S Corporation Shareholder Medical Insurance

[Customer Service]

In the tax code this is called: The cost of accident and health insurance premiums for 2% or more shareholder-employees paid by an S corporation.

This needs to be shown in Box 1 and Box 14 of the W2. It is not subject to FIT, which is the normal requirement for showing an item in Box 1. Therefore, the user must set it up as subject to FIT and then override the automatic calculation of FIT to be zero.

To set up this type of deduction we recommend the following:

1. Set up an income factor, amount per pay period, subject to FIT; Add'l W2 reporting is Fringe Benefit
2. Set up a matching deduction factor
3. On a separate payroll run, enter the amount as both the income and the deduction. Remove all tax amounts. The paycheck should be zero.
4. Print the paycheck.