All employers are required, by obama, to withhold FICA tax on the cost of the life insurance coverage over $50,000

Obamacare hidden tax on life insurance.

All employers are required, by obama, to withhold FICA (Federal Insurance Contributions Act) tax on the cost of the life insurance coverage over $50,000 when an employee’s benefit exceeds $50,000.

If you now have $100,000 of life insurance coverage, you will be taxed on the additional $50,000 starting Jan 1, 2011 thanks to that to the crazy imposter in the white house posing as president.

Here is a link from a company explaning this "hidden benefit" from obama I just found out about.

Hidden obamacare tax on your life insurance over $50,000.00 information and IRS tax tables

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This cost is not based on the actual cost of the premium charged by the insurance company, but on costs established by the Internal Revenue Service (IRS). Before making a decision, to vote for a democrate again you may want to calculate the additional tax that would be imposed on your life insurance over $50,000.

The two examples below are based on the following table:

IRS CALCULATION OF MONTHLY COST PER $1,000 OF LIFE INSURANCE ON THE EXCESS OVER $50,000


Under age 25 $.05
Ages 25 through 29 $.06
Ages 30 through 34 $.08
Ages 35 through 39 $.09
Ages 40 through 44 $.10
Ages 45 through 49 $.15
Ages 50 through 54 $.23
Ages 55 through 59 $.43
Ages 60 through 64 $.66
Ages 65 through 69 $1.27
Over age 69 $2.06

The FICA tax for 2008 is 7.65% (6.20% for social security and 1.45% for Medicare). The taxable wage base for the social security portion is $102,000. This means that no social security tax is imposed on wages over $102,000. There is no limit for the Medicare portion

Example 1: An employee, age 37, earns $17,700 per year. Rensselaer provides this employee with a life insurance benefit equal to 2.25 times the July 1 rate of pay ($17,700 x 2.25 = $39,825), rounded up to the next $1,000. In this instance the benefit is $40,000. As the benefit is under $50,000, the benefit is not considered excessive by the Internal Revenue Service and is not taxed.

Example 2: An employee, age 55, earns $47,500. Rensselaer provides this employee with a life insurance benefit equal to 2.25 times the July 1 rate of pay ($47,500 x 2.25 = $106,875). In this instance the benefit is $107,000. The amount considered in excess is $57,000 ($107,000 - $50,000 = $57,000).

According to the IRS table, the cost of each one thousand dollars of excess is $.43. The taxable amount is then $24.51 per month ($.43 x 57 {the number of excess thousands} = $24.51).

Rensselaer is required to withhold FICA tax of 7.65% on that $24.51, or $1.88, each month ($24.51 x 7.65% = $1.88). The annual FICA tax is therefore $22.56 ($1.88 x 12 months).
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Group-Term Life Insurance IRS Burden On American Taxpayers Via Obamacare

(Crazy obama has made sure the IRS get its your money via your life insurance. Obama must be stopped along with his other thugs in congress!) Story Reports

Total Amount of Coverage

IRC section 79 provides an exclusion for the first $50,000 of group-term life insurance coverage provided under a policy carried directly or indirectly by an employer. There are no tax consequences if the total amount of such policies does not exceed $50,000. The imputed cost of coverage in excess of $50,000 must be included in income, using the IRS Premium Table, and are subject to social security and Medicare taxes.

Carried Directly or Indirectly by the Employer

A taxable fringe benefit arises if coverage exceeds $50,000 and the policy is considered carried directly or indirectly by the employer. A policy is considered carried directly or indirectly by the employer if:

1. The employer pays any cost of the life insurance, or
2. The employer arranges for the premium payments and the premiums paid by at least one employee subsidize those paid by at least one other employee (the “straddle” rule).

The determination of whether the premium charges straddle the costs is based on the IRS Premium Table rates, not the actual cost. You can view the Premium Table in the group-term life insurance discussion in Publication 15-B.

Because the employer is affecting the premium cost through its subsidizing and/or redistributing role, there is a benefit to employees. This benefit is taxable even if the employees are paying the full cost they are charged. You must calculate the taxable portion of the premiums for coverage that exceeds $50,000.

(This kind of government law really makes me mad and I'm sure it does the same for most Americans except those looking for a free handout from obama.) Story Reports

Not Carried Directly or Indirectly by the Employer

A policy that is not considered carried directly or indirectly by the employer has no tax consequences to the employee. Because the employees are paying the cost and the employer is not redistributing the cost of the premiums through an insurance system, the employer has no reporting requirements.

Example 1 - All employees for Employer X are in the 40 to 44 year age group. According to the IRS Premium Table, the cost per thousand is .10. The employer pays the full cost of the insurance. If at least one employee is charged more than .10 per thousand of coverage, and at least one is charged less than .10, the coverage is considered carried by the employer. Therefore, each employee is subject to social security and Medicare tax on the cost of coverage over $50,000.

Example 2 - The facts are the same as Example 1, except all employees are charged the same rate, which is set by the third-party insurer. The employer pays nothing toward the cost. Therefore there is no taxable income to the employees. It does not matter what the rate is, as the employer does not subsidize the cost or redistribute it between employees.

Coverage Provided by More Than One Insurer

Generally, if there is more than one policy from the same insurer providing coverage to employees, a combined test is used to determine whether it is carried directly or indirectly by the employer. However, the Regulations provide exceptions that allow the policies to be tested separately if the costs and coverage can be clearly allocated between the two policies. See Regulation 1.79 for more information.

If coverage is provided by more than one insurer, each policy must be tested separately to determine whether it is carried directly or indirectly by the employer.

Coverage for Spouse and Dependents

The cost of employer-provided group-term life insurance on the life of an employee’s spouse or dependent, paid by the employer, is not taxable to the employee if the face amount of the coverage does not exceed $2,000. This coverage is excluded as a de minimis fringe benefit.

Whether a benefit provided is considered de minimis depends on all the facts and circumstances. In some cases, an amount greater than $2,000 of coverage could be considered a de minimis benefit. See Notice 89-110 for more information.

If part of the coverage for a spouse or dependents is taxable, the same Premium Table is used as for the employee. The entire amount is taxable, not just the amount that exceeds $2,000.

Example 3 - A 47-year old employee receives $40,000 of coverage per year under a policy carried directly or indirectly by her employer. She is also entitled to $100,000 of optional insurance at her own expense. This amount is also considered carried by the employer. The cost of $10,000 of this amount is excludable; the cost of the remaining $90,000 is included in income. If the optional policy were not considered carried by the employer, none of the $100,000 coverage would be included in income.

SEE PAGE 12 Of this IRS publication to figure now much more obamacare will cost you.
Employer’s Tax Guide to Fringe Benefits

(The crazy IRS and obama consider your life insurance a FRINGE BENEFIT!) Story Reports