IRS NOTICE 2004-79 PDF
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 (IRB ) Corporate distributions of property; distribution by subsidiary Notice (IRB ) Notice withdrawn; IRS to continue.
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However, pursuant to G. If you need a response, please locate 2004-9 contact information elsewhere on this page or in the footer. Feedback Did you find what you were looking for on this webpage? The extent to which a particular fringe benefit is excluded from gross income depends on the Code provisions that apply to the benefit.
IRS Notice 2004-79 Clarifies WFTRA Confusion
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. Massachusetts Department of Revenue.
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.
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IRS Notice Clarifies WFTRA Confusion – Benefits Counsel
The gross income of an employee does not include contributions which his employer makes to an accident or health plan for compensation through insurance or otherwise to the employee for personal injuries or sickness incurred by him, his spouse, or his dependents, as defined in section 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 contributions.
However, notkce exclusion is limited to contributions made for coverage of the employee, the employee’s spouse, and the employee’s dependents. In isr context of employer-provided health insurance benefits, the following examples illustrate when imputed income occurs and when it does not.
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.
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 employee’s 0204-79 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. An employer or an employee seeking a case-specific determination on imputed income for federal income tax purposes must contact the Internal Revenue Service.
The exclusion from Massachusetts gross income under G. In 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 For nofice of the exclusion from gross income for employer-provided health insurance, any child of divorced parents who meets the expanded definition of dependent in connection with one parent is treated as notjce dependent of both parents.
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 for federal income tax purposes. The recent legislation provides an exemption for imputed income for Massachusetts personal income tax purposes where health care coverage is required by Massachusetts law.
Text of IRS Notice on Definition of ‘Dependent’ in Group Health Plans (PDF)
In Notice, C. 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.
Although generally Massachusetts follows federal law in the area of noncash fringe benefits, in the case of imputed income with respect to employer-provided health insurance, the Legislature has chosen to depart from the federal treatment. As a result, Massachusetts will not follow federal law in the area of imputed income resulting from employer-provided health care fringe benefits.
If an employee participates in an employer-provided health insurance plan, any amount which, but for this section, 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 204-79 law.
We use your feedback to help us improve this site but we are not able to respond directly. A fringe benefit is any property or service that an employee receives in lieu of or in addition to regular taxable wages.
Under federal tax law, employer contributions for health insurance are excluded from an employee’s gross income. Pursuant 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 return. Section a of the Code noticee that gross income of an notuce does not include employer-provided coverage under an accident or health plan.
The father is a Massachusetts resident.
Massachusetts Department of Revenue Referenced Sources: The purpose nohice this fact sheet is to provide general guidance on the federal and Massachusetts treatment of employer-provided health insurance coverage for an employee’s child.
As explained in TIR irx, whether 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