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

  • Tax Treatment of Same-Sex Couple Benefits by State

    Type:
    Quick Reference

    This Quick Reference chart summarizes federal and state laws regarding whether same-sex marriages, civil unions and/or domestic partnerships are recognized, and whether the value of benefits provided by an employer to an employee's same-sex spouse or civil union or domestic partner is taxable. This chart will be updated when any changes in these laws occur.

  • Same-Sex Marriage Legalized

    Date:
    31 August 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.

  • Taxation of Employee Benefits: Wisconsin

    Type:
    Employment Law Manual

    An in-depth review of the spectrum of Wisconsin employment law requirements HR must follow in respect to Taxation of Employee Benefits.

  • Taxation of Employee Benefits: Virginia

    Type:
    Employment Law Manual

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

  • Taxation of Employee Benefits: West Virginia

    Type:
    Employment Law Manual

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

  • Taxation of Employee Benefits: Iowa

    Type:
    Employment Law Manual

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

  • Taxation of Employee Benefits: Vermont

    Type:
    Employment Law Manual

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

  • Taxation of Employee Benefits: South Carolina

    Type:
    Employment Law Manual

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

  • Taxation of Employee Benefits: Utah

    Type:
    Employment Law Manual

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

  • Taxation of Employee Benefits: Rhode Island

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