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For those still employed and receiving a W-2

by Steven Haninger / March 14, 2013 7:28 PM PDT

You may notice a box in the form marked 12a. If you see the letters DD and then some dollar amount after it, this is supposedly the value to you of your company health plan. You may or may not know that there are two types of income. One is money you actually see and the other is called "imputed" income. Quite often this will be such as company provided death benefit coverage. Imputed income is taxable. I would imagine that adding the company contribution to the W-2 is in preparation for that to become taxable income as well. I know congress has bounced this around as a possibility but I expect it will probably become reality.

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(NT) goodbye "cafeteria plans"?
by James Denison / March 14, 2013 9:06 PM PDT
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Another pre-tax item I had was my contribution
by Steven Haninger / March 14, 2013 10:11 PM PDT

to the medical insurance plan. Over a year's time, this can amount to thousands of dollars. This is different from FSA accounts which, as I understand it, can now be taxed. I haven't found information as to whether or not fixed employee contribution will now be taxed or if congress is looking into doing so. I know there are some union contracts which have no employee contribution and attempts do change this have been met with stiff resistance. I would think that in such cases, the employer contribution would be much greater and possibly subject to tax. Theoretically, if the pre-tax medical contribution stays in place, there could be some unhappy union members should they find out that their entire employer contribution is now considered as income.

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Hard to read legalese, but FSA
by Roger NC / March 15, 2013 12:01 AM PDT

accounts seem to still be tax free up to limits of $2500 or a percentage of income (I didn't see what percentage).

Now some employers contribute to a FSA (as well as HSA's) and increase the health insurace deductible and copayment. HSA seem to be limited to people with really crappy insurance benefits to otherwise.

There are a lot of new regulations on plans, and the cafeteria plans James mentioned seem to have an entire set of retrictions and rules all their own to quailify tax wise.

FSA is wrong anyway, you should just be able to deduct the medical expenses, not have to guess how much you're going to spend next year, without the 7.5% of gross deduction. That is if you're going to allow it to be tax free by guessing right a year ahead of time, why should you not be allow to deduct it at the end of the year.

FSA does do some good. Knowing your deductible, and the minimum number of doctor visits and test you will need for existing conditions, you can estimate pretty well an amount to contribute. And if you need glasses, tht can be figured in based on the last cost.

But why is it tax free if you can guess right but not if you have unexpected medical expense?

Actually the 7.5% of gross deduction to your health cost I guess does in it's way bias taxes based on income. If you believe in proportional cost, it works, sort of.

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not necessarilly, there just has to be cost assigned
by Roger NC / March 14, 2013 11:44 PM PDT

most companies I know of require you to "elect" your benefit selections in November each year. So the cost would be calculated for whatever you choose. Of course, normally higher options are at your cost, so I don't know that it would change the value of company provided benefits.

Some of the choices are normally at least two levels of coverage, deductibles etc. In my experience, there is a two level choice for medical, dental, and drug coverage. You can choose higher deductibles and copayments and lower premium cost or vice versa. I suppose some still have totally company paid health insurance at a set level, perhaps with an option for more at employee expense. Employee cost had gone up for me every year for the 16 years I've worked this job. Actually that may be incorrect, I think the first two years I worked at current job the employee didn't have to pay for his insurance, only for dependent. But every year since then employee cost has increased for employee insurance and dependent insurance.

Then you choose if you'll participate in flex spending, for medical or child care, and how much you wish withheld for each.

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my paycheck stub has listed imputed income
by Roger NC / March 14, 2013 11:33 PM PDT

for years, so it's not a new thing to track it for sure. The W2 has listed it also for some time. I can't say exactly how long.


Using tax software, there are drop down boxes for 12a, 12b, 12c, and 12d.

The codes may be in different boxes for different people it seems, there must be a hiearchy of what is listed first. The list of what can fall under 12 is long. My W2 actual has 3 codes listed, life insurance, 401K, and cost of health insurance.

There is 20 or so options for box 12 sub-boxes. Besides the ones I listed already, it includes things like uncollected income, SS, medicare taxes on tips, taxes on 401Ks, IRA's, and a slew of others. There seems to be a minimum amount for some of those codes to be reported, life insurance for one had to exceed a minimum to be listed in 12.

The discussion in Congress about taxing the value of job provided health insurance has been around for years hasn't it? I'm almost it has been bought up for a decade or more. Not necessarily an actual proposal or bill, but just raised in discussion. The reaction has in the past been enough to kill it I believe.

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(NT) I may be mistaken about the W2, but not the stub
by Roger NC / March 15, 2013 12:05 AM PDT
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It's the "DD" code that's new
by Steven Haninger / March 15, 2013 2:40 AM PDT

I'd not seen it until this year when I was doing my daughter's taxes and it was also in my final W-2 but not any previous. Looking it up found that it's the value of the employer contribution for health and medical insurance. So why else would it be there unless it was intended for the possibility of being taxable income? As for my contribution, that was pre-tax so I paid my share with untaxed income. I must think that could change but it will no longer affect me anyway. It's not going to be easy or cheap to absorb all the new people into the system who've no way to pay for it. It will come from those who can.

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it may well be new on the W2
by Roger NC / March 15, 2013 2:58 AM PDT

but my tax stubs have included the "imputed value" for a few years, so there was record keeping if not reporting before now.

Got to finish my taxes up soon, if I remember I'll glance at old forms and stubs when I haul out the folder for last years, just for information sake.

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As Roger noted....
by Josh K / March 14, 2013 11:43 PM PDT

......that's been there for a long time.

The only person in Congress I remember floating the idea of making it taxable was John McCain. That was his counter-proposal to "Obamacare" in 2008.

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I thought it had been bought up before
by Roger NC / March 15, 2013 12:11 AM PDT
In reply to: As Roger noted....

but shot down quickly, but can't find anything to back that up.

McCain did mention it, Ryan last year wanted to change it and cap it.

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Any idea what benefits aren't taxed?
by Roger NC / March 15, 2013 12:28 AM PDT

Interesting we're talking about eliminating the home mortgage deduction and taxing health benefits.

Is this a step by step process to eliminate deductions entirely? Of course, these don't necessarily affect everyone equally.

While looking at some links about taxing health benefits, it was a surprise to see polls where if they tax health benefits, individuals intend to opt for lower cost benefits, less coverage, or even no coverage if they can.

Of course, that's the ones without known health problems, so it'll skew health costs.

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Benefits or contributions
by Willy / March 15, 2013 2:57 AM PDT

I think this all got started or re-surfaced when "stock options" became a big thing yrs. back. That while pay or direct compensation was done, off-loaded funds like stocks were provided. It's nice when you make $X pay and then have something like 3x your pay stacked away, yada, yada. Items like co. planes, cars or even clothes are supposed to be considered, but it seems often that gets on the minus side of accounting. let's not forget when you retire and you get benefits even you're suppose to be totally off the books. Nope, it seems some benefits still arrive in one form or another, like a co. provided home or paid for relocation into retirement. But, for the common folk we don't see such or get anywhere near into those areas. You wonder why the "simplified tax code" never gets any traction. -----Willy Happy

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