Where to Enter Shareholder Health Insurance in Lacerte
On the 1120S, enter it on screen 36, Schedule K-1 Miscellaneous, in the health insurance field for a more than 2% shareholder, which is code 7. Use that field even when the shareholder received no W-2 from the S corporation. On the individual return, the W-2 and the K-1 have to be linked on screen 20.2 or diagnostic 468 appears.
- Open screen 36 and pick the shareholder
- Enter the premium in the code 7 field
- Confirm it reached the W-2 outside Lacerte
- Link the W-2 and K-1 on the 1040
- Check the allocation
- Detail
- Screen 36, Schedule K-1 Misc.
- Health insurance for a more than 2% shareholder
| Trial balance account | Lacerte screen and field | Lands on |
|---|---|---|
| More than 2% shareholder premiums | Screen 36, health insurance field, code 7 | Included in officer wages, K-1 box 17 |
| Employee health insurance, under 2% | Ordinary deductions with other employee benefits | Page 1 employee benefit programs |
| Self employed health insurance deduction | 1040 screen 24, SE Health Insurance | Schedule 1 of the 1040 |
| W-2 link for the deduction | 1040 screen 20.2, Part II | Clears diagnostic ref. 468 |
| The W-2 itself | Payroll, not Lacerte | Form W-2 box 14 |
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Try it freeWhere to Enter Shareholder Health Insurance in Lacerte on a trial balance
| Acct # | Account | Debit | Credit |
|---|---|---|---|
| 1000 | Cash | 42,800.00 | |
| 1200 | Accounts receivable | 68,500.00 | |
| 1300 | Inventory | 55,000.00 | |
| 1500 | Equipment | 145,000.00 | |
| 1510 | Accumulated depreciation | 47,500.00 | |
| 2000 | Accounts payable | 28,400.00 | |
| 2100 | Accrued expenses | 9,200.00 | |
| 2400 | Notes payable | 92,000.00 | |
| 2450 | Due to shareholder | 15,000.00 | |
| 3000 | Common stock | 10,000.00 | |
| 3900 | Retained earnings | 86,300.00 | |
| 3950 | Shareholder distributions | 52,000.00 | |
| 4000 | Gross receipts | 612,000.00 | |
| 5000 | Cost of goods sold | 318,000.00 | |
| 6000 | Salaries and wages | 88,000.00 | |
| 6050 | Officer compensation (the account this page is about) | 72,000.00 | |
| 6300 | Depreciation expense | 21,500.00 | |
| 6900 | Other operating expenses | 37,600.00 | |
| Total | 900,400.00 | 900,400.00 |
Example journal entries
| Account | Debit | Credit |
|---|---|---|
| Insurance expense | 14,400.00 | |
| Cash | 14,400.00 |
| Account | Debit | Credit |
|---|---|---|
| Officer compensation | 14,400.00 | |
| Insurance expense | 14,400.00 |
The rule before the screen
For a more than 2% S corporation shareholder, health insurance premiums paid by the company are included in W-2 wages for income tax purposes. They are not subject to Social Security and Medicare tax, and the shareholder then deducts them on their own return as self employed health insurance.
Premiums for employees who are not more than 2% owners are a normal employee benefit deduction and belong with the other employee costs.
So two things have to happen, and only one of them happens in Lacerte. The premium has to be in the shareholder's W-2, which is a payroll matter, and the return has to report it correctly.
Screen 36, even without a W-2
Enter the amount on screen 36, Schedule K-1 Miscellaneous, in the health insurance field for a more than 2% shareholder, code 7. Intuit's guidance is to use that field even when the shareholder did not receive a W-2 from the S corporation, which is the common situation when the premium was never run through payroll.
Lacerte does not produce the W-2. If the premium never reached box 14 of the shareholder's W-2, the return and the W-2 disagree, and the shareholder loses the personal deduction.
Diagnostic 468 and the missing link
On the individual return, the self employed health insurance deduction depends on the W-2 and the K-1 being connected. Diagnostic ref. 468 says the premiums were not deductible, and the fix is on screen 20.2, Part II, selecting the same W-2 in the field for the W-2 received by the greater than 2% owner.
It is a linking problem rather than a computation problem, which is why the numbers can all look right while the deduction does not appear.
Allocate by ownership, not by who is insured
Amounts on an 1120S should not be allocated to shareholders differently from their ownership percentage. Doing so risks creating a second class of stock, which would terminate the S election.
That constraint surprises clients with two shareholders where only one is on the company plan. The allocation on the return follows ownership; the economics between the shareholders are their own arrangement.
Tax return treatment
| Form | Line |
|---|---|
| Form 1120S | Included in officer compensation on page 1 line 7, reported on the K-1 |
| Form W-2 | Box 14, and in box 1 wages, for a more than 2% shareholder |
| Form 1040 | Self employed health insurance deduction on Schedule 1 |
Common questions
Where do I enter S corporation shareholder health insurance in Lacerte?
Screen 36, Schedule K-1 Miscellaneous, in the health insurance field for a more than 2% shareholder, code 7. Intuit says to use that field even if the shareholder received no W-2 from the S corporation.
Why is the self employed health insurance deduction not showing on the 1040?
Usually because the W-2 and the K-1 are not linked. That is diagnostic ref. 468, and the fix is on screen 20.2, Part II, where you select the W-2 received by the greater than 2% owner.
Does Lacerte produce the W-2 with the premium in box 14?
No. The W-2 comes from payroll. If the premium never made it into the shareholder W-2, the return and the W-2 tell different stories and the shareholder cannot take the deduction.
Can premiums be allocated to only one shareholder?
Not differently from ownership percentage. Allocating amounts on an 1120S other than pro rata risks creating a second class of stock, which would nullify the S election. Any difference in the economics is settled between the shareholders, not on the return.
Related answers
Go deeper
This page is the short answer. These articles work through the same ground in detail.
Last reviewed October 18, 2026.