What is imputed pay?

Imputed pay refers to the value of non-cash benefits or perks provided by an employer to an employee that are considered taxable income. Examples of imputed pay include employer-provided life insurance coverage above a certain amount, employer-paid personal use of company cars, employer-paid health insurance premiums for non-dependent domestic partners, and employer-provided meals or lodging.

In the United States, imputed pay is subject to federal income tax, Social Security tax, and Medicare tax. The value of imputed pay is typically calculated based on the fair market value of the benefit or perk provided to the employee.

Employers are required to report imputed pay to the IRS and include it on the employee's W-2 form as taxable income. It is important for employees to be aware of imputed pay and understand how it may impact their overall tax liability. Additionally, employers should ensure that they are properly calculating and reporting imputed pay to comply with tax regulations.