Tax questions

March 29, 2000

Members of the Maryland Association of Certified Public Accountants are answering readers' tax questions through April 15.

Should the amount paid for a pretax long-term disability benefit show somewhere on the W-2 as an amount to be deducted from Box 1? If it is a pretax benefit and the amount is included in Box 1, wouldn't that cause taxes to be owed?

Contributions by an employer to accident and health plans to provide compensation (through insurance or otherwise) for employees in the event of personal injury or sickness (e.g., premiums for disability insurance coverage) are exempt from federal income taxation. Premiums that are paid by the employee with pretax dollars are treated in the same manner. Since the premiums are exempt from federal income taxation, they are not included in Box 1 of Form W-2.

Joan C. Holtz, CPA,

PricewaterhouseCoopers, LLP

The above advice is for general purposes only and is not intended as legal, accounting or tax advice. Specific situations may vary.

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