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Lev, Tax Advisor
Category: Tax
Satisfied Customers: 29800
Experience:  Taxes, Immigration, Labor Relations
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My employer has been paying my health insurance premiums (on

Customer Question

My employer has been paying my health insurance premiums (on an individual plan, since there's only a couple employees) for the past 9 years. Now they are telling me they will pay me monthly "commissions" to pay my own health insurance and send me a 1099 at the end of the year, classified as "commission". This doesn't seem right to me! Now I'm supposed to pay taxes on these "commissions" at the end of the year, which are actually paying my health insurance premiums??? This doesn't seem legal to me???
JA: You just pay a $5 deposit now and the rest only when you get a reply from the Accountant. All of this is 100% satisfaction guaranteed, so you can get a refund if you're not happy for any reason. The Accountant will know how to help. Is there anything else the Accountant should be aware of?
Customer: I am a Real Estate Agent that gets paid salary for working in the office 40 hours per week. Very rarely I do get paid commissions for leasing or selling property. It doesn't seem right that now my health insurance premiums will also be classified as commission? I work for a small employer who has 6 employees. They have been paying for health insurance for 2 of us. The other person they pay health insurance for they are planning to continue paying her health insurance premiums. Because my premiums are "too high", they are now punishing me by paying for it this way.
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Submitted: 1 year ago.
Category: Tax
Expert:  Lev replied 1 year ago.

If you are an employee - with compensation reported as wages on W2 - these commissions must be included into your wages and reported on W2 form as well.

You should not be receiving any 1099 form in such situation.

Please communicate with your payroll person and verify the proper reporting.

Customer: replied 1 year ago.
the additional funds they're now paying me monthly to pay for my health insurance should NOT be classified as "commissions" & 1099'd. They should be included in my salary and listed on my W2. Is it classified as regular salary (and taxable income) or is there a way to classify the money as employer paid health benefits (and tax exempt) on the W2?
Expert:  Lev replied 1 year ago.

These payments are classified as fringe benefits.

A fringe benefit is a form of pay for the performance of services.Any fringe benefit the employer provides is taxable and must be included in the recipient s pay unless the law specifically excludes it.

For fringe benefits - see supplemental publication 15b

and page 6 - Table 2-1. Special Rules for Various Types of Fringe Benefits

However - your employer is ALLOWED (not required!) to exclude from taxable wages some fringe benefits - and that publication states conditions for exclusion.

So far - if they choose not to exclude from taxable wages - there is nothing we may do to force them...

You still may deduct these payments as medical expenses on your individual tax return.

But otherwise taxable fringe benefits are reported as wages and may not be reported on 1099misc form.