Word of the Day: Rumormongering

Apparently, the rumor mills are at it again. I’ve received three emails already this morning to this effect:

I’ve been told by several friends that my employer provided health care benefits will be subject to regular income tax treatment in 2011. I pay a monthly amount that partially pays for a high-deductible Blue Cross policy. Will there be different tax treatment in 2011 over 2010?

This is not true. I’ve written about this before (you can read the entire post here) but let me sum it up for you:

For the tax year 2011, employers must report health care benefits for employees. It will appear on your W-2 in 2012 as a report. It will not affect your taxable income.

Under the new health care plan, there is a penalty for those taxpayers who are not covered by health insurance. The reporting requirement will eventually assist the IRS in verifying that taxpayers have coverage. Additionally, the so-called Cadillac tax on high-dollar insurance plans goes into affect in 2018. The new reporting requirement will allow the IRS to identify taxpayers who are covered under these plans.

But to reconfirm: You will not pay tax on the amount of employer-related health care benefits reported in 2011 (some exceptions, such as HRA distributions which are not for reimbursed expenses apply just as they always have).

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13 thoughts on “Word of the Day: Rumormongering

  1. Yes as always your right. It’s a rumor. But could it be a precursor of things to come. I remember something about the nose of the camel… But our government would never do that… or would they!

  2. I agree Michael that it *could* be a precursor of things to come. But that’s no excuse for scaring people or spreading rumors. That just makes it worse.
    I’ve said before that I believe that keeping taxpayers confused is kind of all part of the strategy to avoid real reform…

  3. What people should really be worried about is the governments constant “borrowing” of social security contributions by employees and employers. Again we get a “tax holiday” at who’s expense. As the threat of reduced social security benifits or possible failure of the whole program looms, our elected officials have lowered your contributions to the fund further puting the program at risk. Last year businesses received tax rebates of reduced social security matching for hiring qualified employees. My guess is our elected officials cant wait to get the monkey off their back. The sooner the system fails the sooner they can put it behind them. Just an opinion. Could be wrong?

  4. Is it true that as part of health care reform effective 2013 there will be a 3.8% tax on real estate sales? Anyone know for sure?

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