Reporting Workplace Health Benefits Is Optional

The IRS just announced that one of the provisions within the health care reform bill is now optional. The bill requires all employers to report the total value of each employee’s health benefits on his or her W-2. Many people misconstrued this provision and claimed that health benefits would be taxed. (To be clear, employer-paid health benefits are NOT taxable income.) In addition, employers are not required to report this information until 2012 (meaning benefits from 2011 will be reported on the W-2 employees receive in 2012).

Just as we were all getting used to the idea, the IRS announced that reporting the value of benefits for tax year 2011 is optional. So, employers across the country can relax for another year. After that, the amounts will need to be reported, but will still not be taxable for employees.

(hat tip: Kay Bell from Don't Mess With Taxes)