Imputed Income
What is imputed income?
Imputed income is non-salaried benefits that employees receive (like access to a company car or a gym membership) but still get taxed as part of their income.
The employee might not have to pay for those benefits, but they are responsible for paying the tax on the value of them. Imputed income on a company car, for example, would require employees to pay taxes on the amount it would cost to lease that same car.
Many benefits employees receive are generally excluded and tax-exempt, such as health insurance or meals.
Is imputed income the same as fringe benefits?
Some non-cash perks or fringe benefit rewards may be classified as imputed income. As an example, employer-paid health insurance premiums in excess of $50,000 could be classified as imputed income, but small or occasional gifts usually won’t be.
What are examples of imputed income?
Some fringe benefits are 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 of imputed income to keep in mind:
- Use of a company or employer car
- Fitness benefits, like a free gym membership
- Dependent care assistance exceeding $5,000
- Moving expense reimbursement
- Education assistance exceeding $5,250
- Adoption assistance exceeding the annually adjusted amount
- Some gifts such as cash or gift cards
- Health insurance for non-dependents, such as a domestic partner.
What is excluded from imputed income?
In general, excluded benefits from imputed income 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:
- Health insurance for dependents
- Health savings accounts
- Dependent care assistance under $5,000
- Group term life insurance under $50,000
- Education assistance under $5,250
- Adoption assistance below the annually adjusted amount
- Small or occasional employer gifts, like movie tickets, birthday cake, or a company t-shirt