Bush tax cuts may expire, but reporting the value of health benefits on the 2011 W-2 does not make that value taxable

Let me make my point one more time

Sometimes I wonder whether the most misinformed and misleading individuals are members of Congress or its critics (yikes, that includes me).

I previously reported on a false e-mail regarding the taxability of health benefits because the value of such benefits is to be reported on the W-2 beginning in 2011. This rumor simply will not die. Now, a new e-mail is circulating about the increases in taxes beginning in 2011 because of expiration of the Bush Administration tax cuts.

Here is the WRONG information contained in the latest e-mail making its way around the WEB.

Now your insurance is INCOME on your W2’s…… 
One of the surprises we’ll find come next year, is what follows – – a little “surprise” that 99% of us had no idea was included in the “new and improved” healthcare legislation

Starting in 2011, (next year folks), your W-2 tax form sent by your employer will be increased to show the value of whatever health insurance you are given by the company.

You will now be required to pay taxes on a large sum of money that you have never seen. Take your tax form you just finished and see what $15,000 or $20,000 additional gross does to your Tax debt.  That’s what you’ll pay next year.  For many, it also puts you into a new higher bracket so it’s even worse.

Once again, the value of your health benefits will be reported on the W-2 for 2011, but not as taxable income and will not be taxed.

Employers may want to address this issue now and make sure employees understand what will appear on their 2011 W-2.  Believing this misinformation may cause some individuals to change their benefits, change their payroll tax withholding or otherwise make inappropriate (dumb) decisions.

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