Health Insurance Premium Deductions & Tax Strategy for Entrepreneurs

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[@kgreg2525]

Thank you for the videos, I'm really enjoying them. ** One thing that I might add is where the audience could find more specs on the subject (i.e. IRS webpage, Form 1040 > Instructions > Line 10) Thanks again for sharing all of this

[@NaviMarajCPA]

Thanks @kgreg2525!

[@natej6671]

This is the best comprehensive explanation of Health Insurance Premium Deductions inside of 22 minutes. Navi, If I have an S-Corp and both my health insurance premiums and my HSA contributions being paid by the business via payroll deduction, do I have to get my Payroll company to distribute the funds to the Health provider and the HSA account?

[@randalrichey6408]

Great information and you cleared up many things other videos did not.

[@sarmadaldulaimi7963]

You answered all the questions .... Thank you .

[@hectormaldonado4225]

Hi Nave! on this video you explained how to deduct the health insurance premiums for sole proprietorship & s corp, and you mentioned that if a sole proprietorship has zero income the health insurance premiums are not deductible, how about when the 2% shareholder of a S corp has neither income nor basis, is the deduction not allowed on the new tax form 7206?

[@digitale93]

Great information and you have answered a lot of questions I was thinking about. I love your videos.

[@astridcastro3395]

This video was great, thank you! Can you explain why if you have a “day job” that offers health insurance, you can’t deduct your own health insurance through your business? I have a day job that offers a plan, but I wanted to see if I could get it on my own through my small business

[@winniea5115]

Thank you so much for your video. It is very informative and appreciated you going through the details.

[@puja4079]

Hi Navi - thanks so much for teaching us this. I have a situation . I lost my job recently and got on cobra. Subsequently started a single member llc taxed as an scorp. California doesn’t allow s corps with no employees to get a business health insurance plan. And the individual coverage is very very expensive over $1000/- . I am still continuing my cobra insurance from previous employer. But I cannot get any tax deduction for cobra payments. My question is if I can set up an accountable plan for my scorp to reimburse the cobra insurance premium payments . I am drawing a reasonable salary from my scorp. How do I set up the accountable plan…thanks you so much for taking the time to share your knowledge .. 🙏

[@TheZandrag]

yeah health insurance is mad pricey in Cali, no way around it

[@financiallyadjusted]

This is an amazingly helpful video! I'm an S-Corp business owner. I own a bookkeeping business so I'm trying to learn this to help clients as well as myself. I just elected to be an S-corp and I'm amazed at how many tax pros I know don't understand this or can't explain how to implement it. I'm in Pennsylvania and I believe I can do this by reimbursing myself for healthcare premiums. Would you say that's correct? I do have 2 other employees - my husband and a part time bookkeeper. Am I able to reimburse myself for this even though I don't technically offer this to other employees?

[@rcman0730]

How can I declare earned income if I have an LLC for my rental property so I can deduct health insurance.. I also have a holding company LLC for the rental LLCs. The rental income from the rental LLC flows thru the holding company LLC and eventually to Schedule E. The holding company LLC also trades in stock and it's income are Cap gains, interest, and dividends. These flows thru 1099's and to my 1040/Schedule D..

[@StephanieGagos]

I'm filing as an s corp (single owner) and I used to be on disability and still have Medicare. Do I pay my Medicare premiums and then reimburse myself from my business account monthly? Or should I just pay it and deduct it from my self employment tax return?

[@mike2959]

There’s a few caveats. S-Corp with employees being one of them. That complicates things like Health Insurance and 401K. A S-Corp owner cannot receive “fringe benefits”. Only employees can. So if my company paid half of an employees health care say $500 each month that employee doesn’t pay taxes on that benefit. Not true for the SCorp owner. It becomes part of his wages. Some of the solutions are than the S Corp. owner can deduct the healthcare expense on their personal taxes, but the standard deduction for married is almost $30,000 lol so likely that wouldn’t put somebody over that.

[@bryjonez]

Great job Navi!

[@silviadamen]

I just spoke to Gusto about running my health care premiums to my payroll, and they said that since I'm more than a 2% owner of the company, that the amout of the benefit (over $14k) would be then subject to Federal and State taxes. Therefore, it seems like I would end up paying MORE in taxes since I'm the owner of the S-Corp, whereas when I ran the health care preimiums through my solo proprietor company last year, I was able to deduct it from my Federal and State taxes. What am I missing here?

[@mike2959]

Your payroll company is correct. When you have a S-Corp you cannot receive “fringe benefits” if you have an employee and paid $500 a month to their health insurance that employee doesn’t pay any taxes on that “benefit”. You on the other hand will have to pay taxes on it as it becomes part of your taxable wages. As much as the recent talk of all pro’s on the s-corp election there are cons. The other con is a 401K. Because if you have employees you must offer them the same plan. The last con that comes to mind honestly is the taxes. I know I know…that’s WHY I was told to BE a S-Corp in the first place…well…let’s say your business paid you 65K in salary W2. And you took 25K in distributions. But…left 25K in profit for the year in the bank…. You have to pay taxes on that 25K as well. Just because you didn’t spend doesn’t mean it’s tax free. It’s called retained earning. Retained earnings in a S-Corp vs a C-Corp are where a C-Corp is better.

[@paulfloridausa]

I am a Realtor that received payments on my LLC but Also and S corp(which is another story) on my taxes for the purpose of insurance do I go the AGI Line 11 or the Taxable Income Line 15?( my tax preparer advise of a big jump on my tax liability because of this...)

