presented by: brenda jm sabin, cbp key concepts, llc
TRANSCRIPT
Presented by:Brenda JM Sabin, CBP
Key Concepts, LLC
Definitions of Dependents
Civil Unions and Domestic Partner taxation examples
Recent Law Changes
Section 125 Plan – covers health related plans under Federal law
IRC = Internal Revenue Code Dependents
FederalState – different by state
Section 125 plansFederal Definition of Dependents
Civil UnionsState definition of Dependent
Domestic PartnerNot a Dependent
Section 125 plans – qualified dependents are: Spouse, qualifying child or qualifying relative (federal law)
Qualifying child Is under age 19, or 24 if a full-time student; Lives in same home as taxpayer for more than half taxable
year; Has not provided over 50% of his/her own support for the year.
Qualifying Relative Is not a “qualifying child” as described earlier; Is a resident of US, Mexico or Canada; Earns less than current exemption amount ($3,500 for
2008); Has over 50% his/her support provided by
employee/taxpayer.
NH – SB197 – allows ex-spouses (divorced or legally separated) to stay on insurance plan as a dependent for up to 36 months.
NH – HB790 – changes definition of dependent child.< age 26, andUnmarried, andNH resident or enrolled as a student
(P/T or F/T) in an institution of higher education, and
Not covered under another health plan or Medicaid.
State recognized dependents not federally recognizedVT/NH – Civil Union partner has same
dependent rights as spouse
Under State Laws the section 125 plan is NOT taxable for state income tax if provided for a legal dependent* but it is for federal
The Fair Market Value (FMV) of the insurance itself is taxable to the employee for federal taxes (not state)
Worksheet – Employee and Civil Union Partner (2
person plan)
Using information on Worksheet – calculate the imputed income that is taxable to the employee and the pre-tax vs post-tax premium deductions.
Excel sheet
What if the Civil Union partner had a dependent child?
Worksheet: Employee and Civil Union Partner
and CU Dependent(Family plan)
Excel sheet
What if the dependent child was the Employees legal dependent?
Worksheet: Employee and Civil Union Partner
and EMPLOYEE Dependent(Family plan)
excel
Same sex or opposite sex
Lets look at the same examples but they are not recognized as dependents by either State or Federal Law.
Pro’s and Con’sYearlyQuarterlyPer Paycheck
Requiring proof of civil unionsDo you require proof of marriage?
Requiring proof of dependent childrenDo you require that now?
Do you have a Domestic Partner affidavit?Some insurers require them
Group Term Life –imputed income Tuition Reimbursement ($5,250) Qualified Transportation Benefits
$115 per month for mass transit $220 per month for parking
Company Car and Personal Use Lease Value method Cents per mile method Commuting method
Bonus’ Supplemental Tax Rates
25% Federal 7.2% VT 0% NH
Recent IRS Changes
Rates thru 06/30 07/01 >> Business (mileage) 50.5cents 58.5 cents Medical/Moving 19 cents 27
cents Charitable 14 cents 14 cents
