S-Corp Shareholder Insurance, OT Rules and Year-end planning


W-2 Reporting for S-Corp Shareholders

If your business is an S-corporation that pays for or provides accident and health insurance premiums on behalf of any shareholder-employees with at least 2% or more ownership, make sure you are properly reporting these benefits when preparing your year-end W-2 forms.

According to the IRS, these benefits must be included in taxable wages for income tax withholding purposes on the shareholder-employee’s Form W-2. The benefits are subject to federal income tax withholding, but are NOT considered wages subject to Social Security and Medicare taxes.

The “above-the-line” health care deduction is still allowed on your personal return.

Please remember, as part of the Affordable Care Act, if you have more than 1 shareholder/employee, you are no longer allowed to reimburse the cost of health insurance unless the insurance is part of a group plan.

Please contact us with any questions.

Year-End Planning

Welcome to the first day of winter! Time to think about year-end tax planning if you haven't already started!

Here are a few general year-end planning items to consider:

  • Do you have 4th quarter state estimated payments? If so, you may want to make those on or before December 31 in order to deduct them on your 2016 federal return.

  • Have you sold stock this year? If so, you may have taxes that need to be paid on the gain.

  • Do you anticipate more or less income for your business in 2016 as compared to 2015? You may want to bill your customers earlier or pay expenses ahead of time.

  • Are you saving for college? There are tax benefits available to certain college savings plans.

We have been reaching out and meeting with our clients to discuss year-end planning. If you would like to meet with us to discuss any year-end items, please let us know!

Court Temporarily Blocks New Overtime Rules

In May of 2016, the U.S. Department of Labor passed a very controversial rule that almost doubled the minimum salary requirement that exempts employees from being eligible for overtime pay requirements. This law would have gone into effect on December 1, 2016 with roughly 65% of businesses being impacted by this sweeping change.

However, on Tuesday, November 22, a Federal Court issued a preliminary injunction to temporarily block the U.S. Department of Labor from implementing and enforcing its Final Overtime Rule nationally. As a result of this ruling, employers do not need to comply by the original December 1 effective date.

This injunction is only temporary pending further review of the court. At this time, it is unknown when this will be updated. We will keep you posted as any new developments occur.

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    Cornerstone CPA Group, LLC

    6420 West 95th Street Suite 202 
    Overland Park, Kansas 66212

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