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2011 Wisconsin Act 49: Wisconsin Tax Law Amended to Conform with Federal Adult Child Coverage Requirements

As expected, Governor Scott Walker has signed legislation to conform the exclusion under Wisconsin state income tax law for health coverage provided to an employee's adult child to the exclusion provided for that coverage under federal income tax law. If an employer's health plan extends coverage to an employee's adult child, then, through the end of the tax year in which the child attains age 26, the employee will not be subject to either federal or Wisconsin state income tax on the value of that coverage. This is the case regardless of whether the child otherwise qualifies as the employee's tax dependent. This change in Wisconsin law is effective for tax years beginning on or after January 1, 2011.

If employer health plan coverage is provided to an employee's adult child after the tax year in which the child attains age 26, then, as under current law, the employee will be subject to federal and Wisconsin state income tax on the value of that coverage unless the child qualifies as the employee's tax dependent for health plan purposes.

Governor Walker signed 2011 Wisconsin Act 49 (the "Act"), which amends Wisconsin tax law to conform the state income tax exclusion for coverage provided to an employee's adult child to the federal income tax exclusion, on November 4, 2011.

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About this Author

Timothy C. McDonald, von Briesen Roper Law Firm, Milwaukee, HealthCare Law Attorney

Timothy McDonald is a Shareholder in the Compensation & Benefits/ERISA Section. His practice focuses on health and welfare, corporate pension, 401(k), profit sharing, 403(b), executive compensation, nonqualified deferred compensation, employee stock ownership (including S corporation ESOPs), cafeteria, voluntary employees’ beneficiary association (VEBA), and flexible benefit programs. He works with publicly-traded and private for-profit businesses, tax-exempt entities, municipalities and school districts, and religiously affiliated institutions. The best endorsement...

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