Imputed income is the value of any benefits or services provided to an employee. There are two types of coverages that DXC must report as imputed income for tax purposes, per the IRS — domestic partner coverage and Basic Life Insurance, as explained below. To better understand the tax implications for you, consult with your tax advisor.
Imputed Income for Domestic Partner Coverage
Under federal tax laws domestic partners are not considered tax dependents, so the value of your domestic partner’s coverage is included in your taxable income as imputed income.
If you choose domestic partner coverage, your contributions will be deducted from your paycheck on a pre- tax basis (just like contributions for spouses and dependent children) but will be credited back to you as taxable imputed income in compliance with the federal tax requirements. The total taxable imputed income reflected in your paycheck will include your contribution and the value of DXC’s contribution for your domestic partner’s coverage.
Imputed Income for Basic Life Insurance
Federal tax law requires you to pay taxes on the cost of Basic Life Insurance that provides coverage over $50,000. This is called “imputed income” and will be added to your gross taxable income. It will be included on your paychecks and on your Form W-2 each year. The amount of imputed income is based on your age and coverage amount.
To avoid imputed income, you can elect to limit your Basic Life Insurance benefit to $50,000 during Benefits Annual Enrollment.