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Health Care Law and W-2 Forms
May 26, 2010
Q: Does the new health care law require workers to pay income tax on the value of employer-provided health insurance?
A: No. The value will appear on employees’ W-2 forms for information purposes, but will not be considered taxable income.
FULL QUESTION
I would like to know how accurate the following e-mail claim is:
You really need to read this……starts next year
This is supposed to be part of the new Health Care Bill.
The originator of this notice contacted his Congressman about House bill HR3590 the health care bill, that just passed, and asked for a summary of changes. An aid directed him to go to www: thomas.gov ; enter HR3590 in the search Box and look for summaries.
Starting in 2011 (next year folks) your W 2 tax form sent by your employer Will be increased to show the value of what ever health insurance you are Given by the company. It does not matter if that’s a private concern or Governmental body of some sort. If you’re retired ? So what; your gross Will go up by the amount of insurance you get.
The dollar value (cost of what the company pays for your insurance) will be considered income and added to your gross pay. You will be taxed on the total.
⬐ Click to expand/collapse the full text ⬏
You will be required to pay taxes on a large sum of money that you have never seen.
Take your tax form you just finished and see what $15,000 or $20,000
Additional gross does to your tax debt. That’s what you’ll pay next year.
For many it also puts you into a new higher bracket so it’s even worse.
This is how the government is going to buy insurance for 15 % that don’t
Have insurance and it’s only part of the tax increases.
Not believing this I researched the summaries and here’s what I read:
On page 25 of 29 :
TITLE IX REVENUE PROVISIONS- SUBTITLE A: REVENUE OFFSET PROVISIONS-(sec .
9001 , as modified by sec. 10901)
Sec.9002. "requires employers to include in the W-2 form of each employee the aggregate cost of applicable employer sponsored group health coverage that is excludable from the employees gross income."
Joan Pryde is the senior tax editor for the Kiplinger letters. Go to
Kiplingers and read about 13 tax changes that could affect you. Number 3 is what I just told you about.
Why am I sending you this ?. The same reason I hope you forward this to every single person in your address book.
People have the right to know the truth because an election is coming in November
FULL ANSWER
Here’s another one to add to the list of false claims about the new health care law.
It’s true that the value of employer-paid health insurance will be added as an information item on W-2 forms. But contrary to this widely circulating chain e-mail, it definitely will not be considered taxable income.
Readers who followed the 2008 presidential campaign may recall that it was Republican candidate John McCain who proposed to make the value of employer-sponsored health insurance taxable. Democrats hated that idea; Barack Obama ran an ad claiming, falsely, that it would be the "largest middle-class tax increase in history."
So it is ironic that some of President Obama’s critics now claim that the bill he signed would do what his opponent proposed and he denounced. Ironic, but false.
The e-mail’s author correctly quotes a Congressional Research Service summary of the bill that became law (H.R. 3590), noting that Section 9002 "Requires employers to include in the W-2 form of each employee the aggregate cost of applicable employer-sponsored group health coverage." But the author then goes on to conclude — quite incorrectly — that this amount will be "added to your gross pay" and that "[y]ou will be taxed on the total." The CRS did not say that, and neither does the legislation itself. In fact, the value will continue to be untaxed, just as in the past.
The e-mail’s author also claims that an article written by Joan Pryde, a senior editor of the Kiplinger letters, backs up the claim: "Go to Kiplingers and read about 13 tax changes that could affect you. Number 3 is what I just told you about." But the truth is that the Kiplinger letters actually contradicts the claim.
Pryde’s article is dated April 5 and is headlined "Health Care Reform: Tax Hikes on the Way — Here are 13 changes in the massive overhaul that could impact your tax bill, for better or worse." Among them:
3. A requirement that businesses include the value of the health care benefits they provide to employees on W-2s, beginning with W-2s for 2011. The amount reported is not considered taxable income.
