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Domestic Partner Health Coverage - Imputed Income

Salem, OR |

My employer provides health coverage for my domestic partner and reports it as imputed income on my W2. From my understanding, if my domestic partner qualifies as my dependent (which she does for healthcare purposes) then I should not have to report the coverage as imputed income. How can I claim this when filing my 2012 taxes, and how do I get my employer to stop reporting the benefit as imputed income?

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I would have to know what area on the W2 your employer is reporting the benefit on. In some cases, the employer can report the health insurance as "income" if he is paying the money to you and then you are buying the insurance out of your pocket. However, I don't otherwise see how he could be reporting it as income. It is still deductible to him as an expense no matter how he reports it on your W2. In any event, you may need to talk to your accountant as to how to correctly get it reported on your tax return even though it is wrongly reported on your W2 if your employer wont change it. If it is a large employer, it may simply be a matter of dealing with the bureaucratic process.

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Is your employer aware that you claim your domestic partner as your dependent for tax purposes? If not, then your employer is probably doing the safe thing and treating your domestic partner as a non-dependent. To change this, you should speak with your employer's HR department.

My answer does not constitute legal advice and may not be relied upon by anyone for any purpose and does not constitute an attorney/client relationship or an offer to form such a relationship. This disclaimer is intended to be fully compliant with the requirements of Treasury Department Circular 230 and the terms thereof are fully incorporated by reference. If you wish to consult with me please contact me at dana@nytaxcounsel or visit my website at

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I have notified my employer, but they refuse to change this. My accountant said I will need to get a corrected W-2 that deducts the imputed value. When I brought this up to my employer, they refused to give me a corrected W-2 and said that federal law requires them to tax this benefit. However, from what I can tell, federal law very clearly states that employer provided health plans for dependents are NOT counted as taxable income. I'm not sure where to go from here.

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