No, you won’t have to pay taxes on health insurance paid by your employer!
But there is a new reporting requirement included in the new health care law that requires health insurance premiums to be reported on an employee’s W-2. Current law excludes health insurance from taxable income, and nothing has changed this tax-free employee benefit.
There is a new W-2 reporting requirement beginning in 2011. The new law requires employers to include the cost of health insurance premiums paid for employees on their W-2’s in an information box.
You may be asking — what do I need to do now? If you issue W-2’s and pay health insurance premiums for your employees, begin accumulating insurance premiums paid by employee starting in January 2011 so the information will be readily available for W-2 preparation when January 2012 rolls around.
Since the health care law actually continues the tax exemption on employer-sponsored insurance, why include a requirement that employers report the value of health insurance on the W-2? Widely publicized reasons point out:
- The new health insurance law will eventually penalize people who are not insured. The W-2 reporting requirement will help the Internal Revenue Service verify that people have coverage, both for themselves and their dependents.
There is also a tax that goes into effect in 2018 on the so-called “gold-plated” health insurance policies—those policies that cost significantly more than the national average. The W-2 reporting will allow the IRS to more easily collect the tax.
Please contact us if you have questions on getting ready for this new reporting requirement.
About Blackman & Sloop CPAs, P.A.:
Blackman & Sloop is a full-service CPA firm headquartered in Chapel Hill, North Carolina and is actively involved in auditing, taxation, management consulting, financial planning, and related services. The firm directs a large part of its services toward providing management with advice on budgeting, forecasts, projections, financing decisions, financial analysis, and tax developments. The firm also performs review and compilation services and prepares not-for-profit, corporate, individual, estate, retirement plan, and trust tax returns as well as technology consulting services regarding installation and training on QuickBooks. Blackman & Sloop provides services in Raleigh, Durham, Chapel Hill, RTP, Hillsborough, Pittsboro, Charlotte, and the rest of North Carolina. We are an independent member of the BDO Alliance USA. To find out more please visit http://www.blackmansloop.com
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