On Screen SSA-1099 in the Retirement folder, enter the corresponding self-employed form/schedule, and if applicable, unit number. Once the self-employed activity is identified, UltraTax CS will report amounts entered in the Medicare premiums, Prescription drug (Part D) premiums or Medicare Premium Total (RRB-1099) fields on line 1 of the Self-Employed Health Insurance Deduction Worksheet. If Medicare premiums included for SE health deduction purposes are limited by net self-employment earnings, the excess is reported on Schedule A, line 1.

Medical insurance premiums paid on behalf of a greater-than-two-percent shareholder-employee must be reported on the shareholder-employee's Form W-2 (see IRS Notice 2008-1). In UltraTax CS, enter the medical insurance premiums paid in Screen W2, box 14 with code 3 (Medical insurance premiums), select K-1 from the Form/Sch column drop-down menu. Next, select the corresponding K-1 S corporation unit number from the Unit column drop-down menu. UltraTax CS will automatically report the W2 box 14 medical insurance premiums on line 1 of the Self-Employed Health Insurance Deduction Worksheet.

Shareholder-employee medical insurance premiums entered on Screen W2, box 14 must also have the Form/Sch and Unit columns completed in order for the program to accurately calculate the Self-Employed Health Insurance Deduction Worksheet. If the Form/Sch and Unit fields are completed, and the deduction is still not calculating, review Screen W2 box 5 (Medicare wages). In order for the SE health insurance deduction to calculate, box 5 wages must be present on Screen W2. S corporations must pay reasonable compensation to a shareholder-employee in return for services that the employee provides to the corporation before non-wage distributions may be made to the shareholder employee. Therefore, if the only thing reported on the W2 is the equivalent insurance premium amount in box 1 (i.e. a non-wage distribution), that alone is not considered reasonable compensation. If the wages are reported on a Form W-2 from the S corporation separate from the insurance premiums (i.e. the shareholder employee does have reasonable compensation), the data entry for box 14 has to be done on the unit with the wage compensation.

Medical insurance premiums paid on behalf of the family member of a greater-than-two-percent shareholder-employee must be reported on the family member's Form W-2. In UltraTax CS, enter the medical insurance premiums paid in Screen W2, box 14 with code 3 (Medical insurance premiums). Next, go to screen OtherAdj and select the corresponding W-2 unit number from the Screen W2 unit# under IRC Sec. 318(a)(1) family attribution rules drop-down menu. UltraTax CS will automatically report the W2 box 14 medical insurance premiums on line 1 of the Self-Employed Health Insurance Deduction Worksheet.