QBI/SE insurance

Forum|Forum|6 years ago
April 29, 2020
1 reply
54 views

If an S corporation shareholder pays SE insurance personally and takes deduction on Schedule 1 of form 1040 (He also receives wages from the S corp), is the QBI income amount that flows through to him from the S corp reduced by this same amount, for the QBI deduction?

Lacerte Tax

This topic has been closed for replies.

itonewbie

Level 15

Yes, if that the premium was reimbursed and included as part of his wages on the W-2.

However, there is (or at least there was) a problem with this not flowing correctly for 2% shareholder-employees of S corps. Please see this thread for more info: https://proconnect.intuit.com/community/lacerte-discussions/discussion/re-qbi/01/75726#M14730

---------------------------------------------------------------------------------Still an AllStar

qbteachmt

Level 15

I read this as a bit convoluted and wanted to confirm/clarify.

If the person is paying their own Health Insurance Premium (not "SE insurance"), and the corporation is not paying it nor reimbursing for it through Payroll, then there is no corporate involvement in that cost.

If the corporation pays it directly to the insurer or as reimbursement to the shareholder as the insured, that needs to run through payroll, and that makes it part of Gross Labor costs as a taxable fringe benefit, so it becomes part of QBI computation.

And of course this person would also get wages, because that is required.

Don't yell at us; we're volunteers

1

11BusterAuthor

Level 5

You are correct as there is no involvement with the S corporation and the shareholder in terms of payment. Shareholder paid the premiums himself, out of pocket. I've entered on screen 39 (as he was enrolled he CA Care but received no PTC). In that screen, I've linked it with the W2 he received from S corp. This is then generating, I believe, the SE insurance deduction on line 16, Schedule 1. However, the question I still have, is if the QBI flow through income from the S corp is reduced by this amount?Form 8895 instructions refer to SE insurance as one item not included in the QBI calculation, but doesn't elaborate as to if it is paid personally, it need to be deducted out.

Sign up

Login with SSO

Let's get you signed in

Login with SSO