am actively involved and pay myself a salary of $120K. She has limited involvement with a salary of $24K. 2009 was my first year of operations, and the LLC paid our medical premiums to a former employer's COBRA plan. I plan to deduct these premiums as a business expense.

A) Under this scenario, should I include the premiums as additional salary for myself?
B) Is there a more tax-advantageous way to do this?
C) I am in the process of getting an entirely new plan for my family. It will be a high-deductible plan with an HSA. Does that change anything? Should the business pay the premium? Should the business make the contributions to the HSA?

Thanks for your help.

self-employed health insurance deduction

I'm self-employed and have an individual health insurance plan that covers my wife, children and me.

My wife works for a company that offers a high-deductible type health insurance plan, but she elected not to take this coverage.

Here's my question: Since neither my wife nor I are covered by her employer's insurance, can I deduct on my 1040 the premiums I pay on my individual health insurance policy ?

Thanks for any insight on that. It's a very confusing "fly in the ointment" for self-employed people trying to interpret the IRS rule.

Subsidized Spouse's Employer Plan?

Hi,

Would your spouse's employer contribute to the premiums?

Per section 162 the deduction is not allowed for amounts during a month in which the taxpayer is eligible to
participate in any subsidized health plan maintained by an employer of the taxpayer or spouse.

So the two key word are "eligible" & "subsidized". It sounds like she is eligible but opt not to participate. So that's one strike.

If she would be responsible for 100% of the plan premiums and out of pocket expense, then that would not be a subsidized plan.

However, most employers do contribute at least something toward the premiums. If your wife's employer is typical, then it's a subsidized plan. You need to find that out before we can come to a definitive conclusion.

Good Luck!
L:)

I have a client in our

I have a client in our situation, but he pays the premiums on his health insurance outside of the corporation. He of course wants to get the deduction on the front of his 1040, just like he did when he was a Business Insurance. What would you do with a client like this - explain the consequences of being aggressive with it, or flat out tell him he is out of luck this year but that if has the corporation pay his Dental Insurance premiums in the future the deduction will have a better chance of getting through an audit?

Thanks for any input. You seem to be more on the same page as me regarding this issue than some of the others.

HRA and S Corp

Unless something has changed regarding HRAs, tax deductibility is only allowed with C Corporations for owners. Owners/officer/partners of LLCs and S Corporations cannot participate in HRAs. They can set HRAs up for their employees, but, they personally cannot participate.

SCorp Health Insurance

Thanks for all the clarifications, but I have a situation of my own.

My hubby is the sole shareholder of the S-corp, we both work for the s-corp and have wages (w-2). We have a group insurance policy in the company name and paid for by the company for us and our employees. The policy lists me (the non shareholder) as the policy holder for our family coverage. Do these rules still apply? If so, do I just have to address the premiums for the 100% shareholder or the family coverage?

>2% S Shareholder - Direct or Indirect Ownership

Hi Bev,

Sorry, but yes the rules apply to you too. When you get into the nitty gritty, it's an S shareholder with > 2% direct or indirect ownership. That "indirect" part can get pretty complicated, but it definitely applies to ownership through marriage.

If you run the premiums through payroll and include them in the box 1 wages on the W-2, then you can deduct the premiums as self-employed health insurance. So it means a little more paperwork, but you still get the deduction.

L:)

Can you site the code where

Can you site the code where it states the attribution rules apply to the reporting of employee (spouse) medical premiums on the W-2?

Why would you not add the shareholder and spouse (employee) and report them on the shareholder W-2?

Thanks

Deducting Health Insurance Costs for S Corp.

Hi Linda,
Thank you for being such a wonderful resource to the small business community.
I have a question about deducting health insurance premiums.

I am the only employee of an S Corp which I also own. One of my Corporation's customers allows my Corporation to be part of their group medical and dental insurance plans. The customer deducts the cost for each plan from the payment they send to me each week.

As a Corporation, I would like to offer free medical and dental insurance to its only employee (that's me!)

What is the best way for my Corporation to classify the expenses so that they can be considered a tax deductible expense for the Corporation? Does the employee have to claim this free benefit on their taxes?

