As we get closer to year end, we want to remind our S Corporation shareholders of the following items.
S Corporation shareholders who own a 2% or greater interest in the Corporation must include in their W-2 wage the following fringe benefits they receive from the corporation:
- Health Insurance (this is deductible as wages by the corporation and the individual receives a deduction on page 1 of their personal return equal to the amount included as wages on their W-2, resulting in no taxable amount to the shareholder). Failure to include the health insurance in the W-2 results in NO deduction for the Corporation.
- 100% of group term life insurance, disability insurance
- It is important to remember that a 2% or greater shareholder of an S Corporation is NOT eligible for cafeteria plan benefits
- Personal use portion of a Corporate provided vehicle
Please contact a team member at Rackers & Fernandez if you have any questions about how to handle these items before your W-2’s are prepared for 2013, or any questions regarding tax planning ideas for 2013.
Thanks and have a great day!