Health Insurance Tax Credit I work as a nanny and needed health insurance desperately. Lucky for me, Tom Breedlove of Breedlove & Associates answered my questions, and my employer's questions, without a consultation fee!
First, I went to the Heatlh Reform In Action web site to find the most affordable individual health insurance available in my state. Then, Tom Breedlove explained that if my employer sends in the health insurance premiums that cost is not taxable income.
He explained it is more beneficial to have my employer send in the premiums to lower my taxable income than to add the health insurance premiums to my end of the year medical expense deductions.
But, my employer and I were completely unaware that my employer will actually benefit with tax credits for sending in my health insurance premiums!
Mr. Breedlove explained to us that small employers (less than 25 employees) who contribute to their employee’s health insurance policy are entitled to a tax credit on that expense. So, in addition to being a non-taxable form of compensation, health insurance contributions made by a nanny employer have the added benefit of savings from tax credits!
Here are some benefits parents can offer to their employee and have them be considered non-taxable compensation (no taxes for employer or employee). The IRS-approved benefits for households are:
1. Health Insurance premiums from a state-licensed insurance provider
2. Up to $5,250 per year towards tuition and books for an accredited college or university
3.Up to $230 per month toward public transportation to and from the worksite
4. Up to $230 per month towards parking (at the jobsite and/or at the public transportation facility)
We hope your found Tom Breedlove's advice for common nanny tax dilemmas helpful this week. Be sure to scroll back to read his other articles if you missed any this week.
Tom Breedlove is a Partner at Breedlove & Associates, the nation's leading specialist in payroll, tax, and HR services for household employers.
