What is group imputed income?

What is group imputed income?

Imputed income is the dollar value that IRS puts on the amount of group term life insurance coverage in excess of $50,000. This tax liability is called “imputed income.” It is added to your gross wages and is included on your form W-2 at the end of the year.

What does imputed life insurance mean?

Life insurance is a tax-free benefit in amounts up to $50,000. The Internal Revenue Service requires you to pay income tax on the value of any amount exceeding $50,000. The IRS-determined value is called “imputed income” and is calculated from the government’s “Uniform Premium Table I.” AGE.

What does GTL imputed mean?

If you see GTL which stands for Group Term Life on your paycheck, it means your employer has elected this organization-wide benefit that essentially pays your beneficiaries a portion or full amount of your annual salary.

How is imputed income calculated in group term life?

Imputed income is calculated on a monthly basis on the benefit amount that exceeds $50,000 multiplied by the Table 1 rate that corresponds to the employee’s age.

How do you explain GTL to employees?

If you see GTL or a similar reference to group term life on your paycheck, that means it’s included as part of your employee benefits package. Though your employer may pay the premiums for the insurance, you could owe tax on it depending on the amount of coverage you’re provided.

What is imputed income example?

Examples of imputed income Personal use of a vehicle. Educational assistance that exceeds $5,250. Non-deductible moving expense reimbursements. Employee discounts that exceed the tax-free amount.

What is term group life insurance?

Group term life insurance is an insurance policy offered to all members of a group. The group usually is employees of a particular company, but it may also be members of another type of group, such as a membership association or labor union. Employers often provide group term life insurance as an employee benefit.

What does GTL stand for in insurance?

Group Term Life Insurance
Group Term Life Insurance (GTL)

Is GTL imputed income?

Imputed income for group-term life (GTL) is a non-cash earning that increases an employee’s taxable wages to comply with the IRS-mandated schedule for group-term life insurance with a benefit amount in excess of $50,000.00.

Is GTL a deduction?

On your paycheck under Deductions, you will see “GTL” with a benefit amount. This amount is not the amount deducted from your paycheck, but instead is the value of the taxable benefit that is used to calculate a deduction for social security (6.20%) and Medicare (1.45%) taxes on your paycheck.

What is imputed income for group-term insurance?

by Sterling Price updated Sep 17, 2020 Imputed income is the value of the income tax the Internal Revenue Service (IRS) puts on group-term life insurance coverage in excess of $50,000. In other words, when the value of the premiums paid for by employers becomes too great, it must be treated as ordinary income for tax purposes.

What is an example of imputed income?

For example, say you have a group life insurance policy that has $100,000 in coverage, and your employer pays the premiums for the insurance. Since the death benefit of the plan exceeds $50,000, the life insurance would be subject to imputed income.

Do fringe benefits qualify as imputed income?

If you’re not sure exactly what qualifies as imputed income, or whether the fringe benefits you offer your employees need to be taxed, here is a list of things typically considered imputed income: There are also a variety of excluded benefits you don’t have to report as income.

Is life insurance subject to imputed income?

Since the death benefit of the plan exceeds $50,000, the life insurance would be subject to imputed income. This is calculated by your employer using an IRS imputed income table and then reported on your W-2 tax form. Why does imputed income matter? Imputed income is important to recognize since it is a fringe benefit.