Thank you for your time and patience!
Regards,
Gary

Health plan

Be careful in doing this.
Plans clearly state emplyer/employee eligibility to be on the plan.
Problems will arise when you have a large claim or someone in the group does and the insurance company investigates the group to see if it meets the eligible employee requirements.
They may ask to see the employer wage and tax statement and guess who doesn't show up on it.

Go buy an individual plan.

Health Plan

Thanks Scott. Good advice. I never thought of it from this angle but makes alot of sense.
Regards,
Gary

Deducting health insurance premiums

I own and operate a S-corp. with my wife. We both have single plans of a HMO health insurance. The corporation pays the expenses and we duct them on the 1120S line 19, other deductions. We never included the premuims on our W-2s. Is this allowable?
Also, I want to begin deducting the health insurance on our 1040. What lines should I deduct on there? I want to relieve my S-corp. of the burden of excessive expenses.
It seems if you can deduct health insurance on the 1120S, but have to include them on the W-2, it's a wash. There's no real benefit of S-corp. income reduction. Is this true?

Cobra & S-Corp

Hi

I have started s-corp in July 2008. I am 100% shareholder. I am using cobra coverage from my previous employer which is HSA eligible High Deductible plan. My CPA told me that I cannot take the tax deductions for this premiums or deductibles for tax year 2008.

Atleast I want to be doing it right to be eligible to take tax deductions. Please let me know how to set this up.Now I pay from my personal account $500 premium every month to my previous employer for Cobra Coverage as it is still managed by them. Now I have set up an individual HSA to pay for the deductibles as I have 7k deductible.

Please let me know how to set it up to get tax deductions from my 1120S & 1040.

Thank you
PB

Keep in mind you may

Keep in mind you may qualifie for a 65% reduction in cobra premium if you applied after 9-1-08.

That s-corp designation just doesn't work for self-employed.
I don't see any way around the deducting of the premiums.

Where is the tax benefit

Hi Linda,

You are a great help to self-owned businesses. Thanks!!

I started a S-Corp in June 2008. I am 75% shareholder and wife is 25%. I am the only employee on the company payroll. The health insurance policy in under my own name and not the company's name.
In 2008 I paid all the premiums and copays etc from my personal account. I did not know about this law where I needed to re-imburse myself from the corp or have the corp pay directly to get tax benefits for the health insurance costs.

I have 2 questions

1. Now that 2008 is already gone and I already paid the premiums from my personal account, is there still a way to get tax benefit of the health insurance costs?

2. This is more of fundamental question and I apologize upfront for my lack of understanding here.
With this new law where the premiums have to be reported on the W2, I don't see the tax benefit.

Assume I take 50K as salary and spend 10K on health insurance by myself which I cannot deduct on my 1040 with the new law. So basically I pay taxes on 50K. On the other hand if the company pays the cost and reports the premiums on the W2 then I essentially take 60K in wages, deduct 10K for premium costs and still pay taxes on 50K, so where is the benefit?

Thanks in advance for all the help!!.

Hi Linda, I got the answer

Hi Linda,

I got the answer to my second question from one your other blogs i.e. the tax benefit comes from the fact that the corp will report reduced income because of the higher wages paid.

So that leaves only question#1 whether there is any way to get tax benefits for the 2008 premiums?

S Corp Expenses on Line 29

With the new IRS ruling, does a S-Corp need to have an HRA in order to write off medical expenses on Line 29? Thanks.

You could try and set up an

You could try and set up an HRA and deduct 2008 premiums through it.
Because isn't there a provision to use the money by a certain date for 2008 dollars or is that only FSA.

HRAs

Without the HRA, the S-corp can only reimburse the premiums expenses.

L:)

Med Expenses

Is this not a good question?

