Imputed Income & Tax Fact Sheet for Domestic Partner Benefits

When you enroll your domestic partner or your partner’s child in one of the District’s health plans, the IRS considers the District’s contribution toward the additional coverage as your imputed income. Your imputed income is the District’s contribution toward the additional coverage for your domestic partner and/or your partner’s child.
The payroll deduction amount to cover your domestic partner and/or your partner’s child is a post-tax deduction – unlike medical coverage for other enrolled family members.
Example A: If you enroll your domestic partner and his or her child, your imputed income would be the difference between the District’s contribution for employee only coverage (for you) and family coverage.
Example B: If you enroll your domestic partner, your imputed income would be the difference between the District’s contribution for employee and spouse coverage and employee only coverage.
Imputed income is separate from – and in addition to – your monthly plan cost. Imputed income applies even if you pay no monthly cost for your medical plan. The amount of your imputed income depends upon the plan in which you are enrolled and the level of your coverage.
Imputed income is taxable – that is, it increases your taxable gross income for federal and state income taxes as well as for FICA (Social Security and Medicare) and taxes are withheld from your paycheck. Your imputed income is reported on your annual Form W-2.

The Domestic Partner Affidavit will need to be filled out and submitted to Human Resources.

IMPUTED INCOME AND ITS IMPACT ON TAXES
ESTIMATE YOUR IMPUTED INCOME AND ITS IMPACT – USING THE FOLLOWING WORKSHEET.

1. Your monthly-imputed income for medical coverage: Review the Imputed Income Chart, based on the dependent you are adding and the plan(s) you want to enroll them in.____________
2. Multiply line 1 by 12 months of coverage. Amounts will vary throughout the year due to plan premiums changing mid-year from open enrollment : _______x 12 = $
3. Multiply line 2 by your federal income tax rate (25% or other): Estimated federal income taxes on the imputed income ________x .25 =  $_________
4. Multiply line 3 by your state income tax rate. Estimated state income taxes ______ x line 2_______
5. Multiply line 2 by 7.65% (your share of FICA) FICA taxes on the imputed income: ______x .0765= $
6. Add lines 3 (federal taxes), 4 (state taxes), and 5 (FICA): Total estimated taxes you must pay on the imputed income $_________

Contact Stefanie Edenburn, at 503-261-8250 or stefanie_edenburn@ddsd40.org if you have any questions about imputed income for domestic partner coverage.

DISCLAIMER:
The foregoing examples are for illustration only and may not reflect your actual circumstances. The District and its Human Resources Department are not providing you with tax advice nor are they attempting to evaluate your particular situation. You are urged to consult your own tax advisor(s) concerning the federal and state income tax and employment tax ramification from your enrolling your domestic partner or your partner’s children in one of the District’s sponsored plans.