I have a different perspective.

A non-shareholder employee is not Self-employed. A non-shareholder employee is just an employee, period. Being an Adult, has no bearing. Being the Child of a shareholder of that employer, has no bearing.

Reimbursing this person for their own costs for health insurance is a Taxable benefit, as a Bonus, justified in the amount as against the cost. Getting this as a credit or deduction on the 1040, not a Sched C, is not related to anything "Self-employed."

The Internal Revenue Code disagrees with your perspective, alas. A child (or grandchild, or child-in-law!) of an S-corp shareholder is a deemed shareholder, and not just an employee, and subject to exactly the same tax treatment as an owner.

I can't seem to locate anything where that applies to Health reimbursements, outside of any plan, and to an employee, even if Child, and is adult covered under their own plan and not part of the shareholder's family plan.

Rules of attribution.

Thanks, as always.

:+1:

I always search the web for recent, timely, blog posts on the topic, since the rules keep getting modified, re-interpreted, etc. Here's one that seems easy to understand:

https://www.peoplekeep.com/blog/health-insurance-reimbursement-in-2019-what-are-the-options