Health premium reimbursement , HSA, HRA

Hi Linda

I've been working for a company and I always got a W-2, I opened up an S-Corp and now I get a 1099.
I am the sole proprietor and I have been paying for my own health insurance (privately, not under my company's name).
I just started getting reimbursed for my premium, and I get the check paid to my S-corp.
So my question is, with the health reimbursement check that my company receives:
A) do I just deposit in my business bank account and have my health premium paid through that account? And if do this, is the health premium reimbursement going to be included in my 1099 as income?
B) should I open an HRA or HSA account?

Thanks for your help, I'm just very confused.

I'm confused too....

Is your client reimbursing your S-Corp for the health care premium? That's unusual.

A) Yes. and Probably.
B) HRA. An HRA is not an account. It's a written agreement.

What I would do is set up an HRA, that way you can get reimbursed for your out of pocket health costs too.

The client pays your S-Corp. Your S-Corp reimburses you.

The amount the client pays income to the S-Corp.
The S-Corp adds the reimbursement to your W-2 Wages and deducts it as salary on its 1120S.

You report the W-2 wages which include the HRA reimbursements and deduct the HRA amount as self-employed health insurance deduction. The HRA amount get reported separately on your W-2, box 12.

A lot of moving money around, but the net result is the client pays your health care premium and your S corp pays & fully deducts the remaining health care costs.

Pretty neat!
L:)

Health Premium Deduction and 2% shareholder definition

Linda,

I have a question?

S-Corp with Spouse 100% shareholder.
She gets no compensation nor does she provide any service to or for the corp.
I am the only salaried employee of the s-corp.
We have an individual healthcare plan in my name.

Now if I include the healthcare premiums in my wages, can i deduct them?

I am not a > 2% shareholder but As per § 318. Constructive ownership of stock
An individual shall be considered as owning the stock owned, directly or indirectly, by or for—
(i) his spouse....

My CPA says I cannot deduct and should change the articles of the corporation to make myself > 2% holder

Please advise

Thanks,

2% Shareholder

I agree. Either transfer the shares from your spouse to you, or report the value of health care premium on your spouse's W-2.

Another reason to change the ownership is if your S-Corp ever losses money and your spouse doesn't materially participate it could change the character of the loss to passive which can only offset passive gains.

L:)

HSA and greater than 2% S-Corp Shareholders

We understand that a greater than 2% S-Corp shareholder is generally not considered an employee and cannot receive an employer HSA contribution. Can the greater than 2% S-Corp shareholder make a before-tax contribution to the HSA on their own?

Single Member LLC - Healh Ins & Health Savings Deductibility

Linda - thanks for the great site and valuable info.

I am the sole member of my LLC. I elected to file a Sch C. I have an individual high-deductible health plan and a health savings account both setup in my name. Do they need to be in the name of my LLC instead to deduct these expenses? Both deductions I actually report on the front page of my 1040 (not sch C). Do I need to include the premiums in my Sch C revenue too?

Thanks,
Julie

Deducting Health Insurance

Hi Julie,

No, the plans can be in your name. As a sole proprietor, there is no legal distinction between you and your business so having the plans in your personal name is fine.

Both the premiums and the HSA contributions are reported on the 1040, not the Schedule C (which is a bummer because you end up paying SE tax on it).

The HSA contribution goes on line 25 of the 1040 and the premiums paid go on line 29.

If you include the premiums on the Schedule C and the 1040, you'll be deducting it twice and underreporting your income.

Hope this helps.

L:)

Part-time job + Self-Employed with HRA?

Linda,

Great blog and explanation of how the new IRS rules impact the use of an HRA.

I have two jobs: A part-time job where my health care premium is paid by my employer. I'm also a full-time self-employed individual (Currently as a Sole-Pro)

I'm thinking of transitioning to an S-Corp and will be the sole employee/owner. Am I allowed to contribute to an HRA as the owner and receive the benefits as the employee? Obviously my health care premiums would not be included as they are provided by my part-time employer. However I still spend a lot on medications, co-pays, and other medical related expenses.

Basically I'm looking for the easiest (and legal) way to make my medical expenses tax deductible.

Thanks!

Adam

HRAs when you're covered under another plan

Hi Adam,

Actually if you're already covered under another plan, the HRA isn't really going to help you.

