Is 2 Shareholder life insurance deductible?
Henry Morales
Published Apr 10, 2026
Two-percent owners can take a corresponding deduction for the cost of their health insurance premiums on their personal tax return. This benefit is treated similar to health insurance premiums (above).
Are disability insurance premiums tax deductible for an S corporation?
Individual disability income insurance premiums paid may be deducted by the S corporation. Because more than 2% shareholder/employees are treated as self-employed for accident and health benefit purposes, the premiums are included in the shareholder’s taxable income, resulting in tax-free benefits.
Two-percent shareholders cannot use pre-tax payroll deductions to reimburse premiums paid by the S corporation. Two-percent shareholders can deduct the premiums using the self-employed health insurance deduction on Line 29 of Schedule 1 of Form 1040.
Where do term life insurance premiums go in a 2%’S corporation?
Group term life insurance coverage Group term life insurance premiums should be included in Boxes 1, 3 and 5 of a 2% S corporation shareholder’s Form W-2. The entire premium paid on behalf of a 2% shareholder under a group term life insurance policy is treated as taxable, not just the premium for coverage in excess of $50,000.
What are S-Corp benefits for 2% shareholders?
Set up benefits for S-Corp 2% shareholder-employees. For S-Corp or LLC companies, the IRS requires that health insurance premiums paid by the company to employees with a greater than 2% ownership be reported as wages (not pre-tax benefits).
How are health insurance premiums reported for S corporation?
Health and accident insurance premiums paid on behalf of a greater than 2-percent S corporation shareholder-employee are deductible by the S corporation and reportable as wages on the shareholder-employee’s Form W-2, subject to income tax withholding.
Is the life insurance of a 2% shareholder taxable?
The entire premium paid on behalf of a 2% shareholder under a group term life insurance policy is treated as taxable, not just the premium for coverage in excess of $50,000.
