What does Insurance Income on my check stub mean?

INSURANCE INCOME – Premiums paid by an employer for employee life insurance coverage in excess of $50,000 are subject to income tax as imputed income. The imputed income is calculated using an Internal Revenue Service formula. Tax is not withheld from this imputed income during the course of the year, but imputed income is included in the employee’s gross income at the end of the year and is printed on Form W-2. The earnings statement will show this imputed income as INSURANCE INCOMEand the hours in the block 14 section.

Another way of explaining it:

The answer lies in IRS regulations. Under IRS rules you are able to receive $50,000 of free life insurance from your employer without any tax consequences. For Postal employees the free life insurance is your Basic Life Insurance. The math on calculating Basic Life is your base pay rounded up plus $2,000. When you do the math this puts many employees over the $50,000 limit. The government then takes the premium the Post Office pays on your behalf for the amount over $50,000 and reports it as income to the IRS. It never adds up to much, but it is good to understand why this happens.

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