Presented by: Brenda JM Sabin, CBP Key Concepts, LLC.

Presented by:Brenda JM Sabin, CBP

Key Concepts, LLC

Definitions of Dependents

Civil Unions and Domestic Partner taxation examples

Recent Law Changes

Section 125 Plan – covers health related plans under Federal law

IRC = Internal Revenue Code Dependents

FederalState – different by state

Section 125 plansFederal Definition of Dependents

Civil UnionsState definition of Dependent

Domestic PartnerNot a Dependent

Section 125 plans – qualified dependents are: Spouse, qualifying child or qualifying relative (federal law)

Qualifying child Is under age 19, or 24 if a full-time student; Lives in same home as taxpayer for more than half taxable

year; Has not provided over 50% of his/her own support for the year.

Qualifying Relative Is not a “qualifying child” as described earlier; Is a resident of US, Mexico or Canada; Earns less than current exemption amount ($3,500 for

2008); Has over 50% his/her support provided by

employee/taxpayer.

NH – SB197 – allows ex-spouses (divorced or legally separated) to stay on insurance plan as a dependent for up to 36 months.

NH – HB790 – changes definition of dependent child.< age 26, andUnmarried, andNH resident or enrolled as a student

(P/T or F/T) in an institution of higher education, and

Not covered under another health plan or Medicaid.

State recognized dependents not federally recognizedVT/NH – Civil Union partner has same

dependent rights as spouse

Under State Laws the section 125 plan is NOT taxable for state income tax if provided for a legal dependent* but it is for federal

The Fair Market Value (FMV) of the insurance itself is taxable to the employee for federal taxes (not state)

Worksheet – Employee and Civil Union Partner (2

person plan)

Using information on Worksheet – calculate the imputed income that is taxable to the employee and the pre-tax vs post-tax premium deductions.

Excel sheet

What if the Civil Union partner had a dependent child?

Worksheet: Employee and Civil Union Partner

and CU Dependent(Family plan)

Excel sheet

What if the dependent child was the Employees legal dependent?

Worksheet: Employee and Civil Union Partner

and EMPLOYEE Dependent(Family plan)

excel

Same sex or opposite sex

Lets look at the same examples but they are not recognized as dependents by either State or Federal Law.

Pro’s and Con’sYearlyQuarterlyPer Paycheck

Requiring proof of civil unionsDo you require proof of marriage?

Requiring proof of dependent childrenDo you require that now?

Do you have a Domestic Partner affidavit?Some insurers require them

Group Term Life –imputed income Tuition Reimbursement ($5,250) Qualified Transportation Benefits

$115 per month for mass transit $220 per month for parking

Company Car and Personal Use Lease Value method Cents per mile method Commuting method

Bonus’ Supplemental Tax Rates

25% Federal 7.2% VT 0% NH

Recent IRS Changes

Rates thru 06/30 07/01 >> Business (mileage) 50.5cents 58.5 cents Medical/Moving   19 cents 27

cents Charitable 14 cents 14 cents

Q & A

Brenda JM Sabin, CBP Key Concepts, LLC www.keyconcepts.us [email protected]