Midyear marriage, previous inputed income and premiusm for employer provided health insurance?

Please help by clarifying the rules for this scenario:

A&B are married in Aug 31, 2014, before this (for 8 months) B received health insurance through A's employer as a domestic partner. After the marriage the coverage was continued for the rest of the year (employer was notified of marriage). For the first 8 months the employer withheld taxes based on extra imputed income for the subsidized portion of the health insurance and also based on the fact that B's portion of the premium payroll deductions was not tax deductable. From Sept to Dec the employer correctly stops counting (for withholding) imputed income and the employee premium portion for B, but what about the previous 8-months?

What should the employer include on the 2014 W2? Do the non-married 8-months of employee premiums and employer subsidies become tax deductable (not inclued on W2) or are they still not deductable?

If the pre-married shouldn't be taxed, then I assume the employer should make sure this is reflected in the W2, but if this doesn't happen can A&B (assume they file jointly) take a deduction elsewhere or enter adjusted W2 amounts (with a note) for gross income? - Thanks!

Reply to
aloy.parker
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I believe the W-2 should include the imputed income the employer calculated for the first 8 months. The couple may include as a deductible medical expense any after-tax health insurance premiums the employee actually paid during the year. A change in status does not have any retroactive impact.

I based this on a similar situation where a domestic partner was the employee's dependent at the beginning of the year and the employer health insurance was a tax-free employee benefit. The DP became employed and when income reached the amount of a personal exemption, the employer was informed that the DP was no longer a dependent. The W-2 only included imputed income for the remainder of the year. The change in status had no retroactive impact.

Reply to
Alan

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