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How Can I Tell If My Health Insurance Benefits are Pre-taxed?



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Pre-taxed benefits are those that are withdrawn from your paycheck, before the taxes are removed. These benefits cannot be claimed for deductions if they have been taken from the paycheck of the employee as pre-taxed benefits. Although they are not deductible they are still subject to certain limitations. Discuss any questions that you may have with your employer or accountant.


The first method of determining if your benefits are pre-taxed is to pose the question to your employer; they will have the answer for you, or can contact the payroll department to determine the answer.


When you have received your W2 form, there is an amount listed as the amount of health care benefits that have been paid. Compare this amount with the amount that you have been paid in wages through the year and determine the difference. If your health care has been pre-taxed than the earnings amount will be less than the year to date wages on the pay check. This is a simple way of determining if your health care benefits have been pre-taxed.


Most times, this information is listed clearly on the stub that you have received with your payment of wages. There should be three categories, pre-tax deductions, tax deductions and other deductions. Many times, the pre-tax deductions will include the health benefits – and you will be able to tell if your health benefits have been pre-taxed.


At the beginning of every year, or period most employers have the employees sign a form determining how they would like their benefits to come from their pay, if you have chosen pre-taxed benefits, than you will be able to tell immediately, by this decision. Of course, the decision is up to the employee, but experts recommend that is beneficial for the employee to pay the pre-taxed benefits for health care, rather than from taxed income.


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