Agency: copy and paste the following into either your agency letterhead or an
email template. Items highlighted in yellow should have information updated
before sending to an employee.
You have been identified in the State’s online Benefit Administration System (BAS) as
missing important information regarding the status of your dependent(s) covered by the
State medical and/or dental plans.
Should this information remain missing, the State may have to assume that your
dependent children are non-tax dependents. Per the IRS, employer contributions to
health or dental insurance plans are only a non-taxable benefit to employees, their
spouses, and their tax dependents. If you cover a non-tax dependent on your insurance,
the employer contribution for that non-tax dependent is treated as taxable income to you.
This taxable income would cause your federal and state income taxes to increase,
as well as your Medicare tax.
You are missing the following important information on one or more of your dependent
children (your spouse is always considered your tax dependent). This information will be
used to correctly calculate your income tax.
Tax Dependent Status
Information to help you determine the tax status of your dependent children can be
found at www.colorado.gov/dpa/dhr/benefits. You can also refer to IRS Publication 501
To make this change, follow the instructions below (or if a letter, on the reverse). It is
recommended that you update this information as soon as possible, so that your income
tax can be calculated correctly. Understand that you can update this information at any
time throughout the year, as your dependent children’s status changes.
Please note: This information is not intended as tax advice but rather to alert employees
of potential tax ramifications and IRS rules. The State recommends all employees with
additional questions regarding the tax status of dependent children consult with a
qualified tax advisor. More detailed information is also found in IRS Publication 501 and
How to Review and Update Dependent Student Status and Tax Status in the BAS
Be sure you know your dependents’ tax status and social security number. Log in to
the BAS with your username and password. Choose “Change My Benefits” by
dragging your cursor over the word “Benefits” in the blue bar.
On the next screen, choose “Basic Info Correction” from the drop down menu of
reasons for a change, and then enter the current date as the “date of event.”
On the “Dependent Information” screen, click on the “edit” button for each
dependent child to be taken to that dependent’s information.
On the next screen with the dependent’s details, find the “tax dependent” and “full
time student” fields about halfway down the screen and mark appropriately. Note
that if you do not have your dependent’s Social Security number completed, you
must also add this information.
Be sure to complete this transaction in the BAS all the way through clicking the “I
Agree” button on the last screen.