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.

Can I deduct imputed income for health insurance?

No, sorry. The insurance premiums are properly treated as taxable income for the entire time that you were covering a DP who was not your spouse and not a tax dependent. Since the Janaury-October premiums are treated as being paid with taxable money, you can apply them as itemized deductions for medical expenses.

What is imputed income health insurance?

What is imputed income? If you determine that domestic partners don’t qualify as a dependent and they receive health benefits, the contribution you make toward any premium is counted as a type of employee income called imputed income.

What is imputed income for group term life insurance?

These are benefits — such as services, goods or experiences — provided by an employer that are in addition to your regular income. In the case of group-term life insurance, the IRS states that life insurance premiums for a policy of more than $50,000 are a fringe benefit and create a taxable income for the employee.

How is imputed income calculated for health insurance?

If the premiums for coverage in excess of $50,000 are taxable, the imputed income amount is based on the IRS Table I rates rather than on the rates employees actually pay. The plan “straddles” the Table I rates.

What are the imputed income issues for employers?

Long-Term Disability “Gross-up” Plans The issue: Employers who pay the premiums for employees’ long-term disability (LTD) insurance may want to impute income equal to the premium amount, so the premium will be paid by employee after -tax dollars and benefits will not be taxable if an employee becomes disabled.

When to impute income to a domestic partner?

If a domestic partner is not a Tax Code dependent and is enrolled in your employer group benefit plan (s), you should impute income to the employee, equal to the fair market value of any coverage provided that is paid for by the employer, or by the employee on a pre -tax basis.