Office of Human Resources - Benefits Design & Management

Frequently Asked Questions
Imputed Income

QUESTIONS? CALL HR Employee Services 480.965.2701 HR Faculty Services 480.727.9900 ASK HR www.asu.edu/hr/askhr

Imputed income is the name for the taxable amount an employee will be responsible for in regard to their health benefits. It is particular to a person with post-tax dependents in their health plans.

What is the difference between a pre-tax and post-tax deduction?
The amount of a pre-tax deduction is subtracted from your income before tax is figured; it lowers your taxable gross.Post-tax deductions are subtracted from gross income after taxes have already been calculated.  These deductions also result in imputed income.
 
What is imputed income?
Imputed income is the term the IRS applies to the value of any benefit or service that should be considered income for the purposes of calculating your federal taxes.  If your dependents do not qualify for pre-tax benefits, your deductions will be post-tax and the university’s cost will be taxable to you as imputed income.

How is imputed income calculated?
Imputed income is the difference in the EMPLOYER’S premium cost incurred when your coverage tier changes
as a result of adding a post-tax domestic partner or post-tax older child to your plan.

The employee with post-tax dependents will be paying both before- and after-tax deductions, The employee will have
tax implications for the employer taxable piece of their deductions. They will see this as added income at the end of the year.

Examples of Imputed Income				SEE PAYCHECK EXAMPLE
Original Coverage Level	Original  EE Cost Per Pay	Original ER Cost Per Pay	New Coverage Level	New EE Cost Per Pay	New ER Cost Per Pay	Imputed Income
EE only Tier 1	$13.85	$205.85	Employee + post-tax domestic partner Tier 2	$13.85 (pre) $13.84  (post) $27.69	$412.15	$412.15 - $205.85  $206.30
EE+ spouse Tier 2	$27.69	$412.15	EE + spouse + post-tax older child Tier 3	$27.69 (pre) $41.54 (post) $69.23	$534.46	$534.46 - $412.15  $122.31
EE + Family (2 full-time students) Tier 3	$69.23	$534.46	EE + 2 full-time students + post-tax domestic partner Tier 3	$69.23 (pre)	$534.46	$534.46  -$534.46      Ø (No tier change)

 

This is what you will see on your paycheck:

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