Tuesday, November 9, 2010

Money spent on health insurance through work be deducted?

Can this money spent on health insurance at work be deducted on the Itemized Deductions Schedule A under Medical and Dental Expenses. Thanks
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Normally not. The vast majority of employer-sponsored health insurance plans are paid for with pre-tax dollars under a Section 125 benefits plan. You've already received tax benefit for those premiums so you cannot deduct them again on Schedule A. While it's possible to have those premiums deducted post-tax there's normally no tax benefit in doing so. Some employers may report the total health insurance premiums in box 14 but it's not a requirement. You need to check with your payroll department and see if the health insurance is part of a Section 125 plan or not. That said, if you were given an election sheet when you became eligible for the coverage, or at the annual open season (usually in November) then your plan is a Section 125 plan. That sheet allows you to designate the premiums as pre or post tax. The default is pre tax and I can't think of a good reason why you would ever want to have them deducted post tax.
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