DER/Employee Benefits Division
Medical Benefits Section
04/26/2010, R. 11/01/2011
IMPUTED TAX FOR 19-26 YEAR OLDS
The recently passed federal health care reform act provides some changes to the current City policy regarding “non-tax dependent adult children.”
- An IRS dependent is a 19-26 year old child* of a City employee that receives 51% of their support from their parents. The City refers to these children as “dependent child/ren.”
- A non-IRS dependent is a 19-26 year old child of a City employee that does not receive 51% of their support from their parents. The City refers to these children as “adult children.”
Age Limits and Taxes:
The Patient Protection and Affordable Care Act, March 23, 2010 and Health Care and Education Reconciliation Act, March 30, 2010, state in part that children are eligible for health insurance through the end of the year they turn 26 without impact to federal taxes.
Imputed Income Tax:
The Wisconsin Department of Revenue and the Federal Government define imputed income, in this case, as the value of a single unsubsidized health and/or dental plan (the amount the City pays for a single policy.) In 2010 for example, the cost for UHC is $668.34 and Delta Dental $24.95 so the imputed income is $693.29. That number is then added to your 2nd pay check of each month for the purpose of calculating tax.
If your child was born in 1985 or later, for 2011, imputed federal tax will not be collected by the City for dependent children or adult children. Imputed state tax will be collected for adult children; it will not be collected for dependent children.
If your child was born in 1984, for 2011, because it’s the year they’ll turn 27 regardless of dependent/adult child status, both federal and state imputed taxes will be collected.
* "Child" means: children, stepchildren, foster children, adopted children and children placed for adoption as mandated by the State or Federal Government.
QUESTIONS? Please call the Department of Employee Relations, Medical Benefits Section at 286-3184 or send an e-mail to DerBenefits@milwaukee.gov.