Imputed Income

    Imputed income is the amount of income that has to be declared on a tax return attributable to certain employee benefits (e.g., the benefit of using a company car or gym membership). May not include these benefits in an employee’s actual salary or wages, but they are still taxed as usual.

    What are some examples of imputed income?

    Taxation of fringe benefits is determined by the value of the benefit received. Some benefits are taxed regardless of the monetary amount. Here are some examples:

    1. A person rents out a spare room in his or her house.
    2. A person rents out a car.
    3. A person rents out his or her labor and skills, such as when a lawyer represents a client without charge or an accountant does someone’s taxes for him without charge.
    4. The owner of a piece of property receives rental income from that property, such as when someone leases store space.
    5. The owner of a piece of property receives income from allowing other people to use it, such as when someone holds an event on the property or allows others to build things on it, like stores or shopping malls.””

    what is mean by imputed income?

    The IRS defines imputed income as “income that is assumed to have been earned, whether or not it was earned.” If a taxpayer owns stocks that earn dividends, the dividends are taxable — assuming the taxpayer does not have sufficient records to prove that the income wasn’t made. The same goes for interest income, even if the money is placed in an account and never touched. In these cases, tax authorities consider that the taxpayer has received income from the dividend or interest payments.

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