Imputed Income

What Is Imputed Income?

The definition of imputed income is benefits employees receive that aren’t part of their salary or wages (like access to a company car or a gym membership) but still get taxed as part of their income. The employee may not have to pay for those benefits, but they are responsible for paying the tax on the value of them. In the example of the company car, employees would have to pay taxes on the amount it would cost to lease that same car. Some benefits employees receive are excluded and tax-exempt, such as health insurance or meals.

What Are Examples of Imputed Income?

Many fringe benefits may be taxed depending on the value of the benefit received by the employee. Other benefits are taxed regardless of the monetary amount. Here are some examples:

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What Is Excluded from Imputed Income?

In general, excluded benefits are those that are below a certain value threshold or qualify for special treatment, as in the case of health insurance for dependents. Here are some examples:

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