An employee will be taxed on the cost of group life insurance paid by the employer if coverage exceeds what amount?

An employee is subject to taxation on the cost of group life insurance paid by the employer if the coverage exceeds $50,000. The Internal Revenue Service (IRS) has established this threshold to determine the tax treatment of employer-provided life insurance benefits.

When the coverage amount surpasses $50,000, the cost of the insurance that exceeds this limit is considered a taxable fringe benefit. The taxable amount is calculated based on the IRS table of uniform premiums for $1,000 of group-term life insurance coverage. This means that if an employee has coverage of, for instance, $70,000, they would be taxed on the value of the $20,000 excess over the $50,000 limit.

Understanding this threshold is crucial for both employers and employees to ensure compliance with tax regulations regarding employee benefits.