01/28/2011

We have had tons of activity on the S corporation shareholder health insurance issue. Here is an update related to State Unemployment–at least here in Colorado.

The State of Colorado has taken the position that health insurance premiums of S corp shareholders IS includible in gross wages for unemployment. It is NOT includible for Social Security, Medicare, or FUTA. Colorado’s law states that all items taxable for FUTA are taxable for Colorado SUTA. So we asked the Department of Labor:  why do we have to include health insurance premiums if they are NOT included in FUTA? And the answer (drum roll please): the law does not say what is EXCLUDED, only what is INCLUDED — so the state is free to include more than FUTA. Interesting, eh?

And a sign of the economic times–at least here in Colorado.