The IRS went out of its way today to let employers and employees know that just because the cost of health coverage is a reportable item on the W-2 form in the future (under the new health care law), the amounts are not taxable. Which begs the question: Why are employers being forced to do this then?
According to the IRS, “the new reporting requirement is intended to be informational only, and to provide employees with greater transparency into overall health care costs.”
In releasing the DRAFT W-2 form where coverage costs will be reported, the IRS did make the new requirement optional in 2011, which means it won’t kick in until 2012.
Here is the partial IRS statement:
“The IRS today issued a draft Form W-2 for 2011, which employers use to report wages and employee tax withholding. The IRS also announced that it will defer the new requirement for employers to report the cost of coverage under an employer-sponsored group health plan, making that reporting by employers optional in 2011.
“The draft Form W-2 includes the codes that employers may use to report the cost of coverage under an employer-sponsored group health plan. The Treasury Department and the IRS have determined that this relief is necessary to provide employers the time they need to make changes to their payroll systems or procedures in preparation for compliance with the new reporting requirement. The IRS will be publishing guidance on the new requirement later this year.”
Karen Kerrigan, President & CEO