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| *The Commerce Journal>>>Other Taxes |
Are medical coverage deductions taken before or after taxes? |
When you have a job and you are having medical coverage deductions taken out of your paycheck... do these deductions get taken out before taxes are calculated - like 401K. Or are they taken out of your net pay? I had some back pay owed to my company for health coverage, and the money taken out of my paycheck for that changed what I owed for taxes this pay period. (because the back pay being taken out dropped me down a tax bracket for this particular paycheck) I told my husband it's because medical coverage deductions are pre-tax, but he disagrees. He thinks my company handled it incorrectly such that it appeared like I earned less this period, instead of the money I owed being taken out as a deduction, and he thinks our total taxes paid will end up short at the end of the year because of this. Can be done either way, pre-tax, or after-tax. Almost always it's better to have it taken out pre-tax. If it's pre-tax, it is generally referred to as a cafeteria plan. The health insurance is taken out of your paycheck on a pre-tax basis, and is treated for you tax-wise as if you never earned that money, but because it is taken out on a pre-tax basis you also can't claim the health insurance as a medical expense on Schedule A - Itemized Deductions - Medical & Dental. My husbands coverage for our family is taken out of his check pre-tax. I know that for sure. They are usually pretax dollars. But ask your payroll department to be sure. Federal tax law allows an employer to deduct health insurance payments from your gross earnings prior to taxes being assessed on your earnings. You won't be able to "deduct" your health insurance as an expense at tax time. The logic is that since you'd get a deduction for your health insurance anyway, Uncle Sam lets you get that deduction as you use it, which is when you buy your health insurance, each pay day. So.... You are right and he owes you, oh say, a dinner at Applebees or The Texas Roadhouse. You can give him a kiss and make him feel like he's special for having such a smart gal as his partner. Grinnnnnn. It depends on your employer, but the medical insurance is often taken out pretax. I would call your Human Rescources Dept at your work, they should be able to answer that!!! :) check this link its good http://datentryworksworkathomeobs.blogsp... . |
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