Self Insured Health Insurance
Husband and wife own 100% of Sub S corp. Corp pays health insurance for husband, wife and non-dependent son. In order for the individuals to have an above the line tax deduction on page one of form 1040 they need to include their allocated amount of the total health insurance premium in their w-2.
Question #1: Can they arbitrarily choose an allocation rate?
Additionally, they received a 1095-A which shows an advanced premium tax credit. I know that they can allocate this 1095-A in any proportion they choose. Question #2: Does the allocation of the health insurance premiums discussed above have to be allocated to the w-2 in the same ratio as that chosen for the 1095-A?
I'm assuming not since the w-2 would have already been filed prior to selecting an allocation for the 1095-A information.
Question #3: In allocating the 1095-A information, the "Monthly Enrollment Premiums" in column A, the "Monthly Second Lowest Cost Silver Plan (SLCSP)Premium" in column B, and the "Monthly Advance Payment of Premium Tax Credit" in column C of the 1095-A, I'm assuming that these three amounts would be required to be allocated at the same percentages. (ie, if 100% of column A is allocated to son, 100% of column B and 100% of column C would have to be allocated to him also).
Spouses and other family members are considered S corporation shareholders for these purposes, even if they don't actually have any stock in their names, they are treated as if they own all the stock that the husband owns.
Question #4: Therefore, since the husband and wife filing a joint return can take an above the line tax deduction for self employed health insurance equal to the allocation of such to their respective w-2's, shouldn't the son be able to take an above the line tax deduction also for the amount of the health insurance allocated to his w-2? Or would the whole amount of the health insurance only be allocated to the father and mother's w-2s? Even though they choose to allocate 100% of the 1095-A amounts to the son since he has the lowest income. Note: son works for the same Sub S that the parents own and receives a paycheck.