How To Determine Employee Life Insurance

How do you determine how much to add to employees wages when the company provides term life insurance?

Coverage over the limit. You must include in your employee’s wages the cost of group-term life insurance beyond $50,000 worth of coverage, reduced by the amount the employee paid toward the insurance. Report it as wages in boxes 1, 3, and 5 of the employee’s Form W-2. Also, show it in box 12 with code “C.” The amount is subject to social security and Medicare taxes, and you may, at your option, withhold federal income tax.

Figure the monthly cost of the insurance to include in the employee’s wages by multiplying the number of thousands of dollars of all insurance coverage over $50,000 (figured to the nearest $100) by the cost shown in the following table. For all coverage provided within the calendar year, use the employee’s age on the last day of … Read More

IRS Lien Basics

An IRS lien is a means for the IRS to secure payment for any tax debt and can stay in place for as long as 10 years. While it is in effect, any proceeds from the sale of property, real, personal, or even a “right in” property (such as an inheritance), must be paid to the IRS. Given the serious consequences of a tax lien, it is important to understand and evaluate options based on taxpayer’s unique situation.

A lien begins with a tax assessment, requires the IRS to give public notice of the lien and a payer/buyer to direct payments to the IRS toward the tax assessment, instead of to the taxpayer, the selling property owner. In essence, it places the IRS directly in the path of and prevents the taxpayer from receiving money from purchasers until the IRS has been paid. While it may appear obvious to avoid tax … Read More