Human Resources & Safety -TAX ISSUES and CIVIL UNION PARTNERS

TAX ISSUES and CIVIL UNION PARTNERS

Federal Tax Issues, Generally

The Internal Revenue Code (“IRC”) generally excludes from an employee’s income the amount paid by the employer for health benefits for an employee and his or her dependents. In addition, employees may be able to pay their share of the cost of benefits on a pre-tax basis. However, assuming that a civil union partner does not meet the definition of “dependent” under the IRC, employer-provided benefits for civil union partners will not be entitled to favorable tax treatment under federal tax law. This means that employer contributions for civil union partner benefits will be included in the employee’s income for federal tax purposes. Also, employee contributions for civil union partner benefits cannot be made on a pre-tax basis (or if they are, they amount will be included in the employee’s income at the end of the year).

Contributions

For Whose Coverage

Taxable or Not to Employee

Employer

Employee

Not Taxable Income

Employer

Civil Union Partner

Taxable Income
(imputed income)

Employee

Not Taxable Income
(can be made pre-tax)

Employee

Civil Union Partner

Taxable Income (cannot be made pre-tax)

State Tax Issues, Generally

For Connecticut State tax purposes, the contributions (both by employers and employees) for the health benefits of civil union partners will not be included in the employee’s income.

Contributions

For Whose Coverage

Taxable or Not to Employee

Employer

Employee

Not Taxable Income

Employer

Civil Union Partner

Not Taxable Income

Employee

Not Taxable Income

Employee

Civil Union Partner

Not Taxable Income

This document is not intended to be legal advice. Readers are urged to consult with employee benefits or tax counsel concerning tax matters in any particular case.

Chart provided by Robinson & Cole LLP