The author of this false e-mail seems to have missed the second sentence in that paragraph — the part that says the amount "is not considered taxable income."
–Brooks Jackson
Sources
Pryde, Joan. "Health Care Reform: Tax Hikes on the Way." Kiplinger letters. 5 Apr 2010.
United States. Cong. Senate. 111th Congress, 2 nd Session. H.R. 3590, "The Patient Protection and Affordable Care Act." (Enrolled as Agreed to or Passed by Both House and Senate). accessed 26 May
2011 Tax Increases
September 3, 2010
Updated: Sept. 28, 2010
Q: Will "the largest tax hikes in the history of America" take effect next year? Will ordinary taxpayers see taxes "skyrocket"?
A: That’s not likely. A scary e-mail lists "Tax hikes in 2011" that probably won’t take effect, or won’t apply to families making under $250,000 a year. One "tax hike" is pure fiction.
FULL QUESTION
Hello, I’m forwarding an e-mail apparently from the conservative bureau of misinformation. My friend who forwarded it isn’t very up on the news and politics and was scared to death that her tax will skyrocket next year… even though she makes way less than $250,000.
Thanks for all the great works you guys and gals do!
Subject:Tax Hikes in 2011
In just six months, the largest tax hikes in the history of America will take effect. They will hit families and small businesses in three great waves on January 1, 2011:
First Wave: Expiration of 2001 and 2003 Tax Relief
In 2001 and 2003, the Congress enacted several tax cuts for investors, small business owners, and families.
These will all expire on January 1, 2011:
Personal income tax rates will rise. The top income tax rate will rise from 35 to 39.6 percent (this is also the rate at which two-thirds of small business profits are taxed). The lowest rate will rise from 10 to 15 percent. All the rates in between will also rise. Itemized deductions and personal exemptions will again phase out, which has the same mathematical effect as higher marginal tax rates. ⬐ Click to expand/collapse the full text ⬏
The full list of marginal rate hikes is below:
- The 10% bracket rises to an expanded 15%
- The 25% bracket rises to 28%
- The 28% bracket rises to 31%
- The 33% bracket rises to 36%
- The 35% bracket rises to 39.6%
Higher taxes on marriage and family. The "marriage penalty" (narrower tax brackets for married couples) will return from the first dollar of income. The child tax credit will be cut in half from $1000 to $500 per child. The standard deduction will no longer be doubled for married couples relative to the single level. The dependent care and adoption tax credits will be cut.
The return of the Death Tax. This year, there is no death tax. For those dying on or after January 1 2011, there is a 55 percent top death tax rate on estates over $1 million. A person leaving behind two homes and a retirement account could easily pass along a death tax bill to their loved ones.
Higher tax rates on savers and investors. The capital gains tax will rise from 15 percent this year to 20 percent in 2011. The dividends tax will rise from 15 percent this year to 39.6 percent in 2011. These rates will rise another 3.8 percent in 2013.
Second Wave: Obamacare
There are over twenty new or higher taxes in Obamacare. Several will first go into effect on January 1, 2011. They include:
The "Medicine Cabinet Tax" Thanks to Obamacare, Americans will no longer be able to use health savings account (HSA), flexible spending account (FSA), or health reimbursement (HRA) pre-tax dollars to purchase non-prescription, over-the-counter medicines (except insulin).
The "Special Needs Kids Tax" This provision of Obamacare imposes a cap on flexible spending accounts (FSAs) of $2500 (Currently, there is no federal government limit). There is one group of FSA owners for whom this new cap will be particularly cruel and onerous: parents of special needs children. There are thousands of families with special needs children in the United States, and many of them use FSAs to pay for special needs education. Tuition rates at one leading school that teaches special needs children in Washington, D.C. (National Child Research Center) can easily exceed $14,000 per year. Under tax rules, FSA dollars can be used to pay for this type of special needs education.
