Tax treatment for coverage of children up to age 26

[Guest JM123]

Is anyone aware of any chart or other materials published that shows the tax treatment under state law?

[My 2 cents]

Isn't the age 26 requirement just for purposes of obtaining health insurance coverage? I don't think it has anything to do with whether or not they qualify as dependents for tax purposes, federal or state.

[Guest JM123]

Isn't the age 26 requirement just for purposes of obtaining health insurance coverage? I don't think it has anything to do with whether or not they qualify as dependents for tax purposes, federal or state.

Income is not imputed to adult children as old as age 26 under federal law. Before, adult children could not qualify as eligilbe dependents, so that inocme was required to be imputed for such coverage. Under the new rules, no imputed income results for the cost of coverage for an employee's adult child as old as age 26.

I am looking for a table that shows which states tax rules follow the federal on this, or which might continue to impute income even though it's not imputed for federal tax purposes.

[david rigby]

Don't know if your inquiry is addressed, but Carol Calhoun includes a variety of information on her website:

http://benefitsattorney.com/index.php

[GMK]

For one, Wisconsin does not automatically federalize its tax code, and it has not federalized with respect to coverage to age 26. Maybe they will consider it in January 2011. Adult child coverage, therefore, results in imputed income for state income tax purposes unless the adult child qualifies as a "tax dependent" (as a qualifying child or a qualifying relative).

In addition, Wisconsin requires coverage eligibility to age 27, which results in imputed income for both federal and state income taxes.

You may need to go to each state's Department of Revenue web site to get your answer. (And then you could post your chart here. Probably not what you had in mind. )

[Guest JM123]

For one, Wisconsin does not automatically federalize its tax code, and it has not federalized with respect to coverage to age 26. Maybe they will consider it in January 2011. Adult child coverage, therefore, results in imputed income for state income tax purposes unless the adult child qualifies as a "tax dependent" (as a qualifying child or a qualifying relative).

In addition, Wisconsin requires coverage eligibility to age 27, which results in imputed income for both federal and state income taxes.

You may need to go to each state's Department of Revenue web site to get your answer. (And then you could post your chart here. Probably not what you had in mind. )

Thanks for the info re Wisconsin. I agree with that the best approach is to look it up on each State's DOR. Another good source I am finding is the state tax returns and instructions, specifically the adjustments to federal.

[GMK]

Another good source I am finding is the state tax returns and instructions, specifically the adjustments to federal.

Yes, that is the best source if it's up to date. The instructions usually aren't ready until later in the year. DoR web site announcements can give you the information earlier.

In addition, nowadays federal and state tax laws sometimes get changed near the end of the year with a retroactive effective date, so the instructions may include a "subject to possible recent changes in the law" warning.

[GMK]

And here's similar information about Minnesota state taxes:

http://benefitslink.com/articles/guests/washbull100823.html

[MARYMM]

For one, Wisconsin does not automatically federalize its tax code, and it has not federalized with respect to coverage to age 26. Maybe they will consider it in January 2011. Adult child coverage, therefore, results in imputed income for state income tax purposes unless the adult child qualifies as a "tax dependent" (as a qualifying child or a qualifying relative).

In addition, Wisconsin requires coverage eligibility to age 27, which results in imputed income for both federal and state income taxes.

You may need to go to each state's Department of Revenue web site to get your answer. (And then you could post your chart here. Probably not what you had in mind. )

A chart like this will be a very useful tool, IMO.

PA and NJ do not follow Federal tax code for 401(k) and Sec 125 respectively - those are 2 state you might want to look at.

Other areas where there will be discrepancies are those states who have different age limits for coverage. IIRC, NY mandates coverage to age 30. (Don't quote me on that - I am rusty. The last time I was reading up on this topic was almost 6 months ago, and I was only concerned about CT. )

[MARYMM]

For one, Wisconsin does not automatically federalize its tax code, and it has not federalized with respect to coverage to age 26. Maybe they will consider it in January 2011. Adult child coverage, therefore, results in imputed income for state income tax purposes unless the adult child qualifies as a "tax dependent" (as a qualifying child or a qualifying relative).

In addition, Wisconsin requires coverage eligibility to age 27, which results in imputed income for both federal and state income taxes.

You may need to go to each state's Department of Revenue web site to get your answer. (And then you could post your chart here. Probably not what you had in mind. )

A chart like this will be a very useful tool, IMO.

PA and NJ do not follow Federal tax code for 401(k) and Sec 125 respectively - those are 2 state you might want to look at.

Other areas where there will be discrepancies are those states who have different age limits for coverage. IIRC, NY mandates coverage to age 30. (Don't quote me on that - I am rusty. The last time I was reading up on this topic was almost 6 months ago, and I was only concerned about CT. )

edited to add: A google search turned up this chart on the National Conf of State Legislatures website. It lists the maximum age for mandated coverage by state but hasn't been updated since Aug 2009

http://www.ncsl.org/default.aspx?tabid=14497

[GMK]

Thanks for the link to the chart, MARYMM.

It's a useful reference (and a good starting point for JM123's chart ).