group term life insurance
Employer-paid life insurance can be taxable or tax-free One item you may notice is group term life insurance, or GTL for short. If you see GTL or a similar reference to group term life on your paycheck, that means it’s included as part of your employee benefits package.

Is GTL included in W-2 wages?

Group Term Life Insurance. If your former employer provided more than $50,000 of group-term life insurance coverage during the year, the amount included in your income is reported as wages in box 1 of Form W-2.

What is GTL contribution?

Basically, GTL policies provide life insurance coverage to a group of people. Employers contribute to the entire premium and the employees can contribute for extra protection and riders. Employers project group term life insurance as part of their benefits package to employees but it also helps employers save taxes.

Is GTL considered imputed income?

The IRS considers the value of group term life insurance in excess of $50,000 as income to an employee . This concept is known as “imputed income .” Even though you do not receive cash, you are taxed as if you received cash in an amount equal to the taxable value of the coverage in excess of $50,000 .

Where is imputed income reported on W-2?

Box 12
Reporting imputed income Record imputed income on Form W-2 in Box 12 using Code C. Also, include the amount for imputed income in Boxes 1, 3, and 5. Remember that imputed income is typically not subject to federal income tax withholding.

How is GTL tax calculated?

Group Term Life Insurance is calculated as the taxable cost per month of coverage and is calculated by multiplying the number of thousands of dollars of insurance coverage (figured to the nearest tenth) less 50,000, by the cost from the group insurance table. This total is the calculated cost per period.

Is life insurance reported on w2?

The first $50,000 of group term life insurance coverage that your employer provides is excluded from taxable income and doesn’t add anything to your income tax bill. It’s included in the taxable wages reported on your Form W-2 — even though you never actually receive it.

How does imputed income affect my taxes?

Unless specifically exempt, imputed income is added to the employee’s gross (taxable) income. It isn’t included in the net pay because the employee has already received the benefit in some other form. Imputed income is subject to Social Security and Medicare tax but typically not federal income tax.

How does imputed income affect my paycheck?

The Imputed Income figure is displayed only to reflect your taxable earnings. It does not affect your gross pay, it only affects your gross taxable earnings. Previously, you would see this figure only on your W-2 in box 12A Code C. You will now see this figure each pay period on your Pay Stub.

Where is GTL taxable benefit included on W-2?

The GTL taxable benefit is included in Box 1, Box 3, and Box 5 of the employee’s W-2. If you have any questions, please leave a comment.

Where do I report my GTL imputed income?

Employers may choose to gross up employees on the tax liability caused by the GTL imputed income as they see fit. GTL imputed income is reported on the Form W-2 as wages (Box 1), SS wages (Box 3), Medicare wages (Box 5), and in Box 12 using Code “C”.

What are the boxes on the W-2 form?

See Form 1040 instructions to determine if you’re required to complete Form 8959. Box 6 — Shows the amount of Medicare tax withheld. This amount includes these: Box 7 — Shows any tip income you reported to your employer. Box 8 — Shows tip income allocated to you by your employer. This amount isn’t included in W-2 Boxes 1, 3, 5, or 7.

What does GTL stand for on a paycheck?

If you see GTL which stands for Group Term Life on your paycheck, it means your employer has elected this organization-wide benefit that essentially pays your beneficiaries a portion or full amount of your annual salary. This is a taxable benefit…