HR Support on Taxing Benefits

Editor's Note: Health care reform law and same-sex marriage issues affect payroll.

Rena PirsosOverview: Most employers offer several different types of employee benefits, such as health insurance, sick pay, disability pay, workers' compensation insurance and retirement savings plans. Whether employer and employee contributions and benefit payments received by employees are subject to withholding for certain payroll taxes, such as federal income tax (FIT), Social Security and Medicare (FICA) taxes or federal unemployment (FUTA) tax, varies among benefit types.

Trends: The following important issues will affect the taxation of employee benefits in 2015!

  • Form W-2 reporting of health insurance costs - Regarding Forms W-2, Wage and Tax Statement, that employers are required to provide to employees every January, if an employer provides group health care coverage that is not taxable to employees, it must report the aggregate cost of certain types of coverage on the employees' Forms W-2 to inform them of coverage costs.
  • Health care coverage reporting forms - The IRS has released the final instructions to Forms 1094-C and 1095-C, and Forms 1094-B and 1095-B, which employers are required to complete and file with the IRS to report on their employee health care coverage, as required by the Affordable Care Act and IRC § 6055 and § 6056.
  • Taxation of benefits provided to same-sex spouses - IRS Notice 2014-1 further clarifies the various effects of the US Supreme Court's decision in US v. Windsor and IRS Revenue Ruling 2013-17, regarding same-sex marriage, on cafeteria plans, including flexible spending arrangements and health savings accounts.
  • Supreme Court takes up same-sex marriage issue - The Supreme Court has set April 28 as the date it will hear arguments that could decide the fate of same-sex marriage nationwide. The Court will hear four consolidated cases in Obergefell v. Hodges involving same-sex marriage bans in Michigan, Ohio, Kentucky and Tennessee.

Author: Rena Pirsos, JD, Legal Editor

Latest items in Taxing Benefits

  • Same-Sex Marriage Legalized

    Date:
    31 July 2015
    Type:
    Editor's Choice

    On June 26, 2015, the Supreme Court ruled in Obergefell v. Hodges that the Constitution requires all 50 states and the District of Columbia to license same-sex marriages and to recognize such marriages that are lawfully licensed and performed out of state.

  • IRS Revises Employee Plans Determination Letter Program

    Date:
    31 July 2015
    Type:
    News

    The IRS has announced important changes to its Employee Plans Determination Letter program for qualified retirement plans. The announcement also provides a transition rule with respect to the remedial amendment period for certain plans currently on the five-year cycle, and requests comments on specific issues relating to the implementation of the changes to the determination letter program.

  • Taxation of Employee Benefits: Ohio

    Type:
    Employment Law Manual

    In-depth review of the spectrum of Ohio employment law requirements HR must follow with respect to taxation of employee benefits.

  • Taxation of Employee Benefits: North Dakota

    Type:
    Employment Law Manual

    North Dakota does not recognize same-sex marriage, civil unions and domestic partnerships. The value of health benefits provided to an employee's same-sex spouse or partner is taxable.

  • Taxation of Employee Benefits: Nebraska

    Type:
    Employment Law Manual

    The value of health insurance benefits provided to an employee's same-sex spouse or partner and/or their dependents is taxable in Nebraska.

  • Taxation of Employee Benefits: Missouri

    Type:
    Employment Law Manual

    The value of health insurance benefits provided to an employee's same-sex spouse or partner and/or their dependents is taxable in Missouri.

  • Taxation of Employee Benefits: Kansas

    Type:
    Employment Law Manual

    In-depth review of the spectrum of Kansas employment law requirements HR must follow with respect to taxation of employee benefits.

  • Taxation of Employee Benefits: Mississippi

    Type:
    Employment Law Manual

    The value of health insurance benefits provided to an employee's same-sex spouse or partner, and/or their dependents, is taxable in Mississippi.

  • Taxation of Employee Benefits: Michigan

    Type:
    Employment Law Manual

    The value of health insurance benefits provided to an employee's same-sex spouse or partner and/or their dependents is taxable in Michigan

  • Taxation of Employee Benefits: Louisiana

    Type:
    Employment Law Manual

    The value of health insurance benefits provided to an employee's same-sex spouse or partner and their dependents is taxable in Louisiana.