Don't forget to deduct your health insurance premiums!

One of the benefits of being a business owner is that you can deduct your health insurance costs as a business expense. If you are deducting your health insurance costs through an S-Corp, however, there are some specific rules that you need to follow in order to claim this deduction. Here are the main steps:

1. The health insurance can be purchased either in your personal name or the business name (that part doesn't matter), but the premiums must be paid for by the S-corporation - either directly or as a reimbursement to you, the owner.
2. You must report the amount of premiums paid by your S-corporation as wages on your W-2 form.
3. So you deduct the health insurance from the S-Corp profits, but then add it back to your wages…. Not really a 'deduction' yet.  The key is that you'll then report the health insurance deduction as an adjustment to income on Form 1040, Schedule 1, line 16.  So ultimately, the income and deduction wash out on your personal return, and you're left with the deduction you took on the business return.  But you have to follow all the steps, for the deduction to be legitimate!
4. Be sure to reduce your health insurance deduction by the amount of any subsidy you received from the health insurance marketplace or any other source.

Follow these steps, and you can reduce your taxable income and save money on your taxes as an S-corporation owner.