{"id":61265,"date":"2022-11-16T16:39:40","date_gmt":"2022-11-16T22:39:40","guid":{"rendered":"https:\/\/resource-center.hrblock.com\/?p=61265"},"modified":"2022-11-16T16:40:16","modified_gmt":"2022-11-16T22:40:16","slug":"what-is-imputed-income","status":"publish","type":"post","link":"https:\/\/hrbcomlnp.hrblock.com\/tax-center\/income\/what-is-imputed-income\/","title":{"rendered":"What is imputed income?"},"content":{"rendered":"\n

If you\u2019re an employee who gets certain types of \u201cfringe benefits\u201d \u2013 or non-cash items or services that are taxable \u2013 from your employer, there\u2019s a specific term for the income derived from it\u2026 It\u2019s called imputed income. It\u2019s the cash value equivalency of non-cash benefits received by W-2<\/a> employees.<\/p>\n\n\n\n

These extras at work can be a great perk, but there are imputed income tax implications to be aware of. Read on as we outline examples of imputed income and how imputed income affects your tax return.<\/p>\n\n\n

\n
\"employee<\/figure><\/div>\n\n\n

<\/a>What are examples of perks that can generate imputed income?<\/h2>\n\n\n\n

There are many different types of fringe benefits that give rise to imputed income. Common imputed wages that don\u2019t come with a limit or restrictions are:<\/p>\n\n\n\n

Company car<\/strong><\/p>\n\n\n\n

If you\u2019re frequently on the road for your job, it\u2019s fairly common to receive a company car or van that you use for both personal or business purposes. There are specific rules around how your company will impute income on the vehicle.<\/p>\n\n\n\n

Employee discounts & perks<\/strong><\/p>\n\n\n\n

Some companies offer employees extra discounts on goods or services from partner companies. These perks could give rise to imputed income.<\/p>\n\n\n\n

Gym memberships<\/strong><\/p>\n\n\n\n

Many big companies offer gym memberships to help foster employee health \u2013 these memberships fall into the category of imputed income.<\/p>\n\n\n\n

Moving expense reimbursement<\/strong><\/p>\n\n\n\n

If you move for a job, you\u2019ll likely tally the expenses incurred along the way: moving van rental, relocation costs, realtor fees, and other moving expenses.<\/p>\n\n\n\n

Some other examples of items that give rise to imputed income with specific limits are:<\/p>\n\n\n\n

<\/a>Adoption assistance<\/h3>\n\n\n\n

Generally, adoption assistance over $15,950 per child (for 2023) gives rise to imputed income. Find more information about the tax implications of adoptive children<\/a> for potential parents.<\/p>\n\n\n\n

<\/a>Dependent care<\/h3>\n\n\n\n

Your company could offer dependent care for your children or other dependents. (Dependent care exceeding $5,000 is taxed as imputed income.)<\/p>\n\n\n\n

<\/a>Group-term life insurance<\/h3>\n\n\n\n

Group-term life insurance of more than $50,000 is taxed as imputed income.<\/p>\n\n\n\n

<\/a>Educational assistance and tuition<\/h3>\n\n\n\n

Educational assistance (where companies compensate employees for tuition at higher learning institutions) exceeding $5,250 is taxed as imputed income.<\/p>\n\n\n\n

<\/a>Debt forgiveness<\/h3>\n\n\n\n

Some employers (commonly health care institutions) will pay off student loan debt of their employees.<\/p>\n\n\n\n

Flexible spending accounts and health savings accounts aren\u2019t classified as imputed income.<\/p>\n\n\n\n

<\/a>How does imputed income affect my federal tax return?<\/strong><\/h2>\n\n\n\n

If you\u2019re wondering what the imputed income tax implications are, it depends on two things: the type of benefit and the amount.<\/p>\n\n\n\n

Some benefits are considered de minimis. A de minimis benefit is an employee benefit that Internal Revenue Service (IRS) regulations deem administratively impractical to keep track of and valued at under $100. Examples of what the IRS considers de minimis benefits are:<\/p>\n\n\n\n

\u00b7                     Employee snacks or meals<\/p>\n\n\n\n

\u00b7                     Employee gifts with low fair-market value<\/p>\n\n\n\n

\u00b7                     Employer-branded apparel or items<\/p>\n\n\n\n

\u00b7                     Flowers, books, or fruit provided under special circumstances<\/p>\n\n\n\n

\u00b7                     Occasional sporting or entertainment tickets<\/p>\n\n\n\n

\u00b7                     Occasional parties or picnics for employees<\/p>\n\n\n\n

\u00b7                     Personal use of office copier or printer<\/p>\n\n\n\n

If you\u2019re questioning why imputed income is on your pay stub, there\u2019s a reason for it. For non-de minimis items, your employer should report it on your W-2 form, along with your standard wages.<\/p>\n\n\n\n

Tax is computed on imputed income from taxable non-de minimis benefits. You and your employer will pay FICA tax<\/a>, which covers Social Security and Medicare contributions, on most items of imputed income. Taxable Imputed income is grouped together with your normal taxable income, but only if the benefit qualifies. As such, qualifying benefits are taxed at your normal federal income tax rates<\/a>.<\/p>\n\n\n\n

unless the benefit value exceeds $1 million. In this case the tax rate is 37%.<\/p>\n\n\n\n

In rare cases, your employer may elect to withhold a flat supplemental wage rate of 22% on the benefit’s value.<\/p>\n\n\n\n

And if you\u2019re wondering how to calculate imputed income \u2013 look at your pay stub. There is a special area that lists out non-cash income.<\/strong><\/p>\n\n\n\n

<\/a>Consult an income tax professional<\/strong><\/h2>\n\n\n\n

Understanding issues related to imputed income taxes can be nuanced, which is why we\u2019re here to support you. H&R Block tax pros can help you navigate every tax situation, including how to report imputed income for federal income tax purposes.<\/p>\n\n\n\n

We\u2019re here for you. You can rely on H&R Block whether you file taxes online<\/a>, or with an H&R Block tax pro<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

If you\u2019re an employee who gets certain types of \u201cfringe benefits\u201d \u2013 or non-cash items or services that are taxable \u2013 from your employer, there\u2019s a specific term for the income derived from it\u2026 It\u2019s called imputed income. It\u2019s the cash value equivalency of non-cash benefits received by W-2 employees. These extras at work can […]<\/p>\n","protected":false},"author":5,"featured_media":61267,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[24],"tags":[],"class_list":["post-61265","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-income"],"acf":[],"yoast_head":"What is Imputed Income & How it Affects Paychecks | H&R Block<\/title>\n<meta name=\"description\" content=\"Learn what imputed income is from the experts at H&R Block. 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