Learn about imputed income and my life insurance

What's imputed income?

Ihe IRS uses the term imputed income to describe the value of any benefit or service that is considered income when calculating your federal taxes.

According to Internal Revenue Code regulations (IRC section 79), life insurance coverage over $50,000 may be considered imputed income and subject to federal taxes. The amount of coverage above $50,000 is multiplied by a premium rate based on an employee's age at the end of the calendar year, which results in a monthly amount of imputed income.

This imputed income, reduced by the amount the employee paid toward the insurance, is taxable as a benefit and is, therefore, added to the employee's applicable wage base for federal income tax, Social Security tax and Medicare tax purposes.

This does not apply to a spouse's, domestic or civil union partner's optional life insurance.

Last updated: 11/1/2018