The trick to the HRA is you have include the payments as part of your W-2 income. Then you deduct it under the self-employed health care premiums, line 29 on your 1040. This is deduction is covered under IRC Section 162(l).

In order to be eligible to take this deduction you or your spouse cannot be eligible for a subsidized health plan by another employer. If your current health plan is not subsidized then you could have an HRA.

Otherwise the HRA would actually increase your taxable income because you would include the payments in W-2 income but you couldn't deduct it anywhere except as an itemized deduction & you're pretty much back at paying for the health care costs out of pocket.

You would get a little benefit as you would save on the FICA tax of the HRA payments and you could increase your retirement plan contribution because your W-2 wages are increased.

Hope this helps.
L:)

S-corp and 100% owner, best way to set up an HRA

Hi Linda,

I am trying to understand the best way to set up an HRA and then explain this to my accountant (who has not dealt with these yet).

Situation: S-corp, I am the 100% owner and only employee, physician, $400,000 income with a defined salary of $225,000

Per a previous question, should I consider myself a statutory employee and put the HRA in my name?

Would it be better to make a wife an employee (she actually does a fair amount of administrative functions) and pay her $10,000 per year which is then used to fund the HRA for the same amount? The net result being $0 taxable income and minimizing paperwork (SS, medicare, etc).

Briefly, how does my accountant track all the numbers (forms, boxes, etc)?

My goal is to take take advantage of a HRA but minimize my paperwork headaches. Thanks.

Setting up HRAs

Hi,

The HRA is in the name of the Corporation. You as an employee enroll in the plan. Also, the HRA is funded completely by the employer. The employee is not allowed to make contributions to an HRA. Don't confuse and HRA with an HSA. An HSA can have employee contribution but its a different beast entirely and is extremely limited in the associated health plan & the types of expenses it can reimburse.

I don't think adding your wife as an employee would minimize the paper work because now you're going to have a payroll for 2 people.

Assuming your medical costs are $10k/yr for your family, you could pay yourself $215K and then have $10K of reimbursed medical through the HRA. You would still be getting $225K as you are now, but you would safe the 2.9% Medicare tax on that $10K.

As >2% shareholder the HRA reimbursements are included in your wages (Box 1 of your W2) but they are exempt from payroll taxes, FICA & unemployment. The S-Corp medical payments are also reported in box 14 of your W2 which are then deducted on your 1040 as self-employed medical expenses. The net result is the company pays the medical expenses with no tax implication to you other than the paperwork.

Hope this helps.
L:)

HRA

Linda,

I am in the similar situation as the above physician. does company(S Corp) pay for12.4% of Social security tax and fed income tax on this HRA reimbursement. Also can I deduct health care premium paid by my spouse (employed by another company) under HRA

Thanks, you blog is very useful.

Raj

HRA Snag

Hi Raj,

If your spouse is eligible for a subsidized health plan at work, you will lose some of the benefit of the HRA.

HRA payments must be included in your W-2 Wages, however, they are exempt from social security, medicare & unemployment tax. They are subject to income tax withholding.

If your spouse is not eligible for subsidized health insurance at work, then you can deduct the HRA payments as Self-Employed Health Insurance deduction on Page 1 of your 1040. The net effect being you don't pay any income tax on the HRA payments.

If your spouse is eligible, then you lose the Self-Employe Health Insurance deduction. :( So you don't pay employment tax, but you do pay income tax on the HRA payments.

Any premium your spouse pays through the employer is already tax exempt. You can not reimburse those premium payment through the HRA.

Hope this helps.
L:)

Confused S Corp w Chronic Pain

My husband and I own an S Corp. My insurance comes from a COBRA plan, my daughter's from an individual conversion. I'm preparing taxes for 2007 and 2008. Please tell me I can deduct these and other med expenses somewhere on my return? Insurance, meds, copays coming to almost $1,000 a month!

Deducting Medical Premiums

Obviously you didn't submit your 2007 individual return either. I'm also going to assume that you didn't file any W-2 for 2007.

