Health insurance premiums paid by the corporation for owners with at least 2% ownership in an S-Corp where an employee “non-discriminatory” medical plan is offered is taxable and reportable, thus the employer paid contribution is Social Security, Medicare and FUTA exempt but taxable for federal, state and local purposes.
To Process S-Corp Adjustments in the HCM Payroll portal:
- Under System Configuration > Business Rules, search “Earnings.”
- Click on the earnings link to see if there is an SCORP earning code configured in your database
- If there is, return to Business Rules, search “Earnings” and click on Earning Groups; ensure the earning code is available in the earning group assigned to your S-corp owners
- If there is NOT, use the following SOP to add an earning code using the appropriate “S Corporation Fringe Benefits” tax category: https://plansource.my.salesforce.com/sfc/p/#700000008HTo/a/390000015A5l/hxHDkJzuIu3cdeaU9iWzmJVhN5Rq90Q9RufQLIinZ8s
- In order to collect applicable taxes, the earning code must be added to a regular payroll check containing sufficient earnings to cover the employee tax amounts.
