As discussed in an earlier post, although health care reform legislation excluded the value of employer-provided health benefits provided to any employee’s child under the age of 27 at the end of the taxable year (not just tax dependents) effective March 30, 2010, the 2010 Minnesota state legislature did not incorporate that change into Minnesota law. However, the Minnesota Department of Revenue issued guidance in October stating employers would not be required to withhold state taxes from the value of any health coverage provided to non-tax dependent children through age 26 that would be exempt from federal taxation.
On March 21, Governor Dayton signed into law legislation that adopts most federal tax changes made for the 2010 tax year, including the exclusion from income of employer-provided health benefits to non-tax dependent adult children through age 26. The legislation also clarified any 2010 Form W-2s issued to employees that included the value of such coverage in net income pursuant to prior law would not need to be corrected or reissued by employers.
Unfortunately, this legislation adopted this change only for the 2010 tax year and is silent as to future tax years. So, until legislation is enacted to extend conformance with the federal tax code on this point for tax years beginning in 2011 and beyond, some uncertainty will remain.