Can a corporation pay a (Heath Insurance Premium) fringe benefit directly to the employee (non s/h)? and if they did and took it as a fringe benefit deduction, whats to stop the employee (who wrote the check for the coverage) from also deducting it?
Would the employee in this case be required to include this as taxable income and should it not be included as such on his W-2?
If the payment is going directly to the employee, Mt Juliet is correct - the payments belong on the employee's W-2.
Well (Mt Juliet) that's what I thought, and even recommended that to them, but in reading Pub 15B, "Contributions to the cost of accident or health insurance" are listed under excludable fringe benefits and not subject to Federal, SS, or MC tax. What is not clear though, (and VERY hard to find clarification via the internet) is whether the fact that they pay it directly to the employee, and not to the ins co., makes a difference. Thanks for your comments and more are welcome
Beachsidesigning - If you are making the payments directly to an insurance company, you probably do have a plan. However, when you are just paying it to the employee you have wages since you have no control after that point whether he uses the cash for health insurance or for payments on his new Porsche.
IRMN is correct in his last response
Thanks you two, appreciate both your time & input. Why does the answer always seem soooooo obvious once it's in writing!
THANK YOU
IRMN nailed it.
When you reimburse pursuant to an accountable plan (which this would need to be, if you want to avoid W-2 inclusion and if the payments aren't being made directly to the insurance company), the employee provides proof of premium payment, and the employer reimburses thereafter. No proof of payment, no reimbursement.
A Box 14 memo on the W-2 would clue in the auditor, if the employee were ever audited.
