Step 1

Read the flow chart below.

Step 2

Review this. Here’s what’s happening:

First, the S corporation pays for the health insurance either directly or by reimbursing you, the owner-employee.

Second, the S corporation either

discriminates in its coverage of employees, in which case the cost of health insurance shows on your W-2 as a wage subject to FICA and Medicare taxes, or

does not discriminate in its health insurance coverage of employees, and thus your W-2 wage for the cost of your insurance ... Log in to view full article.