Thursday, June 01, 2006

Ownership of Health Insurance Plan

IRS: ABOVE-THE-LINE DEDUCTION FOR S CORP HEALTH INSURANCE ONLY WORKS FOR COMPANY-OWNED POLICIES: In recent years S Corp taxpayers could deduct all of their health insurance "above the line," without having to clear the 7.5% of AGI hurdle.The IRS has decided to make it just a little harder for S corporation owners to qualify for this deduction. According to an announcement yesterday, S corporation shareholders will be able to take their health insurance costs "above the line" only when the S corporation has purchased the health insurance.This means S corporation shareholder-employees need to make sure that they have their corporations purchase their health insurance and include it in their W-2 income; otherwise the IRS will challenge the deduction.