How is the health insurance stipend built into my hourly rate affecting my income tax?
I believe that’s only if your total medical costs are above 7.5% of your income, and you may only deduct costs after the 7.5% has been met. In this particular case, I don’t think you’ll qualify. Assuming you work 40 hours a week and that you get paid vacation time, you make about $58,000 a year. 7.5% of that amount is around $4,300. You’re paying $2,100 for your health insurance over the year, which is about half of the 7.5% you’ll need to deduct medical expenses. If you don’t have more than $2,200 in other qualifying medical expenses, you can’t deduct. Also, paying $175 for health care is well worth your money, even if you’re being taxed. Their stipend of $2500 has $400 built into it that you’re not paying towards your insurance. Would you be taxed more than $400 total on $2500? That’s another way to think about it. To give you my real-life example: I paid over $200 a month, pre-tax, at my last job. Now that I’m on COBRA, I pay over $500 a month. If I didn’t really, really need the he
In the State of the Union earlier this week, Bush asked Congress to amend the the tax code to allow individuals to deduct from their taxes money they spend on health insurance premiums. That change would erase the financial disparity between individual-purchased health insurance and employer-purchased health insurance. If it passes this year, you would be able to deduct money spent on premiums and you’d be in the same position you were in at your old job (though probably with more paperwork to fill out at tax time). But this has been proposed before, a lot, and it’s never passed, so we’ll see whether anything actually comes of it. You could, if this legislation seems like a good idea to you, call or write to your member of Congress (or possibly the member of Congress who represents your employer’s district in VA, since you’re also lucky enough live in DC where we have taxation without representation) to ask
