Still not understanding 2% shareholder insurance benefits and how to report correctly.

[Nolanryan]

Hello, I am still not understanding the 2% shareholder health insurance benefit reporting via payroll. I understand that square asks for these numbers at the end of the year via the checklist. However, according to my accountant, "The monthly premiums are required to be reported in shareholder wages on the Form 941 Quarterly Reports throughout the year". I get that for health insurance for for shareholders, it can either be paid directly to health insurance company or set up via a employee reimbursement plan but still don't understand where to include this information throughout the year for form 941. I have reached out to square payroll support via email, and their answers still do not help as they are still missing information I am asking about. I need to figure this out as we are already in the 2026 tax year. 

Any help would be great. In my situation, we are a two owner LLC taxed as a S-Corp and are looking to get the 2% shareholder insurance above the line deduction but do not qualify for typical business health insurance as we have no other full time employees that aren't owners. 

Thanks! 

[Sammie_C]

Hi @Nolanryan, thank you for reaching out on this.

I went ahead and reached out to our Account Services team on this, as I have limited information available on my side. I am still waiting to hear back from them, but once I do, and I have more details on this I will post back promptly. 

In the meantime though, I am going to tag in a few of our Square Champions in case they know of anything on this topic. @TheRealChipA, @DinaLRosenberg, and @Bronze_Palms, are you familiar with any of this?

[Sammie_C · Accepted solution]

I just heard back on this, @Nolanryan.

Our Account Services team said that Square Payroll only collects the S-Corp 2% owner health premiums once a year. So you can provide the annual amount via the checklist and our Square Payroll team will report it appropriately on the W2, 941, 940, and state/local filings at the end of the year.

I hope this helps! Please let me know if you have any other questions on this.

[Nolanryan]

Thank you! 

[Sammie_C]

Happy to help! 

Feel free to reach out again if you have any other questions or concerns.

[tbsm]

Does anyone know if you can similarly report HSA contributions to 2% Scorp owners as it's own line item in Box 14?