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Imputed Income?? Grrrr.....
12-16-2006, 09:48 AM
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#1
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Recycles dryer sheets
Join Date: Aug 2006
Posts: 478
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Imputed Income?? Grrrr.....
So with my Sat morning coffee I'm perusing the Retiree Handbook (!) that came yesterday, when I encounter the following regarding the life insurance provided to retirees:
Basic group life insurance is subject to imputed income taxes. This means that if your coverage exceeds $50,000, the value of the coverage in excess of $50k is subject to FICA and federal and state income taxes. The value used to determine imputed income is based on a table provided by the IRS ....
A cursory search of irs.gov was fruitless. Anybody know what the hell this is all about & what kind of hit I can expect? Heck, I might turn down the insurance if they let me...
__________________
I still don't get it...
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Re: Imputed Income?? Grrrr.....
12-16-2006, 09:55 AM
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#2
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Thinks s/he gets paid by the post
Join Date: Feb 2005
Posts: 2,032
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Re: Imputed Income?? Grrrr.....
Yeah, a corporation is only allowed to deduct the value on $50k of life insurance per employee (unless the insurance is paid to the corp).
As rules usually work, somebody has to pay the tax and that somebody is you. This coverage is usually very cheap and I would not worry about the taxes. The value is usually far in excess of what you will be taxed on because group coverage is cheap
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Re: Imputed Income?? Grrrr.....
12-16-2006, 10:16 AM
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#3
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Recycles dryer sheets
Join Date: Aug 2006
Posts: 478
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Re: Imputed Income?? Grrrr.....
Oh, so I'm only on the hook for the value of the premium? Ok, that makes sense & isn't a big deal, I agree. Thanks==
__________________
I still don't get it...
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Re: Imputed Income?? Grrrr.....
12-16-2006, 10:49 AM
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#4
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Thinks s/he gets paid by the post
Join Date: Feb 2005
Posts: 2,032
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Re: Imputed Income?? Grrrr.....
correct, you are taxes as if they had paid the premium to you as ordinary income
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Re: Imputed Income?? Grrrr.....
12-16-2006, 04:28 PM
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#5
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 38,154
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Re: Imputed Income?? Grrrr.....
Your company should put the amount on your W2. I forget which box.
We pointed this omission out to our company many years ago. They got it straightened out and thereafter started reporting it on our W2.
Audrey
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Retired since summer 1999.
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Re: Imputed Income?? Grrrr.....
12-16-2006, 04:34 PM
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#6
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Thinks s/he gets paid by the post
Join Date: Feb 2005
Posts: 2,032
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Re: Imputed Income?? Grrrr.....
Quote:
Originally Posted by audreyh1
Your company should put the amount on your W2. I forget which box.
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1,3,5 & 12 with Code C. Not that any sane human needs to know that
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Re: Imputed Income?? Grrrr.....
12-16-2006, 07:53 PM
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#7
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Recycles dryer sheets
Join Date: Sep 2006
Posts: 142
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Re: Imputed Income?? Grrrr.....
FYI - Depending on how generous your employer is, and if you're relatively young and in good health, you might do better with your own term life policy anyway.
For most people, the employer provides some free coverage like 1 or 2 x salary, but then you usually need to add more coverage that you have to pay for.
I was amazed that at age 30 I could get a 15-year level-premium term life policy with the same coverage I could get through work for about 10% less money. The savings was ok, but the portability of the coverage was the real driver for me. I let the policy lapse once I got close to being FIRE'd last year since by then I didn't need the coverage.
Anyhow, my policy did its job well and I never had to worry about what would happen to my coverage if I lost my job. Usually employer provided life insurance terminates really fast once you leave work (like maybe the week or month you leave).
Jim
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