The HSA Withdrawal Tax Hike. This provision of Obamacare increases the additional tax on non-medical early withdrawals from an HSA from 10 to 20 percent, disadvantaging them relative to IRAs and other tax-advantaged accounts, which remain at 10 percent.
Third Wave: The Alternative Minimum Tax and Employer Tax Hikes
When Americans prepare to file their tax returns in January of 2011, they’ll be in for a nasty surprise the AMT won’t be held harmless, and many tax relief provisions will have expired. The major items include:
The AMT will ensnare over 28 million families, up from 4 million last year. According to the left-leaning Tax Policy Center, Congress’ failure to index the AMT will lead to an explosion of AMT taxpaying families, rising from 4 million last year to 28.5 million. These families will have to calculate their tax burdens twice, and pay taxes at the higher level. The AMT was created in 1969 to ensnare a handful of taxpayers.
Small business expensing will be slashed and 50% expensing will disappear. Small businesses can normally expense (rather than slowly-deduct, or depreciate) equipment purchases up to $250,000. This will be cut all the way down to $25,000. Larger businesses can expense half of their purchases of equipment. In January of 2011, all of it will have to be depreciated.
Taxes will be raised on all types of businesses. There are literally scores of tax hikes on business that will take place. The biggest is the loss of the research and experimentation tax credit, but there are many, many others. Combining high marginal tax rates with the loss of this tax relief will cost jobs.
Tax Benefits for Education and Teaching Reduced. The deduction for tuition and fees will not be available. Tax credits for education will be limited. Teachers will no longer be able to deduct classroom expenses. Coverdell Education Savings Accounts will be cut. Employer-provided educational assistance is curtailed. The student loan interest deduction will be disallowed for hundreds of thousands of families.
Charitable Contributions from IRAs no longer allowed. Under current law, a retired person with an IRA can contribute up to $100,000 per year directly to a charity from their IRA. This contribution also counts toward an annual required minimum distribution. This ability will no longer be there.
PDF Version Read more:
http://www.atr.org/six-months-untilbr-l ... z0sY8waPq1
Now your insurance is INCOME on your W2’s……
One of the surprises we’ll find come next year, is what follows - - a little "surprise" that 99% of us had no idea was included in the "new and improved" healthcare legislation . . . the dupes, er, dopes, who backed this administration will be astonished!
Starting in 2011, (next year folks), your W-2 tax form sent by your employer will be increased to show the value of whatever health insurance you are given by the company. It does not matter if that’s a private concern or governmental body of some sort. If you’re retired? So what; your gross will go up by the amount of insurance you get.
You will be required to pay taxes on a large sum of money that you have never seen. Take your tax form you just finished and see what $15,000 or $20,000 additional gross does to your tax debt. That’s what you’ll pay next year. For many, it also puts you into a new higher bracket so it’s even worse.
This is how the government is going to buy insurance for the15% that don’t have insurance and it’s only part of the tax increases.
Not believing this??? Here is a research of the summaries…..
On page 25 of 29: TITLE IX REVENUE PROVISIONS- SUBTITLE A: REVENUE OFFSET PROVISIONS-(sec. 9001, as modified by sec. 10901) Sec.9002 "requires employers to include in the W-2 form of each employee the aggregate cost of applicable employer sponsored group health coverage that is excludable from the employees gross income."
Joan Pryde is the senior tax editor for the Kiplinger letters. Go to Kiplingers and read about 13 tax changes that could affect you. Number 3 is what is above.
Why am I sending you this? The same reason I hope you forward this to every single person in your address book.
People have the right to know the truth because an election is coming in November.
FULL ANSWER
We’ve been flooded with inquiries about various versions of this chain e-mail, which has been circulating since July. It grafts together a set of misleading claims issued by the conservative Americans for Tax Reform with a fictional claim about taxation on health insurance benefits.
The W-2 Fiction, Again
Let’s dispose of the bogus health insurance claim first. It’s not true that "you will be required to pay taxes" on the value of employer-paid health insurance benefits. This is a falsehood that circulated earlier as a separate chain e-mail. See our May 22 article, "Health Care Law and W-2 Forms," for full details.
