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What is imputed income? | HRMantra
2-3 minute
What is imputed income?
The definition of imputed income is benefits employees receive that are not part of their salary or wages (such as access to a company car or gym membership) but are still taxed as part of their income. The employee may not have to pay for those benefits, but they are responsible for paying tax on the value of them. In the example of a company car, employees must pay tax on the cost of renting that same car. Some benefits employees receive are excluded and tax-free, 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:
- Use of company or employer's car
- fitness benefits, like free gym memberships
- Dependent care assistance over $5,000
- Group-term life insurance over $50,000
- Relocation Expenses Reimbursement
- Education assistance over $5,250
- Adoption assistance in excess of the annual adjusted amount
- Some employers give gifts, mostly cash and gift cards
- Health insurance for non-dependents, such as domestic partners
What is excluded from imputed income?
In general, excluded benefits are those that are below a certain value threshold or qualify for special treatment, such as in the case of health insurance for dependents. Here are some examples:
- Health Insurance for Dependents
- Health Savings Accounts
- Dependent care assistance of less than $5,000
- Group term life insurance under $50,000
- Education assistance of less than $5,250
- Adoption assistance less than the annual adjusted amount
- Small or occasional gifts provided by the employer, such as movie tickets, birthday cake, or company T-shirts
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