An employee is arguing that the deductions that his employer makes from his paycheck for some of his health insurance and the health insurance of a dependent should not be included in his W2 as income.
Details:
Employer does not offer paid insurance for a dependent of an employee.
The employer requires that the employee pays for a portion of the employee's health insurance.
The employer deducts $300 per month from the employee for the employee's dependent, and $150 per month for the employee.
The employer does not have a cafeteria plan.
The employer disagrees with the employee:
The employer figures that it must include this $450 per month as taxable income to the employee and it will show up in box 1, 3, and 5.
The employee can take this expense as an itemized deduction, subject to the limitations.
Who is correct? The employee or the employer?