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How to Make the $100-a-day Penalty Non-Applicable

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You may have wondered why an S corporation can pay for or reimburse a solo owner-employee’s individually purchased health insurance without worrying about the $100-a-day penalty.


The answer is that the S corporation’s payments of the solo shareholder-employee’s individual health insurance premiums are exempt from the $100-a-day penalty.


The exemption does not apply to health coverage for the rank-and-file employees. For the rank and file, you need either


  • a qualified small-employer health reimbursement arrangement (QSEHRA), or

  • group health insurance.


If you would like me to review your health coverage for compliance with the tax rules, please call me on my direct line at 909-570-1103 by email at Carlos@HealthcareTaxadvisor.com

Carlos Samaniego, EA
Enrolled Agent
Licensed by The Department of Treasury to represent taxpayers
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1255 W Colton Ave, Redlands, CA 92374

Ph. (909)570-1103
Fax (909)586-9190