It’s true that the new health care law requires employers to report the value of health insurance benefits on W-2 forms starting next year, but that’s for informational purposes only.
The remainder of the chain e-mail message contains misleading claims about what "will" happen next year that were copied and pasted — nearly word for word — from an Americans for Tax Reform document dated July 1. (The garish colors were added by the anonymous author of the e-mail message.) For the most part, these are "hikes" that the president and Democratic leaders in Congress have long said they won’t allow to take effect, except for individuals making more than $200,000 a year, or couples jointly making more than $250,000.
A ‘Wave’ of ‘Obamacare’ Taxes?
The e-mail describes a "second wave" of tax increases that it says will take effect Jan. 1 under the new health care law. But this "wave" consists of three relatively minor tax changes that affect relatively few people.
■What the e-mail describes as a "Medicine cabinet tax" simply aligns rules governing health savings accounts (HSAs), Flexible Spending Arrangements (FSAs) and Health Reimbursement Arrangements (HRAs) with the tax rules that apply to deducting medical expenses generally. Under current law, taxpayers in general are not allowed to deduct the cost of non-prescription drugs as a medical expense. The only exception is for insulin. But those with HSAs, FSAs and HRAs were allowed to use pre-tax dollars to buy aspirin, over-the-counter cold and allergy medications, and other drugs available without a doctor’s prescription. The new "tax" simply says HSAs, FSAs and HRAs can’t be used to buy these medications — except for insulin — after December 31. (See pages 69 and 70 of the Joint Committee on Taxation’s "technical explanation" of the revenue measures in the new health care law, which can be downloaded from the committee’s website. This will affect a small proportion of taxpayers. For example, the health insurance industry says 10 million persons were covered by HSAs as of January of this year, roughly 3.2 percent of the population. For that relatively small group, the change does amount to a tax increase. It will bring in a total of $5 billion over the next 10 years, the JCT estimated in its "Estimated Revenue Effects" of the new law.
■The "HSA withdrawal tax hike" refers to a doubling of the current 10 percent penalty that must be paid on any HSA funds spent for something that’s not a qualified medical expenditure. (See pages 71 to 73 of the JCT technical explanation.) The JCT expects that to bring in $1.4 billion over 10 years.
■The "special needs kids tax" refers to a cap of $2,500 that the new law places on spending from FSAs. (See pages 74 to 77 of JCT’s technical explanation.) The argument made in the e-mail is that "many" families with special needs children now use FSAs to pay tuition at private schools catering to special needs children, schools that ATR says "can easily exceed $14,000 per year" in Washington, D.C. Perhaps so. IRS rules do allow use of FSA funds to pay for such expenses with pre-tax dollars. But the e-mail message offers no evidence of how many families might be taking advantage of this tax break currently. The claim is copied from the website of Americans for Tax Reform, but as ATR itself says: "For most people, the $2500 cap won’t be noticed." As ATR concedes, FSAs "tend to be used for things like small deductibles, co-payments, eyeglasses, over-the-counter medicines, and laser eye surgery." The amount deferred in the typical FSA is probably much less than $2500 today, ATR says. The JCT expects the change will bring in $13 billion over 10 years, but says nothing about how much of that is likely to come from the pockets of parents of special needs children.
We don’t argue for or against any of these three tax increases. We simply point out that, even taken together, they amount to less than $2 billion per year and, therefore, don’t constitute anything close to a "wave" of historically large tax increases taking effect next year.
i due respect that youd be against anything obama (see did i spel it right felicapprentice?). that showz the unbiaszed i'm talkin about. frank your just the beez knees & no the score. whens your band playing next? i want to com check out your tunes. thats why your here.cuz you r serious abuot music unlike otherz who want to piss about pollitics & post abuot any brain fartt that comes into their heads. .
