How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask USTaxAdvising Your Own Question
USTaxAdvising
USTaxAdvising, CPA
Category: Tax
Satisfied Customers: 1237
Experience:  US Taxation specialist.
58296935
Type Your Tax Question Here...
USTaxAdvising is online now
A new question is answered every 9 seconds

My clients CEO is 65 and qualifies for Medicare. The board

Customer Question

My client's CEO is 65 and qualifies for Medicare. The board of directors agreed to reimburse her for her Medicare premiums. Would the amount of the reimbursement be taxable income to the CEO.
Submitted: 4 years ago.
Category: Tax
Expert:  USTaxAdvising replied 4 years ago.

USTaxAdvising :

Hello,

USTaxAdvising :

Yes, this would definitely be considered taxable income to the CEO as it would most likely be considered compensation.

USTaxAdvising :

Generally, you must include in gross income everything you receive in payment for personal services. In addition to wages, salaries, commissions, fees, and tips, this includes other forms of compensation such as fringe benefits and stock options.

USTaxAdvising :

I think this would be further supported if the company deducted this reimbursement as a compensation expense.

USTaxAdvising :

You could review Publication 525 - http://www.irs.gov/publications/p525/ar02.html#en_US_2011_publink1000229090

USTaxAdvising :

Per this Publication - "Social security and Medicare taxes paid by employer. If you and your employer have an agreement that your employer pays your social security and Medicare taxes without deducting them from your gross wages, you must report the amount of tax paid for you as taxable wages on your tax return. The payment is also treated as wages for figuring your social security and Medicare taxes and your social security and Medicare benefits."

USTaxAdvising :

The fact pattern above is somewhat different but the theory is the same. This would be compensation and taxable to the CEO.

Please let me know if you have any further questions.

Best regards,

Customer : The company has a health insurance plan but the CEO opted to go with Medicare to save cost. In exchange the company agreed to reimburse the Medicare premium. I agree with your conclusion that it would be taxable compensation. Thanks for the quick reply.
USTaxAdvising :

No problem.

USTaxAdvising :

Please don't forget to accept, thanks!