Will coverage provided to children who do not qualify as the employees tax dependent be taxable income to the employee (similar to how we currently handle domestic partners)?
A710. Generally no. Coverage provided to an employee’s children through the calendar year in which they turn age 26 is not includible in income even if they don’t qualify as the employee’s tax dependent. For this purpose, “child” means the employee’s son, daughter, stepson, stepdaughter and foster child; it does not include grandchildren. Note that this new tax treatment is available immediately, which means that if you are currently imputing income for coverage provided to an employee’s child, stepchild or foster child, you may need to adjust your procedures depending on the terms of your plan. The value of domestic partner coverage, however, remains taxable income.
Related Questions
- In light of the change in the tax treatment, can we allow employees to pay for the coverage provided to children under age 26 whose coverage is no longer includible in income on a pre-tax basis?
- What if my life partner meets the eligibility requirements for a non-tax dependent, but my partners children qualify as tax dependents?
- Do i have to report income from the sale of scrap metal?
