What's S-Corp Owner's Health Insurance?
S-corp owner's health insurance is for accident or health benefits provided to 2% shareholders of an S corporation.
It's subject to federal withholding tax, but exempt from Social Security, Medicare, and federal unemployment tax (FUTA). Most states follow the same taxability rules as federal, but there are some states that don't. For more info, contact your state agency (see Payroll Resources: State government resources for contact info).
To set up an S-Corp Owner's Health Insurance pay type for an employee:
- Go here to the Employees tab.
- Click an employee's name.
- On the employee's overview page, look for the Pay section and click Edit.
- Scroll down to the What additional ways do you pay? section and click to select the S-Corp Owner's Health Insurance checkbox.
- Optional: Enter a default amount to be paid each paycheck. You can always change the amount when you create the paycheck.
- Click OK.
Next time you create a paycheck for the employee, the S-Corp Ins. pay item appears. Simply verify or enter the amount for the pay period and our payroll service calculates the amount and includes it on the employee's paycheck.
If you plan on including the entire S-Corp insurance amount in a single paycheck, make sure that the other wages (salary, bonus, and so on) cover the withholding taxes calculated on the check.