Awesome

[Honu]

2011 W-2 Tax Forms and Obamacare

If this doesn’t get to you, then check your pulse. You may be a flat line...

Should you want to verify this, go to http://www.thomas.gov/, enter "HR 3590"
in the search box and look for "CRS Summaries." This is what you'll find.

Title IX Revenue Provisions—Subtitle A: Revenue Offset
"(Sec. 9002) Requires employers to include in the W-2 form of each employee
the aggregate cost of applicable employer-sponsored group health coverage
that is excludable from the employee's gross income (excluding the value of
contributions to flexible spending arrangements)."


Starting in 2011—next year—the W-2 tax form sent by your employer will be
increased to show the value of whatever health insurance you are provided.
It doesn't matter if you're retired. Your gross income WILL go up by the amount
of insurance your employer paid for. So you’ll be required to pay taxes on a larger
sum of money that you actually received. Take the tax form you just finished for
2009 and see what $15,000.00 or $20,000.00 additional gross income does to
your tax debt. That's what you'll pay next year. For many it puts you into a
much higher bracket. This is how the government is going to buy insurance for
fifteen (15) percent that don't have insurance and it's only part of the tax increases,
but it's not really a "tax increase" as such, it a redefinition of your taxable income.

Also, go to Kiplinger's and read about the thirteen (13) tax changes for 2010 that
could affect you.

[brianwspencer]

Honu -- to be honest, I did exactly what you said we should do and looked up the bill, and it says nothing at all about everyone paying taxes on their employer's contributions to their healthcare plans.

Where did the last paragraph in your post come from?

On CRS summary, the only mention of W-2s in the bill says this:

Amends the Internal Revenue Code to impose an excise tax of 40% of the excess benefit from certain high cost employer-sponsored health coverage. Deems any amount which exceeds payment of $8,500 for an employee self-only coverage plan and $23,000 for employees with other than self-only coverage (family plans) as an excess benefit. Increases such amounts for certain retirees and employees who are engaged in high-risk professions (e.g., law enforcement officers, emergency medical first responders, or longshore workers). Imposes a penalty on employers and coverage providers for failure to calculate the proper amount of an excess benefit.

(Sec. 9002) Requires employers to include in the W-2 form of each employee the aggregate cost of applicable employer-sponsored group health coverage that is excludable from the employee's gross income (excluding the value of contributions to flexible spending arrangements).

To me, and I'm totally okay being wrong if someone has better info than what I gleaned from reading this -- that says that the so-called "Cadillac" plans will be taxed at 40% at anything over $8,000/yr. It's okay if you have a problem with that, but that's not news, everyone knew that was going to happen.

$8,000/yr is an awful lot of money, and it won't affect very many people is my best guess. My old employer had EXCELLENT health insurance that covered basically everything with no deductible, and they only contributed about $5,000/yr to it....

So like I said, it's okay to have a problem with that, but your post makes it sound like every American with employer-sponsored health insurance is going to start paying income taxes on the employer's contributions, which as far as I can tell, is 100% false, if I've read the above provisions correctly, as it simply says that the value of those contributions will be noted on the W-2, *not* included in the gross earnings -- as obviously it would have to be noted on a W-2 in order to determine who qualified for the excess tax listed above...they can't just guess.

At least, I hope I'm right.

[Honu]

Go to the bill itself scroll down to section 9002, it clearly states that people will have what their employers pay in insurance for them added to their W2. For me its no big deal because trainers dont provide health insurance for their employees but for my partner it could be a pretty big addition to her payroll.
Maybe I misunderstand it then, to me it seems that bill states that what the employer spends on insurance will be added to the employees taxable earnings, Id love to be wrong about this.

[clyde]

That was awesome!!





(What the fucl< did he say?)

[brianwspencer]

Originally Posted by Honu

Go to the bill itself scroll down to section 9002, it clearly states that people will have what their employers pay in insurance for them added to their W2. For me its no big deal because trainers dont provide health insurance for their employees but for my partner it could be a pretty big addition to her payroll.
Maybe I misunderstand it then, to me it seems that bill states that what the employer spends on insurance will be added to the employees taxable earnings, Id love to be wrong about this.

I quoted Sec 9002 above and laid out why I think you are wrong, which I certainly hope you are, because that would be absurd.

The way I read it, those whose employers pay more than $8K/yr for one employee or $23K/yr for employee + family, would be subject to a 40% tax on the premium paid ABOVE that amount.

But how would the government know what the employer paid in premium contributions? They would know because it will be included on the W-2, which is, by my reading, what Sec. 9002 says. I don't interpret that in any way to say that the employer contributions will be rolled into gross income (thereby making them taxable income for EVERYONE), but rather that they will be included on the W-2 as a piece of information relevant for tax purposes.

See what I'm saying with that? I hope I'm right, or I'll be right there with you blasting this....but I think I'm right on this one.