[@ajt7125]

Hi good video, thank you. Question - when determining reasonable comp., I have seen where RC is calculated and THEN the health insurance premium gets ADDED to the RC number. So if RC = 50k and health insurance = 10k, box 1 would show 60k and box 3 and 5 would show 50k. Is that not correct? What I hear you saying is the health insurance premium gets SUBTRACTED from the RC number and not added. I suppose it could be looked at from both sides...someone could set their RC at a number without counting for the health insurance reimbursement, so they would add it to RC....OR....someone could look at it as my RC salary is this number (with reimbursements already factored in to the RC number) and any reimbursement is subtracted income for box 3 and 5....so for SE tax it would be lower. What do you think?

[@ajt7125]

As an additional thought to my question above - RCReports, who is known for RC calculations, I believe has stated RC, by their measure and calculation, is for the Medicare wage box (box 5), so if that is accurate then I would think any health insurance reimbursement (or HSA contribution) would be ADDED to their RC number, thus making box 1 higher than what RCReports calculated. Thoughts?

[@NaviMarajCPA]

Thanks for the feedback. My thought is Box 1 should be the RC number calculated. Box 3 and 5 should be the RC number minus health insurance premiums and HSA contributions.

[@NaviMarajCPA]

If you post the link to where you read this on their website, I’ll give it a read (time permitting).

[@ajt7125]

@@NaviMarajCPA "Your Reasonable Compensation figure includes taxable Medicare wages & bonuses, healthcare and flexible spending accounts (FSA). It does not include non-taxable fringe benefits such as vehicle or vehicle allowance, stock options, company loans and other items not reported on a W-2 as taxable compensation." This is from one of their pdfs. So their RC number does have HSA factored in to it, apparently.

[@ajt7125]

So at the very least, if one were to go with their report RC number, then if RC = 50k and you contributed 5k to an HSA, then for box 1, that HSA contrib. amount would be ADDED to the RC amount because HSA is part of box 5, which is lower than box 1.... when an HSA contribution is involved....so box 1 = 55k?

[@luisalopez1706]

Quick question you mention we can’t use this deduction if you’re included in your spouse’s employer heath insurance. Spouse’s employer contributes to employees health coverage but not the husband or dependents. Can we use the amount that the employee and spouse pay out of pocket each month.

[@rasulmadyun4709]

Learned a lot. Good lookin out sir

[@TheK9Shepherd]

I know your video is about self employment or being an entrepreneur. I am neither but wondering if you can still answer this question. I will probably stop working when I am 60. I will not be self employed and I will no longer be receiving health insurance through my employer. I have a daughter and wife who will also need to be covered. I know I will have to purchase health insurance on the open market for all 3 of us (could be $20k-$25k per year, depending on the plan). Then when I am on Medicare, I'll still have to purchase health insurance for my wife and daughter. So, are those premiums going to be tax deductible outside of the standard deductions? Thanks !

[@loyaltywealth4u]

Thank you so much for your video. it helps a lot. Just want to confirm: I can contribute HSA from my company account and treat the same way with health insurance premium for the payroll tax part, right?

[@BestG2024]

Do you have any tips for a Self Storage owner? S-Corp doesn't do me any good. I'm trying to retire, but I have a young family and health care is soooooo expensive. Is there a way to make my insurance a wash to what I would have paid in?

[@ElCidPhysics90]

So should reasonable compensation include the amount the corporation pays for your health insurance and hsa? Sounds reasonable since it’s “compensation”.

[@kghart84]

Great information! Thanks!

[@olivercollins4836]

Navi, I've called my payroll Company 5x and my account 2x. Nobody has any idea how to integrate the health insurance premiums and the HSA into the payroll to reduce payroll tax due. There is no way to do it. What do I tell them?

[@NaviMarajCPA]

Simply tell them, “you’re fired”. I’m kidding (kinda). You’re going to have to figure it out on your own. There should be different types of pay that you can select in the payroll software. Find one that increases the wages without increasing social security and Medicare taxes. I believe Quickbooks payroll calls this S-Corp owner health insurance.

[@andylee9973]

Hi, Can I deduct my health insurance premiums with Cover California from my S Corporation payroll taxes?

[@patkelly7839]

what is LTC insurance vs health care insurance? turbo tax deduct the marketplace health insurance through sch1. if my spouse paid medicare health insurance...can that be deduct from self employed health insurance premiums?

[@williamperez-borroto8983]

I have an s-Corp. What if I pay health insurance for my entire family through the business? Is this applicable to the wages deduction? Or is it only valid if I pay for my own health insurance only?

[@Beijing131]

It is a little comfused when you said if you have a day job that you paid insurance premiums that can not deduct.? Vs you can deductible your wife and depending? So can you deduct market place insurance on line 17 sch 1?

[@VictoriaAndDaisyEntertainment]

If I have a single member LLC (not elected to be taxed as an S-corp), the LLC's net income after home office deduction is $100K, my health insurance cost is $5K, should I contribute 25% of $100K or 25% of $95K ($100K-$5K) to SEP IRA? Thank you!

[@Beijing131]

You are better off doing solo 401k.😊

[@travishayes3048]

If a person is working for a company but had to purchase their own health insurance, can you deduct health insurance costs?

[@kylecaudill9261]

The short answer is yes but you have to give up your standard deduction and itemize your deductions. Your standard deduction is 12,500 if you're single and twice that if you're following jointly. That would mean unless you have more than 12,500 in medical bills and insurance premiums it might not be worth it. Not a CPA but I'm in the same boat as you and that's what I've learned so far.