Is a company supposed to tax your insurance payment?

Question

I thought that this was tax free if had insurance through my company. My boss taxes me then pays my insurance, is this the correct way to do it.

And if you know what law it is or whatever could you tell me, so i could show my boss. Its only a few bucks a week, but that adds up after awhile.

Answer 1

Section 125 of the Internal Revenue Service Code allows employers to deduct employees' contributions to insurance costs on a pre-tax basis. There are requirements that your employer would have to meet in order to do this. He can't just take it out pre-tax. There is a plan document that is required and each employee must make an election.

Any health insurance, dental insurance, vision, and some voluntary (supplemental) insurance are eligible to be pre-taxed. Disability insurance can be, but then the benefits will be taxable. I suggest that it be deducted post-tax. Life insurance can be pre-taxed, but only to a total benefit of $50,000. Your agent will explain all of this, if your employer elects to offer this benefit.

If your employer is not doing this, I would suggest that you have him talk to your broker about the availablility of Section 125 plans.

By the way, your employer will benefit from pre-taxing your contributions too.

Answer 2

some have pre tax insurance, and some is post tax. It depends. The company i work for has some plans that are deducted before taxes, and some that are deducted after taxes. You need to look at the insurance language and read the fine print. the way it usuall is decided is based on the price, the cheaper the insurance premiums, the more likely they will be deducted after taxes are taken out.

There isnt a law that says that your insurance has to be tax free. Its up to the company and the insurance.

Answer 3

You would pay your insurance premium with after tax dollars so yes, he would deduct taxes from your gross earnings and pay the insurance premium out of the net.

If you itemize your deductions (in the U.S.) then you would include the insurance premiums (I'm assuming this is medical insurance) as a deduction.

You might want to clarify this a bit though. What kind of insurance are you talking about? If you have a Health Savings Account, those are tax free so he should be paying that before he deducts taxes.

Answer 4

A company may elect under Section 125 of the Internal Revenue Code to deduct, pre-tax, from your gross wages, certain employee benefits such as employee-paid medical insurance premiums. This is at the discretion of the employer; it is not mandatory. Why would your employer choose not to offer to do pre-tax benefits for you? It's easier--no benefit plan to write, no extra paperwork, no keeping track of different employee benefit elections.

Answer 5

It can go either way. And it depends on what type of insurance. If you pay taxes on the premium for, say, disability benefits, then if you should NEED those benefits, the benefits are tax-free. If you DON'T pay taxes on the premiums, then if you file a claim, those benefits become taxable income.

Generally, you're better off paying the tax on the premiums, than paying income tax on the benefits.

Most of the time, health insurance premiums ARE taxed, as are life insurance.

Answer 6

Nope, it is self-employment earnings to the guy doing the paintings. The coverage organisation must be paying all and sundry. the shown fact that it extremely is a kinfolk member does not make it tax loose.