Foxes Guard Hen House With New W-2 Reporting Requirement
The 2010 health care bill includes a requirement that employers report on each of their employees’ Form W-2s the cost of health insurance they sponsor on behalf of that employee. This requirement was made optional for tax year 2011 when it officially went into effect, and will be optional for small businesses those with fewer than 250 W-2s in tax year 2012.
ATRF AnalysisThe IRS has waived the W-2 reporting requirement for tax years 2011 and 2012 because of confusion surrounding the provision.This is understandable, because employers usually use Form W-2 to report salary and wage payments to the IRS so that they can be withheld and taxed appropriately. In a changeup from the form’s usual function, the new reporting requirement does not levy a tax on employees’ health benefits. Instead, its stated justification is to convey to employees the value of their health insurance, and to identify taxpayers who run afoul of the Individual Mandate tax and 40% “Cadillac” tax on “comprehensive” health plans.Taxpayers should be uncomfortable with the implications of the W-2 reporting requirement, which portends higher taxes in the future. Reporting the value of employees’ health benefits opens the door to new taxes on these benefits in the future………….
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