Wisconsin Tax Code Amended to Follow Federal Tax Treatment of Coverage of Adult Children

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November 7, 2011

Human resources and benefits professionals working for Wisconsin employers will now have one less thing to worry about with respect to Health Care Reform. On Friday, November 4, Governor Scott Walker signed legislation which conforms Wisconsin s tax code to the Federal tax code for purposes of determining the tax treatment of employer-provided coverage of adult children. In a client memorandum issued on May 11, 2010, “Federal Agencies Issue Important Guidance on Health Care Reform’s Extension of Health Coverage to Young Adults” we pointed out the fact that while the Federal tax code excluded the value of employer-provided health coverage to children through the end of the year in which the child turned age 26, the Wisconsin tax code had not yet been so amended.
The newly enacted Wisconsin legislation will retroactively amend Wisconsin’s tax code effective January 1, 2011, to mirror the Federal tax treatment of employer-provided health coverage to adult children. This means that for both Federal and Wisconsin tax purposes, any health coverage provided by an employer to an employee’s adult children will not be taxable. As a reminder, for the coverage to be nontaxable, the child must be the employee’s son, daughter, stepchild, legally adopted child (or placed for adoption), or an eligible foster child and the child must not have attained age 27 during the calendar year.
If you have questions regarding the above, please contact Mary Ellen Schill, the author of this article, or any of the attorneys in the Employment, Benefits & Labor Relations Practice Group of Ruder Ware.

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