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Wendy Reed
Wendy Reed, Enrolled Agent
Category: Tax
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Experience:  15+ years tax preparation and tax advice.
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I am a NJ resident. I am considering adding my domestic parnter

Resolved Question:

I am a NJ resident. I am considering adding my domestic parnter onto my health plan. I am aware that my employer will imput my income with the amount of the benefit attributable to my domestic partner. I am also aware but would like advice and confirmation that I can write off/some how eliminate the imputed income if I am able to demonstrate that I provide 50% or more of the financial support to my domestic partner. How do I demonstrate this on a tax form and how do I eliminate write off the imputed income? Also are there any other consequences?
Submitted: 5 years ago.
Category: Tax
Expert:  Wendy Reed replied 5 years ago.

Hello there,

 

As I understand, you are able to add your partner to your insurance as long as you pay tax on a certain amount of imputed income..... Generally the way I have seen medical premiums work is that the employee pays his medical premiums (which are usually Pre-tax deductions) with after-tax funds---meaning that the medical premiums are not pre-tax when a domestic partner is on the policy. Do you pay any health insurance premiums? If not, but your employer is adding $ of taxable income to your W2 wages and subsequently taxing this amount, then your taxable $ per week can be considered deductible medical insurance premiums. (assuming that your domestic partner is your Dependent for tax purposes--which entails more than just paying more than 50% of his or her support) You can add this amount to your other medical/dental bills as an itemized deduction. However, total medical must be greater than 7.5% of your AGI to be deductible, and you must itemize to take advantage of this. That is the only way any of your federal or state taxes may be recouped. Total medical expenses must be greater than 2% of your NJ AGI.

 

Let me know if you have additional questions.

 

 

Customer: replied 5 years ago.

Yes I pay a percentage of the health care premiums. If and when I add my domestic partner I will pay a larger premium. The percentage of the premium attributable to my domestic partner that my employer pays is what is imputed. So I believe I can deduct this...correct?

When you say (Assuming that your domestic partner Your dependent for tax purpose), are you saying that I can claim her as my dependent which I believe means that my domestic partner earns less than $3400 a year? That has to be true in order for me to itemize (assuming total medical is greater than 7.5% AGI)?

Expert:  Wendy Reed replied 5 years ago.

You will be able to use as a medical expense deduction any of your own medical premiums that you pay with "after-tax" money---which I have seen them do when you add a domestic partner. You can deduct the imputed amount (for federal purposes) that you are paying tax on for your domestic partner if and only if your domestic partner qualifies as your dependent for federal tax purposes. This includes having her live with you for the entire year, making less than $3500 (in 2008), you providing her with more than 1/2 support, and a few other qualifications. These can be found in Pub. 501, under "Qualifying relatives" in the Dependency section.

 

With regards XXXXX XXXXX if you have a civil union, you may be able to file a NJ return as married jointly: http://www.nj.gov/treasury/taxation/index.html?civilunionact.htm~mainFrame

 

In this case, all of the medical insurance payments (made after tax) and imputed income can be deducted for NJ medical purposes. If you do not have a civil union, then she would have to be your dependent to deduct the imputed income for the NJ return as well.

Wendy Reed, Enrolled Agent
Category: Tax
Satisfied Customers: 3345
Experience: 15+ years tax preparation and tax advice.
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