by MUG318 » Mon Nov 17, 2008 10:46 pm
I work for an employer that has decided, this year, that they are going to GIVE us 2x salary group life insurance to us at no cost to us. For some of us older employees, the imputed income of this gift is a bit too much to swallow. The employer has not give us anyway to opt out. Is there any law that forces them to at least offer an opt-out or a $50K policy?
Posted: Tue Nov 18, 2008 05:26 pm Post Subject:
This really is a headache...now I want to know how they come up with our OTHER wages. My hubby gets a form from his company every year stating the net worth of his job. This is actually a figure on there: other compensation.....hmmmm now my mind is running in circles...Paying taxes on benefits...Gosh they were right You live, You pay taxes and then you die. DEPRESSING
Posted: Wed Nov 19, 2008 10:54 am Post Subject:
MUG318 you are a very sharp person.
As evidenced by the responses on this thread most people don't realize that the cost of "some" employer paid benefits are included as TAXABLE INCOME to the employee.
In my example above and consistent with the sample W-2 form posted if the person had $25,000 in actual earnings the value of the life insurance benefit would be $1,584 for a total Box #1 wages, tips and OTHER compensation of 26,584 as GROSS INCOME.
If that person ends up in the 28% marginal tax bracket that means they paid $443.53 in additional Federal Income Tax for their "FREE" company benefit.
Posted: Wed Nov 19, 2008 12:10 pm Post Subject:
As evidenced by the responses on this thread most people don't realize that the cost of "some" employer paid benefits are included as TAXABLE INCOME to the employee.
I had NO IDEA that this is going on! none----and what a freakin' crock.....If that person ends up in the 28% marginal tax bracket that means they paid $443.53 in additional Federal Income Tax for their "FREE" company benefit
Well now I'm triple pissed off! And I just re-up'ed and can't change anything for another year...OP, I'm sorry and I'm in the same boat as you, (sure we don't work for the same company ?)....I'll be watchin' that w2 this year for this and see how much this 'benefit' is costing us...Gary, you didn't respond to my question
isn't there some deduction we take or get for life insurance premiums too? thought i remember something about that
seems to me my cpa saying something about, 'we can deduct part of blah blah because some of it is life insurance premium'... :?Posted: Wed Nov 19, 2008 12:33 pm Post Subject:
isn't there some deduction we take or get for life insurance premiums too?
No.
The company takes the tax deduction for the premium paid against their corporate income and YOU pay income tax on the imputed "value" of the life insurance premiums paid for by the company on life insurance above $50,000.
This wouldn't be a HUGE amount of money but I believe OP's point is it should be his choice whether to pay this hidden tax on the "FREE" company benefit OR opt out OR only be provided with $50,000 so as to NOT incur tax liability for something he doesn't need or want.
Posted: Wed Nov 19, 2008 01:47 pm Post Subject:
I didn't mean on this particular type of life ins. gary, I seem to remember (i'll try and remember to ask the cpa)...that we got to deduct part of a private ins premium...i'm thinking it had to do with the CPA ins that my husband has, (it's a job insurance policy with a small life and disability benefit included) seems that we are allowed to take a portion that would be part of the life prem...i'll ask the cpa and get some clarity on that....soooo is there (that you are aware) a deductible for 'other' types of life ins premium (tax wise)
Posted: Wed Nov 19, 2008 06:51 pm Post Subject:
Lori,
Life insurance premiums for individually owned policies are not tax deductible because the death benefit is paid to the beneficiary income tax free.
Posted: Wed Nov 19, 2008 10:16 pm Post Subject:
Hi Lori, does your husband have Long term care insurance? That is the only type of personal "life" insurance that I know of that you can (at least in many cases) deduct the premiums paid from your taxes.
Posted: Wed Nov 19, 2008 10:22 pm Post Subject:
I used my data on the calculator link provided on the web page and used $100,000 as a value. Given my age, 42, I'd be paying $12/year taxes. So basically $1/month. Maybe it's just me but I probably lose that much in change each month.
Posted: Wed Nov 19, 2008 10:58 pm Post Subject:
Fishman, could be I think I'll see my cpa tomorrow and I'll ask, I'm almost certain it had to do with the CPA, (job insurance) maybe it wasn't the life portion of that just a portion of the cpa, and since that's an insurance policy i misunderstood...
I'm with you Todd, I didn't realize that was all we are talking about here, I'm just sure I waste more than that on less...I would certainly cost me more than that to buy a policy that was over 50k...
ok, gary you can move on now to a different topic, I think we're all good here.. :wink:
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