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turbospeedze
New Member

My employer wanted to provide health insurance. So they give it to me as taxable salary. But its required that we invoice separately for this. Can i write it off? Or?

I'm a Tax-Single Indiv. So 30% is taken from insurance stipend and I pay an additional portion "out-of-pocket". Is the employer to provide me with anything or do I just somehow write it off on my taxes?
1 Best answer

Accepted Solutions
Opus 17
Level 15

My employer wanted to provide health insurance. So they give it to me as taxable salary. But its required that we invoice separately for this. Can i write it off? Or?

If you buy private insurance on the Marketplace and are receiving an insurance premium reimbursement as a taxable bonus, then your tax position is that you can use that as the basis for the premium tax credit (if you qualify) and/or the itemized deduction for medical expenses (but this deduction is limited and you may not benefit very much).

Your employer's tax position is that they are in clear violation of the Affordable Care Act and are subject to a non-compliance penalty of $100 per day per employee going back to whenever they came up with this scheme.  The fact that they are breaking the law does not directly affect how you prepare your tax return.  (It may affect you down the road because if your employer gets caught, they will have to change their system.)

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Your employer's legal options are to provide group health insurance coverage, or to remove the conditions on the bonus payment.  If they provide group coverage, then the share they pay is a pre-tax business deduction for them, and the share you pay is a pre-tax deduction for you.  If they remove the conditions on the payment, then it simply becomes a pay raise that they have no control over.  You can spend it on anything you want, and if you happen to spend it on insurance, you can use the deduction and PTC the same as now.  But they can't ask you for proof you really are buying insurance.

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*

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8 Replies
SweetieJean
Level 15

My employer wanted to provide health insurance. So they give it to me as taxable salary. But its required that we invoice separately for this. Can i write it off? Or?

Are you a W-2 employee, or a 1099-MISC contractor?
TaxGuyBill
Level 9

My employer wanted to provide health insurance. So they give it to me as taxable salary. But its required that we invoice separately for this. Can i write it off? Or?

You can't really do much with it on your tax return, other than include it as a "Medical Expense"(which is subject to severe limitations, so most people don't benefit from it).

However, your employer REALLY needs to go to a good tax professional.  They are either (1) Wasting money doing it this way and/or (2) Subject to GIGANTIC penalties for doing it this way.
Opus 17
Level 15

My employer wanted to provide health insurance. So they give it to me as taxable salary. But its required that we invoice separately for this. Can i write it off? Or?

Not necessarily (penalties).  The employer can provide a gross salary amount (basically a taxable raise) for the employer to buy private insurance.  The amount is taxable income to the employee.  The employer is then eligible for the premium tax credit (depending on income) and the itemized deduction for after tax medical expenses.  

If you are self employed (independent contractor), you can also deduct the insurance premiums.
*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
TaxGuyBill
Level 9

My employer wanted to provide health insurance. So they give it to me as taxable salary. But its required that we invoice separately for this. Can i write it off? Or?

@Opus 17   It is specifically a health insurance reimbursement ("its required that we invoice separately for this"), so if it is an employee submitting health insurance receipts, the penalty applies (even if it is after-tax).

However, you do make a good point that "invoice" could easily mean the OP is an Independent Contractor, not an Employee.
Opus 17
Level 15

My employer wanted to provide health insurance. So they give it to me as taxable salary. But its required that we invoice separately for this. Can i write it off? Or?

True.  It depends on how you read the situation.  If the employees are given a bonus to purchase health insurance but are free to use it for other things, it's allowed.  If employees are *required* to purchase health insurance to get the bonus, that is a violation of the ACA and the employer is subject to a fine of $100 per day per employee.
*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
turbospeedze
New Member

My employer wanted to provide health insurance. So they give it to me as taxable salary. But its required that we invoice separately for this. Can i write it off? Or?

Hi, Thank you all. The terms are vague. I am a W2 employee. I send in a bi weekly hourly report and I am to invoice separately for the insurance premium once a month. The money is specifically for health insurance. This year I was asked by our 'accountant' to provide proof of the premium amount and that the insurance was "active" in the middle of the year. I see some back and forth here. Do these details allow for a more definitive answer?  Thank you all again.
SweetieJean
Level 15

My employer wanted to provide health insurance. So they give it to me as taxable salary. But its required that we invoice separately for this. Can i write it off? Or?

"Wants to" or is required to?
Opus 17
Level 15

My employer wanted to provide health insurance. So they give it to me as taxable salary. But its required that we invoice separately for this. Can i write it off? Or?

If you buy private insurance on the Marketplace and are receiving an insurance premium reimbursement as a taxable bonus, then your tax position is that you can use that as the basis for the premium tax credit (if you qualify) and/or the itemized deduction for medical expenses (but this deduction is limited and you may not benefit very much).

Your employer's tax position is that they are in clear violation of the Affordable Care Act and are subject to a non-compliance penalty of $100 per day per employee going back to whenever they came up with this scheme.  The fact that they are breaking the law does not directly affect how you prepare your tax return.  (It may affect you down the road because if your employer gets caught, they will have to change their system.)

----------

Your employer's legal options are to provide group health insurance coverage, or to remove the conditions on the bonus payment.  If they provide group coverage, then the share they pay is a pre-tax business deduction for them, and the share you pay is a pre-tax deduction for you.  If they remove the conditions on the payment, then it simply becomes a pay raise that they have no control over.  You can spend it on anything you want, and if you happen to spend it on insurance, you can use the deduction and PTC the same as now.  But they can't ask you for proof you really are buying insurance.

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*

View solution in original post

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