My husband who does not handle any of the household bills, finances, paperwork etc added our 24 year old back to his medical plan under this new provision that was offered for the first time last year. The problem is that most people didnt realize the tax implications of adding these children onto their benefits. Sure the kid would be covered but the tax rate is like that of domestic partner. My husband who never makes any changes or deletions to the benefits account added our son back on last August without discussing it with me. I had almost submitted our taxes when he thought he may need to mention it to me. I finally got someone on the phone from his benefits office and was advised he added him as a claimable dependent which is a lower premium rate, however we havent claimed him on taxes in years. I have done our taxes for many years using turbo tax and am not having any luck finding any info in regard to this situation. I am afraid we may end up owing a nice tax bill thanks to my hubby's error but atleast grateful I hadnt filed yet and risked an audit. If you took advantage of this provision, I would love to hear about your experience or and advice from any tax professionals out there.
I was able to get our son removed from the plan w/o waiting for open enrollment. He was never eligible to begin w/ because we have not claimed him on taxes in 6 years. The additional bad news is that my husbands employer is going to back charge us for the higher non tax dependant premium for six months. We went ahead and filed as normal and will just have to wait and see if the IRS comes back to us w/anything.
It's ok. The IRS doesn't care, as long as he is really supporting himself. That was a kind and compassionate thing that your husband did. I work at H&R Block. The only issue might be with the insurance company. You might have to take him off.
I am not a tax professional, but you should contact one.
I believe in order to add them to your benefits if they are not full time students, you have to claim him as a dependent on your taxes. I handle the benefits for our company and we told everyone that with this new law you can add your child up to the age of 26 as long as you claim them as a dependent.
You will not be able to get an adjusted W-2 as the taxes have already been paid on the premiums to the IRS from the employers point of view. It is the responsibility of the policy holder to follow the rules. I believe and again i am not a tax professional, but you will need to claim him as a dependent.
I'd be happy to know too, when you find out. I just dropped my 24 yr old from my health, dental and vision. I got notice that if he is no longer a full time student I would have to include over $300 per month as income. He stopped being a f/t student in December, so I may have to eat 1 month. To say the least it makes him grow up and get benefits thru his job and he has to pay for them, but it's scary that if he didn't have a job, I would have to tell him to get one or go back to school for another year (he turns 25 this year). The government doesn't care about the middle class, they hand out free healthcare to aliens but not to US Citizens, and now we have to pay for it too in more ways than one! Good luck, post your findings, I'm very interested.
Barb
In Illinois, the age for elligabel insurance benefits is 26. For Federal it is age 19 or 24 if you are a full time student. It should not make a difference if you claim your son. Nevertheless, you are taxed by the Federal gov for the portion that your company pays for the insurance premium but, not for the State gov.
e.g. Your company pays $1,000 premium for your son to be covered. Your company has a cafeteria plan that makes the premiums tax free. The state says that if your son is a student, your company has to have insurance available to your son up until 26 but, the federal says only until 24. You now need to pay taxes on the $1,000 for federal purposes but, not for state.
I am not a tax accountant, please do not use this information as fact.
I guess I don't understand the question . . . why would claiming your son increase your taxable income? It should decrease . . . I would claim the son as a dependent, and, if he is working, he would then file his own tax return, but not claim himself as a dependent. Depending on what his income is, he may owe, but then again he may not (I claim my oldest who is 21 and she never owes when I file her return not even not claiming herself). Even if he owes, the benefit to your tax situation should offset the negative to his (this is assuming this his income is lower than yours or your husband's - he should be in a lower tax bracket). If you can give a few more details, I might be able to be more helpful.
Believe me if your son ended up in the hospital with any sort of condition you would be extremely grateful as we experienced last year and the cost was a whopping fifty thousand dollars. Well, we declared him as a dependent, he was working and received his own credit back, we received ours and all is well. My other son moved back from the service recently (25 years old) and although I can put him on the family insurance for another year he does not want to be declared our dependent. so that handles that. Although I am scared until he does something else what we would do if something happened to him. When I questioned this they said to look up what the IRS meaning of dependents is. School or not they have to be declared dependent on your taxes. That does not rob them of their own refunds if they have one as in my case with my nineteen year old, but you have to be the primary caretaker. Does he live with you? Of course that might be an issue...I will be looking forward to your decision.
First, I'm not a tax professional. I think it might be worth it to get some advice from a tax preparer.
But it seems like there are two issues - the premium you paid was part of pre-tax income, but you should have paid taxes on the part that covers your son. And it sounds like the value of the premium that the employer paid for his portion of coverage should have been on your W2 as your taxable income. In other words, if they paid $200 a month to cover him, your gross income was actually $2400 higher than you thought it was.
But I don't know of any way to get that number (what the taxable portion should have been) without having the employer correct it and issue a new W2. How else would you know what portion of the premium was for your son, or what the employer paid for it?
I would look into whether you can claim your son as a dependent for 2009. If it's at all possible, that would probably be the cheapest and simplest solution. Otherwise, you should go ahead and get the new W2, pay the taxes on whatever that amount of extra income is, and your son should really pay it back to you (or pay back half since he didn't know either.) It may not work out to be as much money as you think, depending on how expensive the premiums were. Good luck!
