Page 29 - Virtual Currencies

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The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.
Dependent Care Benefits your income. For more information, see Retire- ported in box 1, and report the total on your re-
ment Planning Services, later. turn.
If your employer provides dependent care ben-
efits under a dependent care assistance plan, Employer-Provided Group-Term Figuring the taxable cost. Use the following
you may be able to exclude these benefits from Life Insurance worksheet to figure the amount to include in
your income. Dependent care benefits include: your income.
• Amounts your employer pays directly to ei- In most cases, the cost of up to $50,000 of If you pay any part of the cost of the insur-
ther you or your care provider for the care group-term life insurance coverage provided to ance, your entire payment reduces, dollar for
of your qualifying person while you work, you by your employer (or former employer) isn’t dollar, the amount you would otherwise include
• The FMV of care in a daycare facility provi- included in your income. However, you must in- in your income. However, you can’t reduce the
ded or sponsored by your employer, and clude in income the cost of employer-provided amount to include in your income by:
• Pre-tax contributions you made under a insurance that is more than the cost of $50,000 • Payments for coverage in a different tax
dependent care FSA. of coverage reduced by any amount you pay to- year;
ward the purchase of the insurance. • Payments for coverage through a cafeteria
The amount you can exclude is limited to the plan, unless the payments are after-tax
lesser of: For exceptions to this rule, see Entire cost contributions; or
• The total amount of dependent care bene- excluded and Entire cost taxed, later. • Payments for coverage not taxed to you
fits you received during the year, because of the exceptions discussed later
• The total amount of qualified expenses you If your employer provided more than under Entire cost excluded.
incurred during the year, $50,000 of coverage, the amount included in
• Your earned income, your income is reported as part of your wages in
• Your spouse's earned income, or box 1 of Form W-2. Also, it's shown separately
• $5,000 ($2,500 if married filing separately). in box 12 with code C.
Your employer must show the total amount Group-term life insurance. This insurance is
of dependent care benefits provided to you dur- term life insurance protection (insurance for a
ing the year under a dependent care assistance fixed period of time) that:
plan in box 10 of Form W-2. Any amount over • Provides a general death benefit,
your employer’s plan limit is also included in • Is provided to a group of employees,
box 1. See Form 2441. • Is provided under a policy carried by the
employer, and
To claim the exclusion, you must complete • Provides an amount of insurance to each
Part III of Form 2441. See the Instructions for employee based on a formula that pre-
Form 2441 for more information. vents individual selection.
Permanent benefits. If your group-term
Educational Assistance life insurance policy includes permanent bene-
fits, such as a paid-up or cash surrender value,
You can exclude from your income up to $5,250 you must include in your income, as wages, the
of qualified employer-provided educational as- cost of the permanent benefits minus the
sistance. For more information, see Pub. 970. amount you pay for them. Your employer
should be able to tell you the amount to include
Employee Discounts in your income.

If your employer sells you property or services Accidental death benefits. Insurance that
at a discount, you may be able to exclude the provides accidental or other death benefits but
amount of the discount from your income. The doesn't provide general death benefits (for ex-
exclusion applies to discounts on property or ample, travel insurance) isn’t group-term life in-
services offered to customers in the ordinary surance.
course of the line of business in which you
work. However, it doesn’t apply to discounts on Former employer. If your former employer
provided more than $50,000 of group-term life
real property or property commonly held for in-
vestment (such as stocks or bonds). insurance coverage during the year, the amount
included in your income is reported as wages in
The exclusion is limited to the price charged box 1 of Form W-2. Also, it's shown separately
in box 12 with code C. Box 12 will also show the
nonemployee customers multiplied by the fol- amount of uncollected social security and Medi-
lowing percentage. care taxes on the excess coverage, with codes
• For a discount on property, your employ- M and N. You must pay these taxes with your
er's gross profit percentage (gross profit income tax return. Include them on Schedule 2
divided by gross sales) on all property sold (Form 1040), line 13. For more information, see
during the employer's previous tax year. the Instructions for Forms 1040 and 1040-SR.
(Ask your employer for this percentage.)
• For a discount on services, 20% (0.20). Two or more employers. Your exclusion for
employer-provided group-term life insurance
Financial Counseling Fees coverage can’t exceed the cost of $50,000 of
coverage, whether the insurance is provided by
Financial counseling fees paid for you by your a single employer or multiple employers. If two
employer are included in your income and must or more employers provide insurance coverage
be reported as part of wages. Fees for tax or in- that totals more than $50,000, the amounts re-
vestment counseling are miscellaneous item- ported as wages on your Forms W-2 won’t be
ized deductions and are no longer deductible. correct. You must figure how much to include in
your income. Reduce the amount you figure by
Qualified retirement planning services paid any amount reported with code C in box 12 of
for you by your employer may be excluded from your Forms W-2, add the result to the wages re-
Page 6 Publication 525 (2022)