Excerpt: This notice provides guidance regarding the effect of the Working Families Tax Relief Act of (WFTRA), Pub. L. No. , On November 17, , the Internal Revenue Service (“IRS”) published Notice (“Notice”), clarifying some confusion over the definition. (IRB ) Corporate distributions of property; distribution by subsidiary Notice (IRB ) Notice withdrawn; IRS to continue.

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Massachusetts gross income is federal gross income, as defined under the Code, with certain modifications. The gross income of an employee does not include contributions which his employer makes to an accident or health plan for compensation through insurance or otherwise to the employee for personal injuries or sickness incurred by him, his spouse, or his dependents, as defined in section However, pursuant to G.

Except in the case of amounts attributable to and not in excess of deductions allowed under section relating to medical, etc. In the area of employer-provided health insurance coverage which is a fringe benefitthe value of health insurance benefits for a child of an employee is excluded from gross income where the child is a dependent under the rules of IRC section Under the terms of the divorce agreement, the mother may claim the federal dependency exemption for him.

Also, prior to the clarification in the technical corrections Act, the health care reform law required that on or after January hotice,carriers issuing or renewing insured health benefit plans with coverage for dependents make coverage available for persons “under 26 years of noyice or for 2 years following loss of dependent status under the Internal Revenue Code, whichever occurs first.

The recent legislation provides an exemption for imputed income for Massachusetts personal income tax purposes where health care coverage is required by Massachusetts law. The Legislature made several technical corrections to the health care reform law in the recent “Act further Regulating Health Care Access,” St. An employer or an employee seeking a case-specific determination on imputed income for noticce income tax purposes must contact the Internal Revenue Service.

IRS Notice 2004-79 Clarifies WFTRA Confusion

When does an employee’s child meet the definition of dependent for purposes of employer-provided health insurance coverage so that the entire value of the coverage is excluded from gross income? If you need to report child 20047-9, any other kind of abuse, or need urgent assistance, please click here.

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As of January 1,the Massachusetts Health Care Reform Act expands employer-provided health insurance coverage to include an employee’s jotice “under 26 years of age or for 2 years after the end of the calendar year in which such persons last qualified as dependents under 26 U.

For federal income tax purposes, an employee who opts for coverage for a nondependent child will be taxed on notive fair market value of the child’s coverage to the extent that it exceeds any amount paid by the employee on an after-tax basis employee pre-tax contributions are considered to be employer contributions.

Although generally Massachusetts follows federal law in the area 200-479 noncash fringe benefits, in the case of imputed income with respect to employer-provided health insurance, the Legislature has chosen to depart from the federal treatment.

Generally, with respect to the personal income tax, Massachusetts adopts the Code as amended and in effect on January 1, As a result, Massachusetts will not follow federal law in the area of imputed income resulting from employer-provided health care fringe benefits.

For purposes nohice the exclusion from gross income for employer-provided health insurance, any child of divorced parents who meets the expanded definition of dependent in connection with one parent is treated as a dependent of both parents. Feedback Did you find what you were looking for on this webpage? For an affected employee, the Massachusetts gross income for the year, as reflected in his or her Jotice, will be lower than federal gross income.

Skip table of contents. So a child may qualify as a dependent for purposes of the exclusion from gross income for employer-provided health insurance benefits whether or not the parent actually claims the dependency exemption for the noice on the parent’s federal income tax return.

When does employer-provided health insurance coverage for an employee’s child result in imputed income to the employee? As explained in TIRwhether a child of an employee is a dependent for purposes of the federal exclusion from gross income of employer-provided health insurance coverage is a question of federal income tax law pursuant to Internal Revenue Code section Under federal tax law, isr contributions for health insurance are excluded from an employee’s gross income.

A child of divorced parents, age 25, is a full-time student who lives with his mother. Please do not include personal or contact information. In the context of employer-provided health insurance benefits, the following examples illustrate when imputed income occurs and when it does not.

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If an employee participates in an employer-provided health insurance plan, any amount which, but for this section, would be included in gross income of the employee by reason of coverage under the plan of any person other than the notiec, to the extent such coverage is mandated by law.

Text of IRS Notice on Definition of ‘Dependent’ in Group Health Plans (PDF)

In Notice, C. The employee’s federal gross income for the year, as reflected in his or her W-2, will be higher and notive higher amount will be subject to taxation and withholding.

In general, for a child to be considered a dependent under the Internal Revenue Code, the child must meet the requirements of a “qualifying child” or a “qualifying relative” as described below. We use your feedback to help us improve this site but we are not able to respond directly. Collectively, the amendments require that on or after January 1,carriers issuing or renewing insured health benefit plans with coverage for dependents make coverage available for persons “under 26 years of age or for 2 years after the end of the calendar year in which such persons last qualified as dependents under 26 U.

Section a of the Code provides that gross income of an employee does not include employer-provided coverage under an accident or health plan. Accordingly, under Internal Revenue Service Noticean employee may exclude from gross income the value of employer-provided health insurance coverage for a child who, while not a “qualifying child,” meets the definition of a “qualifying relative” determined without regard to the child’s gross income.

If a taxpayer’s child does not meet the requirements of a dependent as a “qualifying child,” the child may still meet the requirements of a dependent as a “qualifying relative. Recent legislation provides for the exclusion from Massachusetts gross income of any imputed income resulting from employer-provided health insurance of a person included in the employee’s family health insurance plan where the coverage is required by state law.

Massachusetts Department of Revenue. This TIR provides a summary of Internal Revenue Service Noticea federal notice that provides relief from imputed income in many instances where employer-provided health coverage includes an employee’s grown child.