ex-employer insurance payments

[robgold78]

Client receives $ 500.00 monthly from former employer to help defray health insurance costs. She was given 1099-Misc with the $ 6,000.00 payments shown in box 7. She believes these payments are not taxable income to her. I believe they are, as this money can be used at her discretion. Any thoughts ??

[taxea]

Report on 1040 ln 21. If used for medical insurance, deduct on Sch A

[Kram BergGold]

If Taxable

If you determine the $6,000 to be taxable you must either get the employer to redo the 1099 by putting the $6,000 in box 3 or wash the $6,000 off Schedule C before entering on line 21. My gut feeling is the employer should have included the $6,000 in the W-2 and withheld and paid SS and Medicare tax. Saying that, I think this oversight is the employer's problem not your clients.

[FEDUKE404]

Employer paid taxable benefits to her

Client receives $ 500.00 monthly from former employer to help defray health insurance costs. She was given 1099-Misc with the $ 6,000.00 payments shown in box 7. She believes these payments are not taxable income to her. I believe they are, as this money can be used at her discretion. Any thoughts ??

She received $6k of compensation as shown on the Form 1099-MISC.

Doesn't matter what she "believes."

FE

[Burke]

I have a client whose former employer (from which job he retired) reimburses him $120 per month to defray a supplemental medical insurance plan via an HRA account. They have informed him that this money is not taxable based on IRS guidelines for these accounts. However, he does deduct this money from his overall medical insurance premiums which he claims on Sche A.