What is Imputed Income?

employee calculating taxes
employee calculating taxes

Imputed income is the value of a service or benefit that was provided to you by your employer. It is called a fringe benefit, a form of taxable pay that is given in addition to your regular wages. It is added to your gross wages as income, so that employment taxes, including social security and Medicare, can be withheld. A common example is a non-deductible moving expense reimbursement. While it is great that your employer has paid for your moving expenses, you unfortunately may have to pay taxes on some or all of the reimbursement.

Here is a list of imputed income examples:

  1. Gym membership or fitness incentive;
  2. Educational assistance;
  3. Employee discounts;
  4. Company car personal usage;
  5. Non-deductible moving expenses;
  6. Employee benefits provided to a domestic partner.

If your company has provided you with a small fringe benefit like a $25 gift card or tickets to a sporting event, it will most likely not be counted as imputed income. The IRS does not define the dollar amount at which a fringe benefit will be taxed, but it is recommended to be kept at under $100.

The words and other content provided in the blog, and in any linked materials, are not intended and should not be construed as professional advice. It should not be used as individual advice. (Please read the Terms and Conditions for additional information).

Alicia H. Lillegard, Esq.

Alicia Lillegard has over 20 years of experience in employment law, human resources and insurance, working with with large blue chip companies, startups, and not-for-profit organizations. Ms. Lillegard is currently Managing Director of New England Human Capital, a human resources consultancy which advises small and midsize businesses on Human Resources compliance, including employment procedures, employee relations and employee benefits. She holds degrees from Loyola University Chicago and John Marshall Law School.

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