IMPORTANT YEAR-END PAYROLL REMINDERS FOR S CORPORATIONS

As 2023 comes to a close; following are some important payroll items to consider prior to December 31st.

Shareholder Health Insurance

• S Corporation shareholders owning 2% or greater of corporate stock must include health insurance premiums paid on behalf of the shareholder/owner, spouse, and dependents on W2 as Gross Wages, Box 1 and Box 16.
• If insurance premiums are paid personally, the S Corporation must reimburse the annual premiums paid on behalf of the shareholder/owner, spouse, and dependents prior to December 31, 2023 in order to qualify for deduction. 
• Contact payroll provider to properly record the S Corp Premiums Paid on behalf of shareholder/owner, spouse, and dependents, on the W2 as Gross Wages, Box 1, Box 16, and Box 14 SCorp MP.

Personal Use of Company Vehicle 

• Personal use of company vehicles is considered a taxable fringe benefit included on W2 as Gross Wages, Box 1, Box 3, Box 5 and Box 16.
• Valuation methods include: General Valuation Method, Annual Lease Value Method, Cents-Per-Mile Method, and Commuting Value Method
• Contact payroll provider to properly include personal use of company auto, calculated from one of the above valuation methods, and report in Gross Wages Box 1, Box 3, Box 5, and Box 16.

Shareholder Reasonable Salary

• Be sure to pay shareholders/owners a reasonable salary prior to December 31, 2023.
• At a minimum, consider the 60/40 rule: 60% of net income is paid via salary and 40% is paid via shareholder distributions.

Feel free to reach out to our office with any questions or year-end guidance