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A new chain e-mail makes the claim that most people, even retirees, will see big tax increases next year thanks to President Barack Obama's new health care law, because it will start taxing health insurance as regular income. You really need to read this, it begins. Starting in 2011 (next year folks) your W2 tax form sent by your employer will be increased to show the value of whatever health insurance you are given by the company. It does not matter if that's a private concern or governmental body of some sort. If you're retired? So what; your gross will go up by the amount of insurance you get. You will be required to pay taxes on a large sum of money that you have never seen. Take your tax form you just finished and see what $15,000 or $20,000 additional gross does to your tax debt. That's what you'll pay next year. For many it also puts you into a new higher bracket so it's even worse. This is how the government is going to buy insurance for 15% that don't have insurance and it's only part of the tax increases. The chain e-mail is correct that employers will be required to start listing the cost of insurance. The requirement starts for the tax year 2011, so employees will see it on the W-2s they receive in 2012. But that amount will not be taxed. Current law excludes health insurance from taxable income, and there's nothing in the health care law that changes that. Several experts on health care benefits and the workplace confirmed that. It will not affect your taxable income under the new law, said Dallas Salisbury of the Employee Benefit Research Institute in an e-mail interview. Since the health care law actually continues the tax exemption on employer-sponsored insurance, why include a requirement that employers report the value of health insurance on the W-2? There are several reasons. The new health insurance law will eventually penalize people who are not insured with a tax penalty. The W-2 reporting requirement will help the Internal Revenue Service verify that people have coverage, both for themselves and their dependents. There's also a tax on the so-called Cadillac or gold-plated health insurance policies, which are policies that cost significantly more than the national average. The W-2 reporting will allow the IRS to more easily collect the tax. We should also emphasize that the Cadillac tax doesn't go into effect until 2018, and it will apply to health insurance plans that cost more than $10,200 for individual coverage and $27,500 for family coverage, with some exceptions for people in high-risk categories. Most people will not be affected by the tax; analysts expect it to hit fewer than 20 percent of all policies. The chain e-mail we looked at goes the extra mile to promote its deceptive claim that everyone will be taxed next year, however. Joan Pryde is the senior tax editor for the Kiplinger letters. Go to Kiplingers and read about 13 tax changes that could affect you. Number 3 is what I just told you about, the chain e-mail states. Why am I sending you this? The same reason I hope you forward this to every single person in your address book. People have the right to know the truth because an election is coming in November. We looked up the Kiplinger letter and couldn't help noticing that the article states the following: A requirement that businesses include the value of the health care benefits they provide to employees on W-2s, beginning with W-2s for 2011. The amount reported is not considered taxable income. Got that? Not considered taxable income. So the e-mail's own evidence refutes its premise. The e-mail is correct that employers will have to let employees know how much their health insurance costs the employer. But the e-mail's main point -- and the fact that we're checking here -- is that you will be taxed on your health insurance. That is not only wrong, but refuted by its own reference. Assuming the e-mail's author read that Kiplinger entry, we can only conclude that this is a deliberate attempt to upset and mislead voters. This sort of fear mongering rates a Pants on Fire.
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