Should healthcare benefits received by shareholders in a PA-S Corporation be added to their federal Wages?
(We follow the State of PA in determining taxable wages) Answer: If the “owner” is the owner of a sole proprietor or a partnership, any benefits that the owner receives from the business are not deductible or must be considered to be a distribution because an owner cannot be an “employee”. Then, based on the law, if the “owner” is a shareholder in an S Corporation, a shareholder can be treated as a “regular” employee so the benefits aren’t taxable. However, if the “owner” is considered a “highly compensated employee” with an enhanced benefit package, the enhanced benefits are taxable.
Related Questions
- What if I have limited dental benefits available through my Federal Employee Health Benefit (FEHB) Plan? How does this affect my MetLife dental claims?
- What types of payments or benefits received by the employee from the employer are considered wages with DI and PFL benefits?
- Should healthcare benefits received by shareholders in a PA-S Corporation be added to their federal Wages?
