Reimbursement for Health Insurance

[duanecpa]

I have a client who is hiring a nanny - They will pay a competitive rate. In addition, the prospective nanny is paying for health insurance herself. If the client reimburses the nanny for the health insurance, does the reimbursement become taxable ordinary income to the nanny?

If not, please provide a citation for the exemption from income.



Thank you.

[FEDUKE404]

Exempt how?

Although my morning coffee has yet to kick in, my initial response would be "of course" it is taxable income to the nanny.

The real fun and games might occur when the nanny tries to deduct her insurance costs...

For my 2¢ worth, I think it would be simpler to "pay" the nanny more and let the nanny deal with her own insurance/deductions/adjustments (self-employed but more likely a household employee). The latter can come with all kinds of unexpected tax surprises for the employer.

FE

[ChEAr$]

Remember too, that a household employee does not work in a trade or business, hence
payments excluded fail that test.