I would file W-2s for 2007 that include in gross wages the amount of the premiums for you, your husband and your daughter. Premiums only, no copay or out-of-pocket expenses. (You may have to pay a penalty for late filing of the W-2, plus you should have filed Q4 941 & 940. You'll need file these too).

The premiums are not subject to FICA tax, so the W-2 will show only wages in Box 1 and the same amount in Box 14 with "SCORP MP" as the description.

Deduct that amount as wages to shareholders on the S-Corp's 2007 1120S. On your 2007 individual return report the W-2 wages as income and the value reported in box 14 on the line for the Self-Employed Health Insurance Deduction. The next effect is the S Corp pays for & deducts the premium portion only.

Do the same for 2008. You have until 2/2/09 to file the Q4 941 & 940 forms on time.

Any other out-of-pocket expenses you can only deduct on Schedule A subject to the 7.5% AGI floor.

You have a lot of work ahead of you. :(

L:)

S-CORP - How expenses are booked on overseas project.?

Hello,
Recently I have started an S-Corp, and taken up a overseas project (the invoices are raised on US-Company, and payments are done in US in USD) The US company also pays most of the expenses.(like, Air tickets, Hotel stay and partial local transport)

The question is: How do I deduct these expenses? can I also show other expenses which are not covered by US Company (I am traveling to this country on and off and staying there for couple of months, some times around four months)

Please clarify, if I need to produce a receipt for each and every expense, for example:
Hotel, Food, Taxi, Internet, Telephones etc?

Is every expense need to be supported by a receipt?
Say if I pay $60 for taxi and do not have a receipt.. is it acceptable?

A friend of mine suggest that, I can also take perdiem rates as published by US department of State. Can you please explain how does this work?
Link: http://aoprals.state.gov/web920/per_diem_action.asp?MenuHide=1&CountryCode=0000

Please clarify

Overseas Expenses

Hi SD,

OK. Lots going on here.

First you can deduct the overseas business travel on your US return if purpose for the travel is entirely business. If the overseas travel was only partly for business reasons then a plethora of exceptions could apply to limit the deductibility of the travel expenses. See Chapter 1 of IRS Publication 463, Travel, Entertainment, Gift, & Care Expenses".

So when you say "this country" is that the US or overseas? Why isn't the company paying for the business-purpose travel expenses? I don't think I have the whole picture. :)

Per diem is handy because, if you qualify and you only reimburse employees the per diem rates, then that satisfies your "adequate accounting requirements" & you don't have to produce any receipts for the travel expenses. Instead you would reimburse at the lodging & meals rates given on the State Dept page you references. You can only use 3/4 of the rate for the day you depart and return.

Now for the bad news...

If you own 10% or more of your S-Corp (either directly or indirectly through a family member), the per diem rates DO NOT satisfy the accounting requirements and you must be able document all your expenses. (See page 29, IRS Pub 463)

That means, yes, you do need a receipt or other documentation for every single travel expense. Other documentation could be a travel log that documents tips, taxi & public transit expenses when a receipt is not readily available. So if you don't have a receipt jot the expense in your journal & that will suffice. You should probably come up with a monthly travel expense reimbursement form that you use to document the expenses reimbursed.

Pub 463 has a lot of great information in it. Especially about record keeping & what kind of documentation you need. The problem is it's so jam packed with info it takes a while to absorb it all.

I hope this helps!
L:)

S Corp Health Premiums

Your article says effective 2008. What about 2007? I was reading Pub 535 and on page 18 there is a "Tip" that says you may be able to amend prior year returns to take the self-employed health insurance deductions under the new rules.

It's not clear to me if this is referring to future years (like in 2009 going back to 2008). I hate reading IRS publications. Oh well.

Thanks for your input.

2007 treatment for S-Corp Premiums

Yes, in reading Pub 535, you can apply Rev. Proc. 2008-1 to 2007 and earlier tax years.

You can go back to 2006 & earlier years and amend your returns using the treatment described. Actually I think the 4 examples listed in Rev. Proc. 2008-1 are the easiest to understand but the rest of it is "taxlish". :)

Hope this helps.
L:)

Thanks for your help.

TaxNewbie

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