In this video we’re going to talk about using our imputed income tax calculator in Dynamics GP to automatically calculate the imputed income taxable amount of a life insurance premium that you’re paying for your employees when their life insurance coverage amount exceeds 50 thousand dollars of coverage. Sometimes this is referred to as group term life and imputed income. I’m going to show you how to let the system do this for you.
First of all, you can maintain the IRS taxable table in Dynamics GP that appears on the screen. When that is complete, you can then set up the life insurance tax calculation in the life insurance tax code setup window. In this situation, we are using the HR premiums in increments and Dynamics GP. In this example, we are letting Dynamics GP Human Resources calculate the premium and the increment amounts based on an age-based table. In this example, the life insurance coverage amount for the employee is two times their annual salary plus $15,000 with a maximum of $265,000 dollars.
We now have two life insurance taxable benefit code set up. Our primary is the life insurance not taxable, our standard life insurance plan. We’ve added an additional taxable benefit called life TX for taxable you can see that our benefit excess minimum amount is $50,000. Which means that any premium over $50,000 of coverage is going to move over to the taxable benefit code and Dynamics GP and that’s going to happen automatically.