Purpose

The purpose of this bulletin is to inform CUNY payroll staff of new PayServ codes to be used for employee Imputed Income.

Affected Employees

Active CUNY employees who are not in bargaining unit AJ or GA and who cover a domestic partner for health insurance benefits will be affected.

Employees in AJ or GA bargaining units will continue to have their imputed income submitted by the New York State Department of Civil Service.

Background

If active employees pay for health insurance coverage for a domestic partner or other beneficiaries who are not legal spouses or dependents as defined by the Internal Revenue Service (IRS) Publication 15-B (Employer’s Tax Guide to Fringe Benefits), the estimated fair market value (FMV) of those benefits must be calculated and the employee must be credited that amount as “imputed income”. The value of the coverage provided (less any amount paid for coverage on an after-tax basis) must be included in the employee’s taxable gross income, is subject to income tax and employment tax withholding, and must be reported on the employee’s W-2 Wage and Tax Statement.

Effective Date(s)

Effective Institution paycheck of October 24, 2019

Tax Information

The total amount of Imputed Income will be treated as wages and reported on the employee’s 2019 W-2. The wages will be included in boxes 1,3,5,16 and 18, if applicable; and subject to Federal, State, Local, Social Security and Medicare taxes. The taxable value of the Imputed Income will be shown in Box 14 on the employees Form W-2 as “IMP”.

Agency Actions

Agencies must inform impacted employees of the taxability of Imputed Income.

OSC Actions

OSC has created new CUNY Additional Pay earn codes to identify and accurately report CUNY Imputed Income transactions for CUNY employees not in bargaining units AJ or GA. The new Additional Pay earn codes for CUNY are “ICR” (CUNY Imputed Income Regular) and “ICS” (CUNY Imputed Income Special).

Beginning with the paycheck of October 24, 2019, OSC will insert a row for ICR on the Additional Pay page for each employee who is currently receiving imputed income. The ICR amount represents the biweekly amount of Imputed Income and will continue until OSC is notified by CUNY that the employee’s status or coverage has changed.

As required, OSC will insert a row for ICS on the Additional Pay page for any employee requiring a one time adjustment to an employee’s imputed income amount.

Beginning with the paycheck of November 7, 2019, Social Security and Medicare tax deficiencies will be created for employees who received Imputed Income benefits between January 3, 2019 and the paycheck of October 10, 2019 at the rate of 10% of gross pay. The Imputed Income amounts for this time period will be added to the employees’ W-2 taxable wages, and employees will be responsible for Federal, State and Local (if applicable) withholding taxes when they file their taxes for 2019.

Payroll Register and Employee’s Paycheck Advice

The Additional Pay earn code and the bi-weekly Imputed Income amount will be displayed on the payroll register. The earn code description and the bi-weekly Imputed Income amount will also be displayed on the employee’s paycheck stub or direct deposit advice. Note: ICR and ICS are not pensionable earn codes.

Questions

Questions regarding this bulletin may be directed to the agency benefits coordinator.