HOW CAN I TELL IF MY HEALTH INSURANCE BENEFITS ARE PRE TAXED?
Sunday, February 7th, 2010 at
6:27 am
Keep in mind, your health word premiums can’t be deducted if they’re taken out of your paycheck as pre-tax dollars. However, after-tax health word premiums have been deductible, but they still have been theme to a reduction of 7.5% of your AGI. If you’re self-employed, you might concede a apportionment of your health word premiums as an adjustment. The self-employed deductible apportionment is 100% in 2007.
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If you have to ask your employer, your pay statements are NOT well designed. MY pay statement has 3 sections under deductions: Pre-Tax Deductions, Taxes, and Other deductions. Which section is your insurance deduction under? If that doesn’t help, you will have to ask your employer. You mentioned self-employment. If you are self employed and need to ask, you NEED an accountant DESPERATELY.
OKay, it’s nice that you read a publication somewhere (it made for a funny looking question since you quoted from the pub).
When you get your W-2, look at box 14, many companies list the amount of health care benefits there. Also Compare the amount in box 2 (your wages for social security purposes) and the amount shown as ytd wages on your last paycheck stub. If your health care was pre-tax, the amount in box 2 will be LESS than the YTD wages on the paycheck.
Boston–Pre-tax health care lowers your social security earnings. This *will* ultimately reduce the monthly payment one receives from SSA. It *may* also affect how pension payments are paid out. I happen to be a devout saver–anything I don’t pay as taxes now, I save. My savings should be enough to compensate for any loss in benefits.
The quick estimator at the SSA web site (plugging in $40,000 and 41,500 as the annual income with pre and post tax dollars) shows about a $30 difference in monthly benefits.
At the 15% tax bracket, someone would pay $20/month more in tax now.
If FERS uses the $40,000 number for retirement (assuming 20 years government service) , that would be another $25 a month as well.