Fillable Declaration That Enrolled Dependent Meets Irs Requirements (Page 2 of 2) in pdf

Declaration that Enrolled Dependent Meets IRS Requirement for Tax-Favored Health Premium Contributions

An employee wishing to claim his or her Medical

requires no changes or corrections, as the Medical

Terms and Conditions

Dependent, and/or their Medical Dependent's

Dependent must qualify for the entire year in order to

By signing the front of this form you agree you

children, as tax dependents for insurance purposes

receive favorable tax treatment.

understand and abide by the following:

under IRS Section 152 must complete and sign this

Dependents for Federal Income Tax Purposes

declaration of tax status form. Please note that

Example 4 – An employee's Medical Dependent

LANS distinguishes between a Medical

Section 152 dependent status must be re-

qualifies as an IRC Section 152 dependent on

Dependent and an extended family member

declared and a new declaration of tax status

January 1, and the employee submits a Declaration

because of the way current tax law requires

form must be filed with HR-Benefits Service

of Tax Status Form at the start of the year. The

employers to treat the value of benefits provided to

Center each tax year.

Medical Dependent continues to qualify as an IRC

Medical Dependents. In most cases, a Medical

Section 152 dependent until her death on August

Dependent will not satisfy the definition of

LANS will assume your Medical Dependent (and/or

15. The Medical Dependent's death does not

dependent under the Internal Revenue Code. As a

their children) DOES NOT qualify as your tax

change her status for the portion of the year during

result, the law requires LANS to report the entire

dependent for tax-free lab sponsored health

which she was alive and no adjustments will be

value of your Medical Dependent's health care

insurance unless a declaration of tax status form is

necessary.

coverage (often referred to as "imputed income")

completed and submitted to LANS HR-Benefits

Example 5 – an employee adds their Medical

as taxable income to you and the contribution you

Service Center each year by required deadlines.

Dependent to their coverage on November 1 as

pay for this coverage must be on an after-tax basis.

Required Retroactive Tax Treatment and Mid-

their Medical Dependent has now shared the

Alternatively, if your Medical Dependent and/or

Year Changes

employee's primary residence for the previous 6

his/her eligible dependent children qualify as your

The Declaration of Tax Status Form requires the

continuous months and is newly eligible for

dependents under IRC Section 152 (as modified by

employee to anticipate the dependency status of

enrollment. The employee improperly submits a

Code 105(b)), LANS costs for their benefits are

Declaration of Tax Status Form at the same time.

their Medical Dependent or Medical Dependent's

not considered taxable income to you. Generally, to

child for the upcoming year. It is important for

The Declaration of Tax Status Form is rejected

qualify as an IRC Section 152 (as modified by Code

employees to report any changes in dependency

because to qualify as an IRS Section 152

105(b)) dependent of an employee during a given

status during the year because IRC Section 152

dependent, the Medical Dependent must have the

tax year, the Medical Dependent and their children

requires a "look-back" at the dependency status at

same principal place of residence as the employee

must be a "qualifying relative" of the employee, as

the end of each calendar year. Circumstances can

for the full tax year (January 1 through December

defined by the IRS. To be considered an IRS

change during the calendar year that could

31). In this case, the Medical Dependent did not

disqualify or qualify the Medical Dependent for the

"qualifying relative", the Medical Dependent must

begin sharing the employee's residence until May

meet the following requirements:

entire tax year. In these situations, a retroactive

1. Imputed income for the Medical Dependent's

adjustment will be necessary. Some examples of

coverage will be added to the employee's gross

1. Have the same principal place of abode as the

status changes include the following:

income each pay period in November and

employee for the full tax year (January 1

December for the purposes of calculating federal

through December 31), except for temporary

Example 1 – An employee's Medical Dependent

and state income taxes and for Social Security and

absences such as vacation, military service, or

qualifies as an IRC Section 152 dependent on

Medicare taxes.

education. If

during

the

year,

Medical

January 1 and the employee submits a Declaration

Dependent eligibility status ceases other than

of Tax Status Form at the start of the year. Midway

Requested Documentation

on December 31, for reasons other than the

through the year, the Medical Dependent begins

LANS reserves the right to require proof of tax

death of the Medical Dependent, the tax

employment such that the employee is no longer

dependency upon request. When you sign this

exclusion is lost for the entire year. If the

providing more than one half of the Medical

form, you agree to provide such documentation

eligibility ends due to the death of the Medical

Dependent's total support and the Medical

upon request.

