VALUE OF INSURANCE OVER $50,000 IS Taxable
VALUE OF INSURANCE OVER $50,000 IS TAXABLE
NEW IRS TABLE
EFFECTIVE JULY 1, 1999
The value of group term life insurance provided by one or more employers is considered taxable income in the current year to the extent the insurance coverage exceeds $50,000. The Church Pension Fund provides $50,000 coverage for all clergy active in the Fund, subject to some limitations and eligibility. Clergy whose diocese, church, or other employer provides additional life insurance will have an income tax liability each year. Contrary to popular belief, this tax liability is not based on the actual cost of the life insurance. The IRS provides a table which must be used to determine the value of this benefit. This table is age-specific and has been updated by the IRS effective July 1, 1999.
| |
|Cost Per $1,000 of All Group Life Insurance Coverage |
|Per Month Exceeding the $50,000 Exclusion |
| |New Rates |
|Age |Effective July 1, 1999 |
|Under 25 |$.05 |
|25to 29 |.06 |
|30 to 34 |.08 |
|35 to 39 |.09 |
|40 to 44 |.10 |
|45 to 49 |.15 |
|50 to 54 |.23 |
|55 to 59 |.43 |
|60 to 64 |.66 |
|65 to 69 |1.27 |
|Over 70 |2.06 |
Each employer (diocese, parish, institution, or other employer) should provide a W-2 which includes the annual value of this insurance benefit. But even if a W-2 with this information is not received, it is the individual’s responsibility to report this imputed income when filing income tax returns.
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