Health Care Reform Legislation Requires the W-2’s Show Value of Health Coverage
UPDATE 10/21/10: The IRS has announced that the health care reporting requirement will be optional in 2011 and mandatory in 2012. From the IRS “to provide employers the time they need to make changes to their payroll systems or procedures in preparation for compliance with this requirement, the IRS will defer the reporting requirement for 2011, making that reporting by employers optional in 2011.”
Thanks to the health care reform legislation, employers are required to report the value of the health insurance coverage they provide on each employee’s annual Form W-2 beginning in tax year 2011.
This reporting is for informational purposes only, to show employees the value of their health care benefits so they can be more informed consumers, according to the IRS.
There has been considerable confusion generated concerning the reporting of the value of health insurance coverage-with rumors spread that the amount is taxable for income tax purposes. To be clear, the amount reported does not affect tax liability, as the value of the employer contribution to health coverage continues to be excludible from an employee’s income and it is not taxable.
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