Health Insurance Premiums for a more than 2% shareholder of a S-Corporation are reported in Box 14 of the individual's Form W-2 Wage and Tax Statement.
To get the amount reported in Box 14 to transfer to Line 16 of the individual's Schedule 1 (Form 1040) Additional Income and Adjustments to Income, if you received a Schedule K-1 (Form 1120-S) Shareholder’s Share of Income, Deductions, Credits, etc. , please complete the Self-Employed Health Insurance Deduction Worksheet found at the bottom of the schedule in the Forms list (Desktop users only).
To enter this information in the Federal Q&A (and Online users):
- From within your TaxAct return (Online or Desktop), click Federal. On smaller devices, click in the upper left-hand corner, then click Federal.
- Click Business Income in the Federal Quick Q&A Topics menu to expand, then click S Corporation income (Form 1120S Schedule K-1).
- Click + Add S Corporation Schedule K-1 to create a new copy of the form or click Edit to review a form already created.
- Continue with the interview process to enter all of the appropriate information.
- On the screen titled S-Corporation - Schedule K-1 Information, check Box 12 - Other deductions, then click Continue.
- On the screen titled S-Corporation - Other Deductions, click Yes.
- On the screen titled S-Corporation - Self Employed Health Insurance, click Yes.
- On the screen titled S-Corporation - Health Insurance, enter the Non-Marketplace health insurance premiums amount from Box 14 (health insurance premiums) and enter the Form W-2, Box 5 amount (if any) as Medicare wages from this S-Corporation as the deduction will be limited to this amount, then click Continue.
- On the screen titled SE Health Insurance - Qualified Long-Term Care, click Yes if you need to also enter information for a qualified long-term care insurance plan. Otherwise, click No. This will reflect the amount of your self-employed health insurance deduction that will appear on Schedule 1 (Form 1040), Line 16.
If you did not receive a Schedule K-1, see Form W-2 - Entering in Program.
Per IRS Publication 535 Business Expenses, on page 21:
Self-Employed Health Insurance Deduction
You may be able to deduct the amount you paid for medical and dental insurance and qualified long-term care insurance for yourself, your spouse, and your dependents. The insurance also can cover your child who was under age 27 at the end of 2020, even if the child wasn’t your dependent. A child includes your son, daughter, stepchild, adopted child, or foster child. A foster child is any child placed with you by an authorized placement agency or by judgment, decree, or other order of any court of competent jurisdiction.
One of the following statements must be true.
- You were self-employed and had a net profit for the year reported on Schedule C (Form 1040) or Schedule F (Form 1040).
- You were a partner with net earnings from self-employment for the year reported on Schedule K-1 (Form 1065), box 14, code A.
- You used one of the optional methods to figure your net earnings from self-employment on Schedule SE.
- You received wages in 2020 from an S corporation in which you were a more-than-2% shareholder. Health insurance premiums paid or reimbursed by the S corporation are shown as wages on Form W-2.
The insurance plan must be established, or considered to be established as discussed in the following bullets, under your business.
- For self-employed individuals filing a Schedule C (Form 1040) or F (Form 1040), a policy can be either in the name of the business or in the name of the individual.
- For partners, a policy can be either in the name of the partnership or in the name of the partner. You can either pay the premiums yourself or the partnership can pay them and report the premium amounts on Schedule K-1 (Form 1065) as guaranteed payments to be included in your gross income. However, if the policy is in your name and you pay the premiums yourself, the partnership must reimburse you and report the premium amounts on Schedule K-1 (Form 1065) as guaranteed payments to be included in your gross income. Otherwise, the insurance plan won’t be considered to be established under your business.
- For more-than-2% shareholders, a policy can be either in the name of the S corporation or in the name of the shareholder. You can either pay the premiums yourself or the S corporation can pay them and report the premium amounts on Form W-2 as wages to be included in your gross income. However, if the policy is in your name and you pay the premiums yourself, the S corporation must reimburse you and report the premium amounts on Form W-2 in box 1 as wages to be included in your gross income. Otherwise, the insurance plan won’t be considered to be established under your business.
Medicare premiums you voluntarily pay to obtain insurance in your name that is similar to qualifying private health insurance can be used to figure the deduction. Amounts paid for health insurance coverage from retirement plan distributions that were nontaxable because you are a retired public safety officer can’t be used to figure the deduction.
Take the deduction for self-employed health insurance on Schedule 1 (Form 1040), line 16.
Note that any link in the information above is updated each year automatically and will take you to the most recent version of the document at the time it is accessed.