[Honu]

Originally Posted by brianwspencer

I quoted Sec 9002 above and laid out why I think you are wrong, which I certainly hope you are, because that would be absurd.

The way I read it, those whose employers pay more than $8K/yr for one employee or $23K/yr for employee + family, would be subject to a 40% tax on the premium paid ABOVE that amount.

But how would the government know what the employer paid in premium contributions? They would know because it will be included on the W-2, which is, by my reading, what Sec. 9002 says. I don't interpret that in any way to say that the employer contributions will be rolled into gross income (thereby making them taxable income for EVERYONE), but rather that they will be included on the W-2 as a piece of information relevant for tax purposes.

See what I'm saying with that? I hope I'm right, or I'll be right there with you blasting this....but I think I'm right on this one.

I hear ya and I hope you are right, but why would it be included on a taxable wage form if they werent going to tax it? Why does the government need to include it on a employees W2 form when Im sure the information is already available to them through the employer. It doesnt make sense that now after health care reform that the feds need to know. What is the purpose of this?
Dude Im so hoping I am wrong and you are right and I guess when we file our taxes for 2011 we will find out.

[brianwspencer]

Originally Posted by Honu

I hear ya and I hope you are right, but why would it be included on a taxable wage form if they werent going to tax it? Why does the government need to include it on a employees W2 form when Im sure the information is already available to them through the employer. It doesnt make sense that now after health care reform that the feds need to know. What is the purpose of this?
Dude Im so hoping I am wrong and you are right and I guess in when we file our taxes for 2011 we will find out.

I'm assuming it's because if you've got a "Cadillac" plan, then your tax preparer will have your W-2 and know to account for that tax. There's a grievance to be had against taxing that in ANY case, but that's separate.

If the government knows, but the tax preparer doesn't know, then taxes will be underpaid, the IRS will go nuts, and it'll be a BIG issue because nobody will know what they really need to pay. And they'd include it on a "taxable wage form," because for SOME people, it would be taxable (above a certain threshold in very expensive plans).

My honest understanding is that there's nothing in here to include it in "earnings," but rather it will be included as a subset of information on the W-2, much like taxes withheld are, so that people aren't blindsided.

And like you, I hope I'm right, because though it won't affect me right now, that'd be way too problematic. But I'd imagine I am right, because for as much as anyone thinks voting for healthcare is political suicide in the first place, if you're right, this is a vote to OUTRIGHT raise every person with employer sponsored healthcare's taxes to a ridiculous degree, and for as stupid as our Pols are, I'm not sure they're THAT stupid.

[Danzig]

http://www.factcheck.org/2010/05/hea...and-w-2-forms/


Q: Does the new health care law require workers to pay income tax on the value of employer-provided health insurance?

A: No. The value will appear on employees’ W-2 forms for information purposes, but will not be considered taxable income.


The e-mail’s author correctly quotes a Congressional Research Service summary of the bill that became law (H.R. 3590), noting that Section 9002 "Requires employers to include in the W-2 form of each employee the aggregate cost of applicable employer-sponsored group health coverage." But the author then goes on to conclude — quite incorrectly — that this amount will be "added to your gross pay" and that "[y]ou will be taxed on the total." The CRS did not say that, and neither does the legislation itself. In fact, the value will continue to be untaxed, just as in the past.

The e-mail’s author also claims that an article written by Joan Pryde, a senior editor of the Kiplinger letters, backs up the claim: "Go to Kiplingers and read about 13 tax changes that could affect you. Number 3 is what I just told you about." But the truth is that the Kiplinger letters actually contradicts the claim.

Pryde’s article is dated April 5 and is headlined "Health Care Reform: Tax Hikes on the Way — Here are 13 changes in the massive overhaul that could impact your tax bill, for better or worse." Among them:

3. A requirement that businesses include the value of the health care benefits they provide to employees on W-2s, beginning with W-2s for 2011. The amount reported is not considered taxable income.
The author of this false e-mail seems to have missed the second sentence in that paragraph — the part that says the amount "is not considered taxable income."

[hi_im_god]

i'm pretty sure that if everyones employee provided health insurance was now taxable the death panel crowd would have noticed and headlined it.

[Honu]

Glad this has all been cleared up, I wasnt so worried for me but I was for my partner, we are lucky that her company includes domestic partners in their health plan which provides me with insurance that I would'nt be able to have otherwise. I still am not seeing the purpose of it being on a W2 but whatever the government knows whats best.

[Danzig]

Originally Posted by Honu

Glad this has all been cleared up, I wasnt so worried for me but I was for my partner, we are lucky that her company includes domestic partners in their health plan which provides me with insurance that I would'nt be able to have otherwise. I still am not seeing the purpose of it being on a W2 but whatever the government knows whats best.

it probably has to do with something between the employer and the government. maybe has something to do with cafeteria plans as well? don't know really, just guessing...

