Is group term life insurance taxable for federal income tax?

Group-term life insurance is a nontaxable fringe benefit, but only up to a certain amount. The first $50,000 of group-term life insurance coverage you pay for is excluded from each employee’s taxable income. If you pay for more than $50,000, you must include the excess in the employee’s taxable income.

Is GTL subject to federal withholding?

Spouse or dependent GTL coverage in excess of $2,000 paid by the employer is subject to imputed income at the standard Table I rates. The full amount is taxable (i.e., not simply the coverage in excess of $2,000), and income tax withholding applies (unlike imputed income for employee GTL coverage).

Are group term life insurance proceeds taxable to the beneficiary?

Answer: Generally, life insurance proceeds you receive as a beneficiary due to the death of the insured person, aren’t includable in gross income and you don’t have to report them.

Is group term life insurance pre tax?

Key Takeaways: 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 deductions. The first $50,000 of group term life insurance coverage is tax-free to the employee.

Is GTL a deduction?

On your paycheck under Deductions, you will see “GTL” with a benefit amount. This amount is not the amount deducted from your paycheck, but instead is the value of the taxable benefit that is used to calculate a deduction for social security (6.20%) and Medicare (1.45%) taxes on your paycheck.

Is group life insurance a taxable benefit?

Premiums you pay for employees’ group life insurance that is not group term insurance or optional dependant life insurance are also a taxable benefit. Term insurance is any life insurance under a group term life insurance policy other than insurance for which a lump-sum premium has become payable or has been paid.

Is group life insurance tax deductible?

Do you pay taxes on group life insurance?

Is the cost of group term life insurance taxable?

Coverage for Spouse and Dependents. The cost of employer-provided group-term life insurance on the life of an employee’s spouse or dependent, paid by the employer, is not taxable to the employee if the face amount of the coverage does not exceed $2,000. This coverage is excluded as a de minimis fringe benefit.

Who are beneficiaries of group term life insurance?

An employee who has group-term life insurance coverage chooses beneficiaries. Their beneficiaries receive the benefits of the life insurance plan if the employee dies. You can also extend group-term life insurance coverage to an employee’s dependents (e.g., spouse and/or children). Is group-term life insurance taxable?

Do you have to report group term life insurance?

Unless you pay for group-term life insurance policies over $50,000, you don’t need to worry about reporting the amount. However, you must report your costs toward any group-term life insurance over $50,000 as taxable income (Social Security and Medicare taxes) for each employee.

Is there an IRC exclusion for group term life insurance?

IRC section 79 provides an exclusion for the first $50,000 of group-term life insurance coverage provided under a policy carried directly or indirectly by an employer. There are no tax consequences if the total amount of such policies does not exceed $50,000.