Employers using tax forms to verify dependents

One last thing to do before sending in your tax return: Make a copy for your boss.

Employers are asking workers for a copy of the front page of their 1040 tax form to verify that children and spouses covered by company health benefits are eligible. Employers don’t want the entire return, which might reveal sensitive information, and they recommend blacking out financial numbers.

What they do want to know is who is being claimed as a dependent to the IRS because, chances are, those who are not are also ineligible for health benefits. It’s the latest wrinkle in dependent eligibility audits, which will be conducted next year by 74 percent of large employers, a survey by Watson Wyatt and the National Business Group on Health found.

Many employers such as Ford Motor Co. give a list of documents that employees can provide, including birth certificates and marriage licenses. The 1040 is an option, but it’s not required by Ford.

But Mark Rucci, senior vice president of Gallagher Benefits Services, says most companies want a tax return as the primary source of information and might question why couples file separately or choose to investigate whether a 19-year-old is really attending college.

Peter Ronza, benefits manager for the University of St. Thomas in Minnesota, doubts companies are finding many ineligible dependents. He assumes the percentage is too small to inconvenience employees with an audit or risk the implications if scanned-in tax documents are opened by curiosity seekers.

“It’s an invasion,” says lawyer and privacy expert Mari Frank. “What will companies want next?”