# How to calculate group term life insurance

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Oct 07,  · Calculating Group Term Life Insurance. 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 . Sep 26,  · Subtract \$50, from the total amount of group term life insurance provided to the employee through a policy carried by the employer. For example: Total group term life insurance provided: \$, IRS permitted exclusion: \$50, Excess subject to imputed income = \$, - \$50, = \$50,

The annual imputed income is calculated by multiplying the number of full months of coverage by the monthly amount and adding a prorated amount for a partial month. For example:. Determine the employee's age group from the IRS premium table. For example, age 45 is in age group "45 through Identify the monthly cost for the employee's age group from the IRS premium table.

Calculate the total imputed income for an employee by multiplying the monthly cost by the number of lifd months of coverage provided and adding a prorated how to find your savings account number wells fargo for a month where only partial coverage grokp provided.

Steve McDonnell's experience running businesses and launching companies complements his technical expertise in information, technology and human resources. He earned groyp degree in computer science from Dartmouth College, served on the WorldatWork editorial board, blogged for the Spotfire Business Intelligence blog and has published books and book chapters for International Human Resource Information Management and Westlaw.

Share It. Determine the employee's age on the last day of the calendar year. Employee birth date: June 1, Last day of calendar year: December 31, Liife age:

Dec 15,  · Group-term Life Insurance Monthly Taxable Income: \$ X 50 = \$3. Group-term Life Insurance Annual Taxable Income: \$3 X 12 = \$ Add \$36 to William’s taxable income on his Form W You will add this amount to his total taxable income in boxes 1, 3, and 5. And, record the \$36 in Form W-2 box 12 with code C. Oct 31,  · Excess coverage = \$, - \$50, = \$, Monthly imputed income = (\$, / \$1,) x = \$ Yearly imputed income = \$30 x 12 = \$ - \$ (what the employee pays in premiums) = \$ Sterling Price is a research analyst at ValuePenguin specializing in Author: Sterling Price. Feb 05,  · Group term life insurance is an employee benefit that's often provided for free by employers. Employees may also have the option to buy additional coverage through payroll .

A policy is considered carried directly or indirectly by the employer if:. The determination of whether the premium charges straddle the costs is based on the IRS Premium Table rates, not the actual cost. This benefit is taxable even if the employees are paying the full cost they are charged.

A policy that is not considered carried directly or indirectly by the employer has no tax consequences to the employee. Because the employees are paying the cost and the employer is not redistributing the cost of the premiums through an insurance system, the employer has no reporting requirements.

Example 1 - All employees for Employer X are in the 40 to 44 year age group. The employer pays the full cost of the insurance. If at least one employee is charged more than. Example 2 - The facts are the same as Example 1, except all employees are charged the same rate, which is set by the third-party insurer.

The employer pays nothing toward the cost. Therefore there is no taxable income to the employees. It does not matter what the rate is, as the employer does not subsidize the cost or redistribute it between employees.

Generally, if there is more than one policy from the same insurer providing coverage to employees, a combined test is used to determine whether it is carried directly or indirectly by the employer. However, the Regulations provide exceptions that allow the policies to be tested separately if the costs and coverage can be clearly allocated between the two policies.

See Regulation 1. If coverage is provided by more than one insurer, each policy must be tested separately to determine whether it is carried directly or indirectly by the employer. This coverage is excluded as a de minimis fringe benefit. Whether a benefit provided is considered de minimis depends on all the facts and circumstances. See Notice for more information. If part of the coverage for a spouse or dependents is taxable, the same Premium Table is used as for the employee.

This amount is also considered carried by the employer. More In File. Not Carried Directly or Indirectly by the Employer A policy that is not considered carried directly or indirectly by the employer has no tax consequences to the employee. Coverage Provided by More Than One Insurer Generally, if there is more than one policy from the same insurer providing coverage to employees, a combined test is used to determine whether it is carried directly or indirectly by the employer.