PREPAID MEDICAL INSURANCE

[699574]

CLIENT TOLD ME HE HAD $500.00 DEDUCTED WEEKLY FROM NET PAY FOR MEDICAL 

INSURANCE.  HE PAID $25,000 LAST YEAR.  HE SAID H & R BLOCK TOLD HIM IT WAS PRE TAXED AND THEREFORE  NOT DEDUCTIBLE.  IT SHOWS ON HIS PAYCHECK STUB AS AN ADJUSTMENT TO NET INCOME.  HOW CAN IT BE PRE-TAXED IF IT IS DEDUCTED FROM NET INCOME.   I;M CONFUSED?

I PLAN ON DEDUCTING IT AS A MEDICAL EXPENSE?

[abctax55 · Accepted solution]

1) Please use your inside voice.

2) Do the "math" on the paystub to determine if it is a PRETAX or after tax deduction.

3) The Blockheads have been know to make mistakes.   

4) Client *said* isn't a defensible position on a tax return that you sign.  You might have to actually talk to the employer.  I've had some very intelligent clients that were clueless on the before/after tax deduction issue.

5) If # 3 is correct, amend the prior year returns.

[itonewbie]

If you have already reviewed his payslips and comp breakdown for the W-2 and are sure it's deducted from Net Pay, why should that be a pre-tax deduction?  You have already answered your own question.

This is some very costly insurance for an employer plan at $25k per year!  I'd ask a few more questions to satisfy my curiosity and have that documented in case some agent is equally curious before deducting that.

[abctax55]

I agree with Jensen... something just doesn't completely add up here.

Also, is there something on the W-2 coded DD?

Is this a family plan, and your client is paying for his/her dependents?  

NMI.

[TaxGuyBill]

It is rude and difficult to read when you type in all capital letters.  All of your prior questions have done this.   If you continue to do so, most likely nobody will respond to your future questions.

[699574]

I'm really sorry i'm glad you  me. It won"t happen again. My eyesight leaves a lot to be

desired and it just makes it easier for me. I never thought of the person reading my email.

You learn something new everyday,

[TaxGuyBill]

No problem.  Thanks for responding!

Did your original question get answered to your satisfaction?  As was mentioned, do the actual math to see what was done.

It is extremely unusual for the insurance to be NOT pre-tax, so that is likely why H&R Block assumed it was pre-tax.  If it truly is not pre-tax, that is also costing the employer more money.  If you are looking for another business client, you may want to contact that employer to save them some money.   😀

[abctax55]

Hey... if you have a good reason for all caps, just say so when you post.

Otherwise, it's considered shouting, and as Bill says, rude (from an internet perspective).

Please let us know what you find out, as $ 25K post tax would be a bit unusual. 

[TaxGuyBill]

One other thought ... are you accessing this forum via a web browser?  If your eyesite makes reading difficult, you can generally make web pages larger by holding down the "Ctrl" button on the keyboard and hit the plus sign (+).  That makes it larger (and the minus sign makes is smaller and the zero resets it to the default size).  You can keep doing it for multiple times to make it larger and larger.

[IRonMaN]

Well, if we are going to start doing eye exams, we might as well do it right.  What is the smallest line that you can read?

[qbteachmt]

For this part: "I PLAN ON DEDUCTING IT AS A MEDICAL EXPENSE?"

Paying Medical Insurance premiums is not the same as incurring Medical Expense. You need to find out exactly what is being paid for.

[699574]

I agree with itonewbie. checkstub showed health insurance deduction from net pay, therefore

how can it be a pretax item?  You folks are the best. Thank You.