IRS NOTICE 2004-79 PDF

Excerpt: This notice provides guidance regarding the effect of the Working Families Tax Relief Act of (WFTRA), Pub. L. No. , On November 17, , the Internal Revenue Service (“IRS”) published Notice (“Notice”), clarifying some confusion over the definition. (IRB ) Corporate distributions of property; distribution by subsidiary Notice (IRB ) Notice withdrawn; IRS to continue.

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The employee’s federal gross income for the year, as reflected in his or her W-2, will be higher and this higher amount will be subject to taxation and withholding.

When does an employee’s child meet the definition of dependent for purposes of employer-provided health insurance coverage so that the entire value of the coverage is excluded from gross income? Massachusetts Department of Revenue Referenced Sources: Skip table of contents. However, pursuant to G. A fringe benefit is any property or service that an employee receives in lieu of or in addition to regular taxable wages.

So a child may qualify as a dependent for purposes of the exclusion from gross income for employer-provided health insurance benefits whether or not the parent actually claims the dependency exemption for the child on the parent’s federal income tax return.

Generally, with respect to the personal income tax, Massachusetts adopts the Code as amended and in effect on January 1, Collectively, the amendments require that on or after January 1,carriers issuing or renewing insured health benefit plans with coverage for dependents make coverage available for persons “under 26 years of age or for 2 years after the end of the calendar year in which such persons last qualified as dependents under 26 U.

Except in the case of amounts attributable to and not in excess of deductions allowed under section relating to medical, etc. If you need to report child abuse, any other kind of abuse, or need urgent assistance, please click here. Section 61 a 1 of the Code states that, except as otherwise provided, gross income includes compensation for services, including fees, commissions, fringe benefits, and similar items. This TIR provides a summary of Internal Revenue Service Noticea federal notice that provides relief from imputed income in many instances where employer-provided health coverage includes an employee’s grown child.

The child is included in the father’s employer-provided health insurance coverage. In the context of employer-provided health insurance benefits, the following examples illustrate when imputed income occurs and when it does not. The term “imputed income” is sometimes used to refer to the value of a noncash fringe benefit an employee receives where federal law requires the value of the fringe benefit to be included in the employee’s gross income.

A noncash fringe benefit that is included in gross income is sometimes referred to as “imputed income. As explained in TIRwhether a child of an employee is a dependent for purposes of the federal exclusion from gross income of employer-provided health insurance coverage is a question of federal income tax law pursuant to Internal Revenue Code section If you need a response, please locate the contact information elsewhere on this page or in the footer.

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The Legislature made several technical corrections to the health care reform law in the recent “Act further Regulating Health Care Access,” St.

The Massachusetts Health Notiec Reform Act at chapter 58 of the Acts ofas amended, changed chapters 32A,A, B and G of the General Laws to require a broadening of dependent coverage offered by health insurance carriers.

In the area of employer-provided health insurance coverage which is a fringe benefitthe value of health insurance benefits for a child of an employee is excluded from gross income where the child nitice a dependent under the rules of IRC section We use your feedback to help us improve this site but we are not able to respond directly. An employer or an 2004-779 seeking a case-specific determination on imputed income for federal income tax purposes must contact the Internal Revenue Service.

Employer-provided health insurance coverage is a fringe benefit. In Notice, C. The purpose of this fact sheet is to provide general guidance on the federal and Massachusetts treatment of employer-provided health insurance coverage for an employee’s child. If a taxpayer’s child does not meet the requirements of a dependent as a “qualifying child,” the child may still meet the requirements of a dependent as a “qualifying relative.

Pending specific guidance from the Internal Revenue Service, an employer must determine the amount of imputed income attributable to the health insurance coverage of an employee’s nondependent child under valuation principles articulated in federal income tax law.

As a result of the expanded coverage required by 20004-79 Massachusetts health care reform law, the child is included in the parent’s employer-provided health insurance coverage. Massachusetts General Laws show more show less. Accordingly, under Internal Revenue Service Noticean employee may exclude from gross income the value of employer-provided health insurance coverage for a child who, while not a “qualifying child,” meets the definition of a “qualifying relative” determined without regard to the child’s gross income.

This TIR focuses on the instances where a child of a taxpayer who is not a “qualifying child” may be a “qualifying relative. However, the exclusion is limited to contributions made for coverage of the employee, the employee’s spouse, and the employee’s dependents. When does employer-provided health insurance coverage for an employee’s child result in notkce income to the employee?

IRS Notice 2004-79 Clarifies WFTRA Confusion

iirs The extent to which a particular fringe benefit is excluded from gross income depends on the Code provisions that apply to the benefit. As a result, Massachusetts will not follow federal law in the area of nltice income resulting from employer-provided health care fringe benefits.

Although this TIR provides general guidance, an employer or an employee seeking a case-specific determination on federal imputed income must contact the Internal Revenue Service. Massachusetts Department of Revenue.

However, for federal income tax purposes, the value of health insurance benefits for a child of an employee is treated as imputed income in cases where the child does not qualify as a dependent under IRC section Any child to whom section e applies shall be treated as a dependent of both parents for purposes of this subsection. Recent legislation provides for the exclusion from Massachusetts gross income of any imputed income resulting from employer-provided health insurance of a person included in the employee’s family health insurance plan where the coverage is required by state law.

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If a child does not meet the definition of dependent for these purposes, the value of the health coverage for this individual will be imputed as income to the employee for federal income tax purposes.

As of January 1,the Massachusetts Health Care Reform Act expands employer-provided health insurance coverage to include an employee’s child “under 26 years of age or for 2 years after the end of the calendar year in which such persons last qualified as dependents under 26 U. The exclusion from Massachusetts gross income 20004-79 G. Where nottice employee is charged with federal imputed income for employer-provided health coverage, the employee is not charged with the imputed income for Massachusetts purposes where the health care coverage is required by state law.

The father is a Massachusetts resident. Also, prior to the clarification in the technical corrections Act, the health care reform law required that on or after January 1,carriers issuing or renewing insured health benefit plans with coverage for dependents make coverage available for persons “under 26 years of age or for 2 years following loss of dependent status under the Internal Revenue Code, whichever occurs first.

For an affected employee, the Massachusetts gross income for the year, as reflected in his or her W-2, will be lower than federal gross income. Massachusetts gross income is federal gross income, as defined under the Code, with certain modifications.

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Small Business Taxes & Management

If an employee participates in an employer-provided health insurance plan, any amount which, but for this section, would be included in gross income of the employee by reason of coverage under the plan of any person other than the employee, to the extent such coverage is mandated by law.

In general, for a child to be considered a dependent under the Internal Revenue Code, the child must meet the requirements of a “qualifying child” or a “qualifying noticw as described below. Although generally Massachusetts follows federal law in the area of ir fringe benefits, in the case of imputed income with respect to employer-provided health insurance, the Legislature has chosen to depart from the federal treatment.