Dependent, the Medical Dependent would

Dependent ceases to qualify for the remainder of

Final Word

continue to be treated as a dependent for the

the year. The Medical Dependent remains eligible

When you sign and submit this form, you are

entire tax year.

for coverage, but this change requires treating the

stating that:

coverage provided for the Medical Dependent as

2. Receive more than half of his or her support

taxable to the employee (subject to federal income

1. You certify that your Medical Dependent, and/or

from the employee.

tax, social security, and Medicare taxes) for the

his/her children, do or will qualify as eligible tax

entire year.

3. Be a U.S. citizen, U.S. national, or a resident of

dependents for employee sponsored benefit

purposes under Section 152 (as modified by

U.S., Canada, or Mexico; and,

Example 2 – The employee is uncertain if their

Code 105(b)) of the Internal Revenue Code for

Medical Dependent will qualify as an IRC Section

4. Not be the employee's (or anyone else's)

the entire current tax year. You agree you will

152 dependent at the start of the year and does not

"qualifying child" as defined under Internal

notify HR-Benefits Service Center immediately if

submit a Declaration of Tax Status Form to

Revenue Code Section 152.

there is a change in your situation that

LANS HR-Benefits. Imputed income for the Medical

disqualifies your Medical Dependent as an

Dependent's coverage is added to the employee's

(Note of caution: Even if your domestic partner

eligible IRS dependent for employer sponsored

gross income each pay period for the purposes of

qualifies as your dependent for medical plan

benefits.

calculating federal and state income taxes and for

purposes, the child of your domestic partner may

Social Security and Medicare taxes. However,

2. You have read and understand the terms and

midway through the year the employee's tax

not qualify as your tax dependent.

This is

conditions listed above.

advisor determines that the Medical Dependent

because the child is often the qualifying child

actually will qualify as an IRC Section 152

3. You understand that falsely certifying such tax

of the domestic partner. Please be sure to

dependent of the employee for the entire year and

dependency could result in potential charges of

review these rules carefully before certifying that

the employee submits a Declaration of Tax Status

tax fraud.

the coverage of the child does not have to be

Form to LANS HR-Benefits. This requires that the

imputed into your income for tax purposes.)

imputed income of the Medical Dependent's

4. You are aware that any change in your family

coverage not be treated as taxable income to the

status may directly impact the calculation of

The rules for determining support are complicated

employee for the entire year. To correct for

your taxable income. You agree to notify HR-

and are more involved than just determining who

incorrect treatment prior to notification, Social

Benefits Service Center if there is any change

the "primary breadwinner" in the household is.

Security and Medicare taxes already withheld on

in the circumstances attested to in this

Internal Revenue Service (IRS) Publication 17

the imputed income of the Medical Dependent's

declaration within 31 days of the change.

coverage during the year will be refunded.

includes a worksheet to assist taxpayers in

evaluating whether they may provide, or are

However, the Federal and State income taxes

5. You understand that willful falsification of

information on this declaration may result in

expected to provide, more than one half of an

already withheld on the imputed income of the

Medical Dependent's coverage during the year will

serious

consequences, including

loss

individual's support. Because this area of tax law

remain in the employee’s withheld income tax

benefits, appropriate legal action or disciplinary

can change, and because the situation of every

accounts and will be reported as withheld income

action up to and including discharge.

employee is different, employees are strongly

taxes on his/her W-2 form due to LANS current

encouraged to consult with a tax advisor before

6. You affirm under penalty of perjury that the

practice of taxable income adjustments.

declaring that a Medical Dependent satisfies

preceding statements are true and correct to the

each of the above requirements to be

Example 3 – The employee reports that as of July

best of your knowledge.

considered a qualifying relative as defined by

1, their Medical Dependent lost their job and the

the IRS.

employee will now be providing over one half of

their Medical Dependent's total support. This

Declaration That Enrolled Dependent Meets Irs Requirements Page 2

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