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Financial Planning / Tax Strategies
|Subject: Re: Marriage Penalty Returns||Date: 1/22/2013 1:58 AM|
|Author: joelcorley||Number: 117490 of 122503|
You wrote, I cover my girlfriend's healthcare through my current employer. In the past she's covered me. We've switched based on cost.
To which you replied, This is one of the few places that there are tax "penalties" for not being married. Coverage of an employee's "family" is a tax-exempt fringe benefit. In your case the diffence in premium between covering the employee alone and whatever it is you're paying is taxable wage income, at least at the Federal level. States are free to make the adjustments they deem appropriate.
Understood. In past years I've worked for a contracting firm. Health benefits were expensive - basically unsubsidized - and benefit caps were so low my employer had to file for waivers with the DOL. I was fairly well paid though - I had a specific skillset their customer needed, so I was paid what I thought was fair. (It's always great to be in a position where you know your employer needs you. :-) When I took that job and we realized just how bad the benefits were, my girlfriend put me on her plan - and I paid her for the after-tax cost. So for 2 years I paid healthcare premiums with after-tax money. It was still a better deal. Even had we broken up, taxable COBRA payments would have been a better deal.
Late last year I took a new, full-time position. Benefits here are excellent and my own costs are nominal. My new employer also provides full benefits for unmarried partners and they actually true-up (add to my paycheck) for the taxes. However, they do charge unmarried employees a fee on each paycheck if that employee's partner is eligible for coverage through their employer. (The fee is assessed only if the employee is unmarried.) Even with this fee, the costs are less and the benefits are arguably better.
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