W-2

[Christian]

A client has come in with a W-2 unlike any I have seen. Her husband's company established a plan for 2014 which permits him to deduct his health insurance premiums pretax and therefore he cannot use the premiums on his Schedule A. All the W-2s I have seen show a LOWER amount in box 1 which shows his wages than is reported in box 3 Social security wages. Her husband's W-2 shows a lower amount in box 3 and the higher amount in box 1. If you subtract his premiums from the gross wages you come up with the amount reported in box 3. I could be wrong but this looks as if an error may have been made at the husband's company. Any info is appreciated.

[Catherine]

I think you are correct and the W-2 is wrong.  Pre-tax payments lower taxable wages but not socsec wages or medi wages.

[KEYWEST_RICKS]

is this a 2% s/h in s corp?   maybe they are actually taxing the health ins prem and including on the w-2?   maybe they misunderstand the pre tax??

 

just a throwing out a SWAG

[Pacun]

I think you are correct and the W-2 is wrong.  Pre-tax payments lower taxable wages but not socsec wages or medi wages.

 

Pretax payment lower everything, I think, except for retirement plans.

Edited March 23, 2015 by Pacun

[Gail in Virginia]

Prior to this year, a 2% or more shareholder in an S-Corporation would have to add the HI premium back to the box 1 wages but not the box 3 and 5 wages, if the HI were paid under a corporate pre-tax plan.  The other, non-owner employees, would not have the HI as part of their wages in any of the boxes if it were a pre-tax plan.  The S-Corp owner could then deduct the HI premiums on page 1 of his tax return provided he had medicare wages (box 5 on the W2) in excess of his insurance premiums. 

 

This year, I don't really know and have probably done somebody's wrong. 

[Christian]

The husband is a non-owner employee. The way I see it they have effectively exposed his HI benefit to regular income tax while denying him the ability to dedut the premiums on Schedule A as he formally did. In other words a foulup in the front office.  

[Lee B]

The husband is a non-owner employee. The way I see it they have effectively exposed his HI benefit to regular income tax while denying him the ability to dedut the premiums on Schedule A as he formally did. In other words a foulup in the front office.  

 

Actually, I'm surprised that this type of problem hasn't popped up more often.

 

There was a lot of confusion about what to do around the time W -2 s were being prepared.

 

His employer needs to talk to their accountant and decide what they are going to do.

[Jack from Ohio]

The husband is a non-owner employee. The way I see it they have effectively exposed his HI benefit to regular income tax while denying him the ability to dedut the premiums on Schedule A as he formally did. In other words a foulup in the front office.  

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Edited March 24, 2015 by Jack from Ohio

[TAXMAN]

I am finding so many bad things this year that I too am way behind in getting anything done. Esp broker stmts.