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Old 05-25-2010, 04:01 PM
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Health Insurance/Medical Expenses for C-Corp

Suppose a C-Corp has only one officer, who is also an employee. Can the corporation deduct any medical expenses or health insurance it pays for the officer/employee? Can it be classified as an employee benefit, or is the fact that he is an officer make it non deductible? The expenses paid were not included in wages on his W2. He is the only employee of the corporation.



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Old 11-08-2010, 08:37 AM
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Generally speaking, "a C-corporation enjoys a full deduction for the cost of employees’ (including owner employees’) health insurance, group term life insurance of up to $50,000 per employee, and even long-term care premiums without regard to age-based limitations." Thus, to answer your question, yes, the the corporation can deduct any medical expenses or health insurance it pays for the officer/employee as a health insurance deduction item."

Furthermore, "the C-corporation can also deduct the costs of a medical reimbursement plan. If you have a lot of medical expenses that aren’t covered by insurance, the C corporation can establish a plan that results in all of those expenses being tax deductible, and deduct it as a employee benefit expenses. It matters not if there is only a Single Shareholder for a C corporation."

This is in fact rare advantage of a C corporation over a an S corporation!!

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