While reimbursements made through PeopleKeep are generally tax-free, IRS requirements state for 2018 and beyond, reimbursements to employees who did not have Minimum Essential Coverage need to be included as taxable income (What is MEC?).
For these employees, you’ll add these reimbursement amounts to their existing wages, tip, other compensation in Box 1. These reimbursements are not taxed for Social Security or Medicare, so do not add them to Boxes 3 and 5.
How do I know if an employee has taxable reimbursements?
It is the employee's responsibility to inform you of these amounts. Don't worry, we're helping each of your employees understand their responsibility and giving them the tools to gather that information to provide you.
In 2019 we'll make it easier on you and your employees by automatically tracking any taxable expenses, if applicable, and reporting those to you at the end of the year.
What if I don’t hear from my employees?
Those that had MEC during the time expenses were incurred won't need to report anything to you, so don't be alarmed if you don't hear from each of your employees.
If you need help filling out your employee's Form W-2, we recommend reaching out to your payroll provider directly.