One Year-End Payroll Task S-Corp Owners Can’t Afford to Miss

As you wrap up payroll for 2025, there’s one important task that often gets overlooked, but skipping it could lead to reporting issues with the IRS. If you’re an S-Corp owner with 2% or more ownership and you (or your family) are enrolled in your company’s health plan, this blog is for you.

Here’s how to make sure that employer-paid health insurance is correctly reported by your final paycheck of the year:

1. Does This Apply to You?

If your company doesn’t offer health insurance, or you’re not on the plan, no action is needed. But if you’re a 2%+ S-Corp shareholder receiving health coverage through your business, you’ll need to make sure that information is properly added to your W-2.

2. Add Health Insurance to Owner Wages

The cost of employer-paid health insurance must be included in each eligible owner’s wages by their final 2025 paycheck.

How to calculate the amount:

• If your payroll provider tracks this, use their figure.

• If not, review insurance invoices and tally what the company paid for each applicable owner (including dependents).

• Multiply by the number of months covered in 2025, and adjust for any premium changes mid-year.

3. Communicate with Your Payroll Provider

Your payroll team will need to enter the health insurance amount using the correct classification (often labeled “S-Corp 2% Shareholder Health Insurance” or similar).

4. Plan Ahead for Next Year

To simplify next year’s process, consider asking your payroll provider to track this health insurance info with each payroll run going forward. That way, it’s already built into the system and not a last-minute scramble.

Taking a few minutes now to handle this correctly can save you time, stress, and potential filing errors later. It’s a small step that makes a big difference in starting the new year clean and compliant.