Add fringe benefits and report imputed pay

Fringe benefits are considered non-cash compensation and taxed as regular wages. These taxable “wages” are called imputed pay. Imputed pay is only added to gross wages for taxability purposes. This means team members will not receive the benefit amount as pay—they receive the benefit in another way. They'll be taxed on its value since it's considered part of compensation.

Learn more about fringe benefits from the IRS.

Examples of imputed pay

If you do not know whether you need to enter imputed pay in Gusto, work with an accountant to find the correct classification for your situation. Learn more about imputed pay on our blog.

Reimbursing employees for fringe benefits

Employees might receive fringe benefits in different ways. For example, an employer-paid cell phone may be purchased directly by the company. Or, perhaps employees pay out of pocket for gym memberships and you reimburse them.

If you reimburse your team for fringe benefits they've paid for out of pocket, remember that reimbursements (both regular and expense) are not taxed and are not reported as wages. Typically, when you reimburse an employee for a fringe benefit, you should also set up that fringe benefit in Gusto so their compensation is recorded accurately.