Imputed income.

In plain English

Some perks are taxable even though they aren't cash. The classic example is employer-paid group life insurance above $50,000 of coverage. The IRS assigns a value to the excess coverage, adds it to your taxable wages, and you pay tax on it. It shows up as a line on your pay stub and in Box 12 of your W-2.

01Why it matters

It's why a "free" perk can quietly raise your tax bill, and why a pay-stub line you didn't recognize is sometimes the value of a benefit, not a deduction.

02The math, step by step

Your employer gives you $150,000 of group life coverage for free. The first $50,000 is tax-free. The IRS values the other $100,000 using its Table I rates, perhaps a few dollars per pay period for a 30-year-old, and that amount gets taxed.

03What this is NOT

04Receipts

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