My employer pays my health insurance premiums and gave me a 1099 put the amount in box 7 how should it be reported?

[bubbaloo52]

My employer pays my health insurance premiums but makes me claim as income they reported it on a 1099 box 7 is thus wrong should I have them change it to box 3 and what is the best way for me to report this on turbo tax?

[MarilynG · Accepted solution]

Yes, you are correct that your Employer's payment of your health insurance premiums does not make you 'self-employed' and should not be reported on a 1099-Misc in Box 7.   

You should ask for a corrected 1099-Misc. 

If the amount was reported in Box 3, it would be taxed to you as 'Other Income'.

They could just add it to your wages in Box 1 on your W-2, and report the amount in Box 12, as per the IRS.

Here's more info:

https://www.irs.gov/newsroom/reporting-employer-provided-health-coverage-on-form-w-2

[bubbaloo52]

Are they correct in requiring that I claim it as part of his income and have to pay taxes on it. Seems there should be a better way for them to report this

[MarilynG]

Yes, it would be considered taxable income, whether they issue a 1099-Misc or add the amount to his wages on his W-2. You can claim after-tax medical premiums as a medical expense.

[CynSadler]

I'm concerned about your reply regarding health care. As I understand it in my researching this subject, health insurance premiums paid by an employer are not taxable as income. Please refer to these articles.

https://www.irs.gov/businesses/small-businesses-self-employed/employee-benefits

https://www.taxpolicycenter.org/briefing-book/how-does-tax-exclusion-employer-sponsored-health-insur...

[dmertz]

The question asked here was not about employer-provided health insurance but was just about supplemental wages paid to the employee that the employee used to buy individual health insurance.

It was improper for the employer to report the supplemental wages on Form 1099-MISC.  They should have been included in boxes 1, 3 (up to the Social Security wage base) and 5 of the employee's W-2.

[TomD8]

@CynSadler :  Your citations apply only to employer-sponsored health insurance plans.  Premiums paid  for employer-sponsored health insurance are properly reported in Box 12 of the employee's W-2, with Code DD.  Premium reimbursement to an employee purchasing his own health insurance outside any employer-sponsored plan are taxable, and are reported as described by @dmertz .   In that situation, the premiums paid by the employee would qualify as a deductible medical expense if the employee itemizes, subject to the usual limitations on medical deductions.

Reporting these premiums on a 1099-MISC is incorrect in either situation. 

[Carl]

My employer pays my health insurance premiums and gave me a 1099

I am assuming this is *NOT* an employer sponsored plan. That means the employer is just reimbursing you for the cost of the plan "outside" of an employer sponsored plan. If my assumption is correct, then your employer is flat out wrong to report those reimbursements to you on anything other than your W-2.

But how things are treated tax-wise depends on specifics not provided anywhere in this thread. I suggest you read through the IRS FAQs at https://www.irs.gov/pub/irs-utl/health_reimbursement_arrangements_faqs.pdf  It covers the many different kinds of reimbursement plans in what I perceive as "plain language" that I can better understand and comprehend.

[dmertz]

An HRA provided by the employer would not be reported as income on either a 1099-MISC or a W-2, so this would not be an HRA.

[Anonymous]

This is imputed income.  Prior to retirement, it was reported on my W-2.  Since we are not married and my partner is not my dependent, I have been covering the taxes on these premiums.  This is an employer sponsored plan.  The company I retired from is considered "self-insured".  He has been under the same insurance arrangement prior to my retirement since 2006.  I had the option of not using their insurance for him or myself just as I did prior to my retirement when I was working.  For purposes of insurance, he is listed as my dependent but not for tax purposes.  The only difference was that the dollars were less when before I retired.   I also use the insurance but because of being on Medicare, which is my primary, my cost is considerably less.  

[MarilynG1]

There is no place to enter a Box 7 amount on a 1099-Misc entry in TurboTax.  Your employer should use Box 3 to report this payment to you. 

You could report this income under 'Miscellaneous Income' on the Wages & Income topics page (at the bottom of the list).  Choose Edit/Add. 

Scroll all the way down to 'Other Reportable Income' and enter a description of Retiree Reimbursed Health Insurance and the amount.

At least this way you are reporting the income (since you no longer receive a W-2) and have the 1099-Misc for documentation if needed. 

[zz237]

Reading through this, I believe I have an answer. I just want to double check:

I am treasurer at a church, does not have non-profit 501c3 status. We pay someone $200/mo to clean the church as well as another $200/mo for her health insurance which she purchases on her own.

Would her 1099 need to include the extra $200/mo for health insurance reimbursement or only the $200/mo for cleaning the church?

Thanks much!

[DaveF1006]

Yes, you will need to report the employees taxable income at $400/month or $4800/yearly taxable income on their 1099R. The employee can deduct the premiums as medical itemized deductions if they qualify to claim itemized deductions.

@zz237

[zz237]

Thank you. So, since they have a 1099, can't they just write off the insurance premiums as a sole proprietor would and still take the standard deduction? They are not a W-2 employee.

[DawnC]

Yes, if the person is self-employed, they can claim the Self-Employed Health Insurance Deduction (see rules below) and take the standard deduction.   You should include all amounts paid to that person on their annual 1099-NEC.    They will claim all the income on their return.   

You, as a sole proprietor may be able to deduct medical, dental, and long-term care insurance premiums for yourself, your spouse, and your dependents if you or your jointly-filing spouse is self-employed.   There are two ways to do this: through the self-employed health insurance deduction or as an itemized deduction.   If you take the standard deduction, your only option to deduct the premiums is below:

Self-employed health insurance deduction

• To get this deduction, your Schedule C must show a net profit.
• The deduction amount generally can't exceed your net profit amount.
• If you (or your spouse if filing jointly) were eligible to participate in an employer's health plan during any given month—even if you declined the coverage—the premium you paid for that month can't be claimed under this deduction.
• Health insurance premiums you paid for your child, even if you aren't claiming them as a dependent, are eligible for this deduction as long as your child was age 26 or younger at the end of 2021.
• The self-employed health insurance deduction shows up on Schedule 1, line 17.

@zz237