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bensac23
New Member

My health insurance premium is deducted from paycheck. but this amount is not deducted from Box 1 of W2. Can I deduct this amount while filing tax?

Can I deduct this amount while filing tax or should I get my W2 updated to reduce total health insurance premium (deducted from paycheck) from gross pay?
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Accepted Solutions
viktoriyab11
New Member

My health insurance premium is deducted from paycheck. but this amount is not deducted from Box 1 of W2. Can I deduct this amount while filing tax?

Does your health insurance premium take out of your paycheck pre-tax or after-tax? If your premium is paid with pre-tax money, that money will not be included as income in Box1 (wages) on your W-2. If your premiums are paid with after-tax money, that money will be included as an income on your W-2. 

If you think it is a mistake in your W-2, talk to your employer first.

If by the end of February, your attempts to have the Form W-2, Wage, and Tax Statement, corrected by your employer, are unsuccessful, you can request that an IRS representative initiate a Form W-2 complaint. Call the IRS toll free at 800-829-1040 or visit an IRS Taxpayer Assistance Center (TAC). https://www.irs.gov/faqs/irs-procedures/w-2-additional-incorrect-lost-non-receipt-omitted/w-2-additi...

[Edited: 01/21/2018 [4:44pm]]

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5 Replies
Opus 17
Level 15

My health insurance premium is deducted from paycheck. but this amount is not deducted from Box 1 of W2. Can I deduct this amount while filing tax?

Are you sure?  If true, that's a stupid and costly mistake by the employer (costs them more in payroll taxes).  

(Although there are a few reasons why a small employer might do it that way.)
*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
bensac23
New Member

My health insurance premium is deducted from paycheck. but this amount is not deducted from Box 1 of W2. Can I deduct this amount while filing tax?

Yes. That's how it is now. What are the probable reasons small employer do it that way?
Opus 17
Level 15

My health insurance premium is deducted from paycheck. but this amount is not deducted from Box 1 of W2. Can I deduct this amount while filing tax?

Mainly due to the ACA (Obamacare).  A small business can't deduct the premium as a pre-tax deduction unless they offer the same insurance plan to all "similar" workers.  By paying the premiums after tax and considering them part of your salary, they may be able to get around some of those rules and only provide insurance to selected employees.  Now as it happens, many of the schemes for doing this are against the law (ACA) themselves, and the penalties are $100 per employee per day for being non-compliant.  So I think it's more than likely that the employer either doesn't understand the benefit of a pre-tax deduction to HIM (as well as to the workers), or the employer is trying to get around some ACA regulations that they shouldn't be doing.

And, for some businesses like small S-corps, if you are both an employee and a significant shareholder, you aren't allowed a pre-tax deduction for medical insurance (although I don't know why).

But I am not expert enough to know all the reasons an employer might do this.
*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
bensac23
New Member

My health insurance premium is deducted from paycheck. but this amount is not deducted from Box 1 of W2. Can I deduct this amount while filing tax?

I asked out of curiosity. Thanks for explaining.
viktoriyab11
New Member

My health insurance premium is deducted from paycheck. but this amount is not deducted from Box 1 of W2. Can I deduct this amount while filing tax?

Does your health insurance premium take out of your paycheck pre-tax or after-tax? If your premium is paid with pre-tax money, that money will not be included as income in Box1 (wages) on your W-2. If your premiums are paid with after-tax money, that money will be included as an income on your W-2. 

If you think it is a mistake in your W-2, talk to your employer first.

If by the end of February, your attempts to have the Form W-2, Wage, and Tax Statement, corrected by your employer, are unsuccessful, you can request that an IRS representative initiate a Form W-2 complaint. Call the IRS toll free at 800-829-1040 or visit an IRS Taxpayer Assistance Center (TAC). https://www.irs.gov/faqs/irs-procedures/w-2-additional-incorrect-lost-non-receipt-omitted/w-2-additi...

[Edited: 01/21/2018 [4:44pm]]

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