Karen Lee Posted April 9, 2009 Report Share Posted April 9, 2009 My sister-in-law came in to have her taxes completed. She showed me her W-2 from a part-time job she has. Not alot of pay but uses the job for health benefits. The company subtracts her Cafeteria Plan from gross wages, ss wages and mc wages. Her W-2 shows she made less than the amount deducted for the Cafeteria Plan. Total earned would be close to 10K but her W-2 shows only $3200. in Box 1,3 and 5. I haven't searched wholeheartedly on Cafeteria Plans but this just doesn't seem right. Cafeteria Plans not subject to FIT, SS Tax or Medicare?!?!?!? No information in Box 14. Thanks Karen Quote Link to comment Share on other sites More sharing options...
Catherine Posted April 10, 2009 Report Share Posted April 10, 2009 My sister-in-law came in to have her taxes completed. She showed me her W-2 from a part-time job she has. Not alot of pay but uses the job for health benefits. The company subtracts her Cafeteria Plan from gross wages, ss wages and mc wages. Her W-2 shows she made less than the amount deducted for the Cafeteria Plan. Total earned would be close to 10K but her W-2 shows only $3200. in Box 1,3 and 5. I haven't searched wholeheartedly on Cafeteria Plans but this just doesn't seem right. Cafeteria Plans not subject to FIT, SS Tax or Medicare?!?!?!? No information in Box 14. Thanks Karen excerpted from The TaxBook, 13-31: "A cafeteria plan is a written plan that allows employees to choose between receiving a taxable compensation or a qualified benefit for which the law provides an exclusion from wages." So, FIT, yes, but I'm not sure offhand about SS or Medi. Quote Link to comment Share on other sites More sharing options...
Maribeth Posted April 10, 2009 Report Share Posted April 10, 2009 excerpted from The TaxBook, 13-31: "A cafeteria plan is a written plan that allows employees to choose between receiving a taxable compensation or a qualified benefit for which the law provides an exclusion from wages." So, FIT, yes, but I'm not sure offhand about SS or Medi. Benefits paid under a §125 plan are not subject to federal income tax, social security tax or medicare tax. The amount of the benefit paid under the plan will not show up in Box 1, 3, 5 of Form W-2. Where you might be getting confused is thinking of a 401(k) plan. In that case, the amount deferred is subject to social security and medicare, but not subject to federal income tax. That scenario is just the opposite for s-corp s/h medical premiums which are taxable for federal income tax, but not medicare or social security. There can be a few other quirks but for your sister-in-law, her health benefits are not taxable and will not show on her W-2. Maribeth Quote Link to comment Share on other sites More sharing options...
Karen Lee Posted April 10, 2009 Author Report Share Posted April 10, 2009 Thank you for your comments. Cafeteria Plan is great for employers for reduced 941's but the employees don't get the wage credit for SS. Oh Well. Nice to have this in my brain just hope to be able to retrieve it when needed. Thanks Karen Quote Link to comment Share on other sites More sharing options...
clay Posted April 11, 2009 Report Share Posted April 11, 2009 Can an item such as health insurance that is part of the cafeteria plan, paid by the employee but excluded from taxable wages, still be deducted on Sch A? Quote Link to comment Share on other sites More sharing options...
TAXBILLY Posted April 11, 2009 Report Share Posted April 11, 2009 No. taxbilly Quote Link to comment Share on other sites More sharing options...
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