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Tax Treatment of WA Worker's comp

the State of Washington allows a portion of the Worker's Comp premium to be passed on to employees. My undersanding from our accountant is that in low risk industries, it is commonplace for the employer not to pass this charge on to the employee. Is this your experience?

If the employer chooses to pass this portion on to the employee, should the amount deducted be treated as taxable or non-taxable for Federal Income Tax purposes? What about for FICA and FUTA purposes? What about for State unemployemnt tax purposes?

What if the employer does NOT choose to pass it on to the employer. Should the amount that could have been passed on be treated as additional income? If so is it taxable? even for FICA, FUTA and SUTA? If it isn't taxable for FUTA purposes, should it nevertheless be included on line 3 of form 940, and if so, what box should one check on line 4 (4a fringe benefits or 4e other) to exempt it?

Reply to
bill-deja
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Does the employer take out the premium from your paycheck? If so, do they do it before deducting federal/state taxes or after?

If this is like the health insurance deduction, the employer should take out the employees' portion pre-tax. This means pre-federal and pre-state tax. FICA is based on gross income before most deductions such as the medical insurance deduction, 401k contribution, etc. I think FUTA and SUTA are also based on gross income.

No, the amounts the employer pays should not be considered income to the employee. It's a fringe benefit or something like that, section 125.

Reply to
removeps-groups

Five states have statutory disability plans that require mandatory payments that can trigger a tax deduction on Schedule A of Form 1040: CA, NJ, NY, RI & the one you are asking about, Washington State Supplemental Workmens' Compensation Fund. The premium is taken from an employee's pay after tax. If you work for an employer that is self-covered and takes some premium from your pay (also after-tax), it is not tax deductible on Schedule A. Any premiums paid by the employer is not taxable income to the employee.

Reply to
Alan

Where would you deduct it on schedule A? Line 8 : Other taxes? Income tax doesn't seem right since it's a tax on hours worked not on income.

Reply to
bill-deja

Per the IRS instructions for Schedule A: State & Local Income Taxes.

Reply to
Alan

Thanks, I noticed that after I posted. Thanks also for the followup to the group, since the moderation doesn't seem to allow self replies.

Reply to
bill-deja

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