My spouses employer does not give this option, and I don't feel this is right. We will have high medical expenses this year, and I'm afraid this will make a difference in whether we will have enough to claim.
2007-01-09 07:24:08 · 3 answers · asked by momofcody1993 2 in Business & Finance ➔ Taxes ➔ United States
Your employer is required to tax your entire salary until exclusions are offered by the Revenue Code. The only deductions they're allowed to take out tax free are listed on the back of your W-2.
The only way for you to deduct medical payments of any kind from your personal taxes is on schedual A "itemized deductions".
In this case, your employer is not ALLOWED to give you the option you're asking for.
(You can always bypass your employer and just change your W-4. If you want less taxes taken out, claim more deductions. You will owe the same amount in taxes at the end of the year, but you'll have less taken out. You have to be careful about this, though. If you end up owing on your 1040 2 years in a row, you might be facing a penalty for not having enough deducted.)
2007-01-09 07:30:01 · answer #1 · answered by Anonymous · 0⤊ 0⤋
Most employers deduct employee premiums for medical insurance as a pre-tax deduction (which is allowed by the IRS). Generally this is more favorable for the employee because there's a 7.5% exclusion (deductible) of adjusted gross income for itemizing medical expenses. Example: your AGI was 50,000 and you have 4000 in medical expenses, 7.5% of 50000 is 3750 which is the deductible. 4000-3750=250 may be itemized on schedule A. This deductible doesn't apply to items deducted from employee paychecks.
2007-01-09 09:05:00 · answer #2 · answered by n2js 2 · 1⤊ 1⤋
Yes, it's legal either way, pre-tax or post-tax.
2007-01-09 14:41:39 · answer #3 · answered by Judy 7 · 0⤊ 0⤋