[Cannon Shell]

The first step is to add it to the W-2. Once that happens it is only a matter of time before it becomes taxed.

Plus this will cost businesses money to add this number and because the accuracy is of utmost importance as the initial reasoning behind this is to put the burden of proof that employers are actually providing the required insurance on the employers themselves via the W-2's.

The funding mechanism behind the health care plan is seriously flawed and once the reality that it will come up massively short the next step will to be simply tax the benefits as income.

[Honu]

Originally Posted by Cannon Shell

The first step is to add it to the W-2. Once that happens it is only a matter of time before it becomes taxed.

Plus this will cost businesses money to add this number and because the accuracy is of utmost importance as the initial reasoning behind this is to put the burden of proof that employers are actually providing the required insurance on the employers themselves via the W-2's.

The funding mechanism behind the health care plan is seriously flawed and once the reality that it will come up massively short the next step will to be simply tax the benefits as income.

You may be onto something with that ....it will create more government jobs because we will for sure need some more people to oversee that this is done and since the stimulus package is mostly going to create more government jobs they need something for these employees to do.

[brianwspencer]

Originally Posted by Cannon Shell

The first step is to add it to the W-2. Once that happens it is only a matter of time before it becomes taxed.

Plus this will cost businesses money to add this number and because the accuracy is of utmost importance as the initial reasoning behind this is to put the burden of proof that employers are actually providing the required insurance on the employers themselves via the W-2's.

The funding mechanism behind the health care plan is seriously flawed and once the reality that it will come up massively short the next step will to be simply tax the benefits as income.

But that's just a guess. A bill would have to be passed to make that the new law, and that would be something we would all fight against regardless of the party...it's not something that they're just going to be able to say "well here's a source of income," and decide without a vote that said taxation is the new rule.

This is nothing but pure conjecture.

[trackrat59]

I work in health care with physicians. I'm far from an expert on this topic so this is just a guess on my part.

I remember reading that there will be additional taxes for health care insurance companies. The amount being stated on employees' W-2s could be connected to the increased tax the carriers are being asked to pay. It might be that they will use the total cost employers are paying for health care and tie that number back to additional taxes for the insurance companies. The total cost being paid per employee being stated on a W-2 would validate the cost to the employer therefore establishing a real total number to tax the insurance companies on.

If this is correct it will be a Catch-22 for insurance companies. The more they charge the higher they are taxed.

Not being Pollyanna and just a guess on my part based on what I read about the additional taxes to carriers.

Will each of us wind up paying more in the end? Likely.

[Danzig]

i don't see why this would add govt jobs, w-2's already are verified by someone, one more blank to look at shouldn't make a big difference. they probably only verify a percentage.
and i don't see a correlation between adding that line now and a tax on the info later. but maybe i'm just being naive in that degree. they already track income before and then income after 401k deposits, even tho the after is the only one to be taxed at the time.

[AeWingnut]

is this why they need another 16,000 IRS agents?

[clyde]

Originally Posted by trackrat59

I work in health care with physicians. I'm far from an expert on this topic so this is just a guess on my part.

I remember reading that there will be additional taxes for health care insurance companies. The amount being stated on employees' W-2s could be connected to the increased tax the carriers are being asked to pay. It might be that they will use the total cost employers are paying for health care and tie that number back to additional taxes for the insurance companies. The total cost being paid per employee being stated on a W-2 would validate the cost to the employer therefore establishing a real total number to tax the insurance companies on.

If this is correct it will be a Catch-22 for insurance companies. The more they charge the higher they are taxed.

Not being Pollyanna and just a guess on my part based on what I read about the additional taxes to carriers.

Will each of us wind up paying more in the end? Likely.

Oh shut that big yap of yours.

[Danzig]

Originally Posted by AeWingnut

is this why they need another 16,000 IRS agents?

more audits maybe?

[Cannon Shell]

Originally Posted by brianwspencer

But that's just a guess. A bill would have to be passed to make that the new law, and that would be something we would all fight against regardless of the party...it's not something that they're just going to be able to say "well here's a source of income," and decide without a vote that said taxation is the new rule.

This is nothing but pure conjecture.

Speculation would be a better word. But when the IRS starts requiring us to add the dollar value of benefits to the form on which we show income for tax purposes it is hardly a stretch to think that these benefits wont eventually be taxed.

Hundreds of new tax laws are passed every year, the many of them piggybacked on other bills, sometimes in the middle of the night. As you pointed out the opposition to this would be strong which is why it is being phased in gradually. The healthcare bill never would have passed with everybody's heathcare plans being included. Of course the "cadillac" plans are fair game because of those pesky rich people, the definition of which is poorer than it used to be.

Anyone who thinks that the govt, the current admisistration especially, isn't going to eventually dig deeper into your pockets to pay for their spending sprees is kidding themselves.