Health Insurance Reimbursement

by John
(SW Virginia)

I am a pastor and pay my own taxes thru the quarterly ES form. My wife works outside the home and we get health insurance thru her job. The church reimburses us for this health insurance premiums, that are deducted from her paycheck.

My question is, since the church reimburses us for this do I have to declare it as income? Or can it just be a reimbursement? Before we got the health insurance from my wife, the church paid for it directly, but we found it to be less expensive for the church to just get it from my wife's job, saving the church $8000 a year.

Answer

Yes, I believe the payments would be taxable income for you, especially with the insurance being in your wife’s name. However, I would consult a CPA if I were you...there may be a loophole I do not know about.

A lot of times a CPA will offer free advice to a church, so you may want to have someone from the church call and ask if the payments are taxable.

If you do find out the payments are taxable income to you...you might want to approach the church about adding the extra into the reimbursement to cover the taxes owed on it. It would still end up being cheaper for the church. $8000! Wow!

Hope this helps,



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