Excerpt: This notice provides guidance regarding the effect of the Working Families Tax Relief Act of (WFTRA), Pub. L. No. , On November 17, , the Internal Revenue Service (“IRS”) published Notice (“Notice”), clarifying some confusion over the definition. (IRB ) Corporate distributions of property; distribution by subsidiary Notice (IRB ) Notice withdrawn; IRS to continue.
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Irrs, the exclusion is limited to contributions made for coverage of the employee, the employee’s spouse, and the employee’s dependents. Where an employee is charged with federal imputed income for employer-provided health coverage, the employee is not charged with the imputed income for Massachusetts purposes where the health care coverage is required by state law.
The purpose of this fact sheet is to provide general guidance on the jotice and Massachusetts treatment of employer-provided health insurance coverage for an employee’s child. In the context of employer-provided health insurance benefits, the following examples illustrate when imputed income occurs and when it does not.
Employer-provided health insurance coverage is a fringe benefit.
The exclusion from Massachusetts gross income under G. Feedback Did you find what you were looking for on this webpage? Massachusetts Department of Revenue. Generally, with respect to the hotice income tax, Massachusetts adopts the Code as amended and in effect 2004-7 January 1, An employer or an employee seeking a case-specific determination on imputed income for federal income tax purposes must contact the Internal Revenue Service.
A fringe benefit is any property or service that an employee receives in lieu of or in addition to regular taxable wages. If you need to report child abuse, any other kind of abuse, or need urgent assistance, please click here.
The extent to which a particular fringe benefit is excluded from gross income depends on the Code provisions that apply to the benefit. The Massachusetts Health Care Reform Act at chapter 58 of the Acts ofas amended, changed chapters 32A,A, B and G of the General Laws to require a broadening of dependent coverage offered by health insurance carriers.
IRS Notice 2004-79 Clarifies WFTRA Confusion
As a result of extended employer-provided health insurance coverage for children “under 26 years of age or for 2 years after the end of the calendar year in which such persons last qualified as dependents under 26 U. Massachusetts gross income is federal gross income, as defined under the Code, with certain modifications. The child is supported by both his parents.
A child of divorced parents, age 25, is a full-time student who lives with his mother. As a result, Massachusetts will not follow federal law in the area of imputed income resulting from employer-provided health care fringe benefits.
The father is a Massachusetts resident. 2004-9 to IRS Noticethe definition of “dependent” for purposes of the exclusion from gross income for employer-provided health insurance benefits is broader than the definition for purposes of claiming the dependency exemption for the child on the parent’s federal income tax 20047-9. As explained in TIRwhether a child of an employee is a dependent for purposes of the federal exclusion from gross income of employer-provided health insurance coverage is a question of federal income tax law pursuant to Internal Revenue Code section If a child does not meet the definition of dependent for these purposes, the value of the health coverage for this individual will be imputed as income to the employee notkce federal income tax purposes.
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The employee’s federal gross income for the year, as reflected in his or her W-2, will be higher and this higher amount will be subject to taxation and withholding. A noncash fringe benefit that is included in gross income is sometimes referred to as “imputed income. Collectively, the amendments require that on or after January 1,carriers issuing or renewing insured health benefit plans with coverage for dependents make coverage available for persons “under 26 years of age or for 2 years after the end of the calendar year in which such persons last qualified as dependents under 26 U.
However, for federal income tax purposes, the value of health insurance benefits for a child of an employee is treated as imputed income in cases where the child does not qualify as a dependent under IRC section In Notice, C.
For an affected employee, the Massachusetts gross income for the year, as reflected in his or her W-2, will be lower than federal gross income. Nltice the area of employer-provided health insurance coverage which is a fringe benefitthe value of health insurance benefits for a child of an employee is excluded from gross income where the child is a dependent under the rules of IRC section Recent legislation provides for the exclusion from Massachusetts gross income of any imputed income resulting from employer-provided health insurance of a person included in the employee’s family health insurance plan where the coverage is required by state law.
If a taxpayer’s child does not meet the requirements of a dependent as a “qualifying child,” the child may still meet the requirements of a dependent as a “qualifying relative.
So a child may qualify as a dependent for purposes of the exclusion from gross income for employer-provided health insurance benefits whether or not the parent actually claims the dependency exemption jrs the child on the parent’s federal income tax return. Also, prior to the clarification in the technical corrections Act, the health care reform law required that on or after January 1,carriers issuing or renewing insured health benefit plans with coverage for dependents make coverage available for persons “under 26 years of age or for 2 years following loss of dependent status under the Internal Revenue Code, whichever occurs first.
Massachusetts General Laws show more show less. Please do not include personal or contact information. The recent legislation provides an exemption for imputed income for Massachusetts personal income tax purposes where health care coverage is required by Massachusetts law. Massachusetts Department of Revenue Referenced Sources: If an employee participates in an employer-provided health insurance plan, 204-79 amount which, but for this is, would be included in gross income of the employee by reason of coverage under the plan of any person other than the employee, to the extent such coverage is mandated by law.
As of January 1,the Massachusetts Health Care Reform Act expands employer-provided health insurance coverage to include an employee’s child “under 26 years of age or for 2 years after the end of the calendar year in 20004-79 such persons last qualified as dependents under 26 U.
The term “imputed income” is sometimes used to refer to the value of a noncash fringe benefit an employee receives where federal law requires the value of the fringe benefit to be included in the employee’s gross income. We use your feedback to help us improve this site but we are not able to respond directly. Section 61 a 1 of the Code states that, except as otherwise provided, gross income includes compensation for services, including fees, commissions, fringe benefits, and similar items.
Although generally Massachusetts follows federal law in the area of noncash fringe benefits, noice the case of imputed income with respect to employer-provided health insurance, the Legislature has chosen to depart from the federal treatment. When does an employee’s child meet the definition of dependent for purposes of employer-provided health insurance coverage noice that the entire value of the coverage is excluded from gross income?
However, pursuant to G. For federal income tax purposes, an employee who opts for coverage for a nondependent child will be taxed on the fair market value of the child’s coverage to the extent that it exceeds any amount paid by the employee on an after-tax basis employee pre-tax contributions are considered to be employer ire.
Although this TIR provides general guidance, an employer or an employee seeking a case-specific determination on federal imputed income must contact the Internal Revenue Service.
The gross income of an employee does not include contributions which his employer makes to an accident or health plan for compensation 2004-799 insurance or otherwise to the employee for personal injuries or sickness incurred by him, his spouse, or his dependents, as defined in section