| When can S-Corporation Health Insurance Premiums of Shareholders be deductible?
The IRS has provided some much needed clarity with respect to when 2% shareholders in an S corporation may deduct accident and health insurance premiums.
The Internal Revenue Bulletin, 2008-2, states that "in order for a 2% shareholder-employee to deduct the amount of the accident and health insurance premiums, the S corporation must report the accident and health insurance premiums paid or reimbursed as wages on the 2% shareholder-employee's Form W-2 in that same year."
Further, "the shareholder must report the premium payments or reimbursements from the S corporation as gross income on his or her Form 1040, U.S. Individual Income Tax Return."
The IRS states further, that "the only time where a 2% shareholder-employee is not eligible for the section 162(l) deduction is when they make the payments and the S corporation does not make any payments or reimbursements with respect to the premiums." | 
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