California conforms to the exclusion of nondependent health care benefits

California conforms to the exclusion of nondependent health care benefits (04-07-2011)The Governor has signed AB 36 (Perea), which excludes employer-provided health insurance for nondependent adults under the age of 27 from California income tax. The bill brings California into conformity with the federal exclusion enacted under the Health Care Act in 2010. (Act §1004; IRC §105(b))

Prior to the enactment of this law, California included these benefits in taxable income. This created a wage difference for California taxpayers whose employers provided health insurance for their nondependent adult children.The law is effective immediately, and applies to the same periods as the federal law. This means you may amend 2010 returns for clients who paid California income tax on these benefits.

For the full text of the bill, go to: http://leginfo.ca.gov/pub/11-12/bill/asm/ab_0001-0050/ab_36_bill_20110324_enrolled.pdf.  

For more information on this bill, and other California law changes, attend Spidell’s 2011 Summer Seminar. Click here to register.

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