What Does GTL Stand For on My Paycheck?
Decode "GTL" on your paycheck. Understand this employer benefit and how it affects your taxable income.
Paychecks often contain various codes and acronyms. One such acronym is “GTL.” This article clarifies what GTL signifies and its implications for your earnings. Understanding these details can help you better interpret your pay stub and manage your financial planning.
Understanding Group Term Life Insurance
GTL stands for Group Term Life insurance, a type of life insurance coverage typically provided by an employer to its employees as a benefit. Group Term Life insurance provides coverage for a specific period, often for the duration of employment.
The “group” aspect means that a single policy covers many individuals, pooling the risk across all insured employees. This structure usually makes group term life insurance more affordable than individual life insurance policies. Employers may pay all, part, or none of the premiums, though it’s common for employers to cover at least a portion of the cost.
Why GTL Appears as Imputed Income
The IRS has specific rules for employer-provided Group Term Life insurance. If an employer provides more than $50,000 in Group Term Life insurance coverage to an employee, the value of the coverage exceeding this $50,000 threshold is considered “imputed income.” Imputed income is a non-cash benefit that the IRS treats as if it were cash income for tax purposes.
The GTL amount on your paycheck represents the taxable value of this excess coverage, not a direct premium deduction. Your employer calculates this imputed income based on IRS tables, specifically the Uniform Premium Table I, which assigns a cost per $1,000 of coverage based on age. The age used for this calculation is generally the employee’s age on the last day of the calendar year.
How GTL Affects Your Taxable Pay
GTL as imputed income directly impacts your taxable pay. While added to your gross income for tax calculation, this amount is typically “backed out” or subtracted from your net pay, meaning you do not physically receive it as cash. This adjustment accounts for the non-cash benefit in your taxable wages without increasing your take-home pay.
Because GTL imputed income increases your taxable income, it leads to higher withholding for federal, state (if applicable), and FICA taxes (Social Security and Medicare). On your annual W-2 form, this imputed income amount will typically be reported in Box 1 (Wages, Tips, Other Compensation), Box 3 (Social Security wages), Box 5 (Medicare wages and tips), and specifically in Box 12 with code “C.” The “cost” to the employee is the increased tax liability from this non-cash benefit being treated as income.