Question

Taxability of Employer Paid Benefit

Forum|Forum|6 years ago
March 1, 2020
2 replies
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My employer and I each paid 50% of a Bermuda social insurance tax for each pay period I worked there. My payments were made on an after tax basis; the amount of my employer's payments were not taxable to me for U.S federal income tax purposes in the years paid. Upon my reaching 65 in 2019, Bermuda returned to me the total amount of the social insurance tax paid by both my employer and me. Is the distribution of my employer's payments in 2019 taxable to me in 2019? Thank you.

TurboTax Basic Windows

O

Opus 17

Employee

If half the premiums were pre-tax and half were post-tax, then I would say that half the benefit is non-taxable (already taxed) and half the benefit is taxable (the part not previously taxed.) I wouldn't know how to record this though. Did you get any US tax forms with the payment?

AmyC

Employee

Here is the IRS Taxation of Foreign Pensions. Since Bermuda does not have taxes, there is no treaty with the US. Usually, it is treated as pension income and your employer's half would be fully taxable. You may have circumstances that change the norm.

The easiest way to report this income is to convert it to USD and then enter it as miscellaneous income.

Click on Wages & Income at the top of your screen
Scroll down to Less Common Income, and the last item , Miscellaneous Income and click on start
Scroll down to Other Reportable Income and click Start
Enter your retirement income and description