1099 Misc Box C for Employer Paid Insurance

[BulldogTom]

My Client is a Highly Compensated Employee.  in 2015 he moved into executive management in the company and they paid for a life insurance policy for him.  I did not know this in 2015.  In 2016, he sends me his stuff and there are 2 1099MISC with box 3 Amount of $4400 for each year, one for 2015 and one for 2016.  There is an amendment coming for 2015.

Question is - Does this go to line 21 and no SE tax?  I have never seen this before.  Does it make a difference that he is over the top for SS?

Thanks

Tom
Newark, CA

[Terry D EA]

Tom, what bothers me with this is you said he is a highly compensated employee. Why wasn't this included in his w-2 wages? I feel it should have been. However, line 21 would have the same impact as line 7 but I am not sure how you would show what it was for. If it should have been included in the W-2 wages, then I think your client should talk to his/her employer to have it corrected. Definitely would not be subject to SE tax.

[jklcpa]

Clearly the employer thinks that providing this is a taxable benefit to your client. It should be on the W-2 and you need to find out more about the type of insurance, the level of coverage, and who the beneficiaries are before you know whether or not it is subject to FICA, medicare and unemployment taxes. It may not make a difference in social security taxes since he is over the threshold but Medicare has no cap, and since you say he is highly compensated, I'll say that he may also be subject to the .9% Medicare add-on.

[BulldogTom]

On ‎2‎/‎27‎/‎2017 at 5:42 PM, Terry D said:

Tom, what bothers me with this is you said he is a highly compensated employee. Why wasn't this included in his w-2 wages? I feel it should have been.

Me too.  That is why I asked here.

 

On ‎2‎/‎27‎/‎2017 at 5:56 PM, jklcpa said:

 you need to find out more about the type of insurance, the level of coverage, and who the beneficiaries are

It is a life insurance policy is all I got when I asked the question.  I would have expected it to go to box 12 code W (I think that is the code), but maybe not because it is probably not term insurance and that is what that code is for.

This is a new one on me.  I think I will stick it on line 21 and see if it flies.  If I am wrong, it will cost the Medicare and Medicare add on (already subject to that one).

Thanks for your responses.

Tom
Newark, CA