Received W2 showing "imputed income" from company that laid me off in 2020 - what does this mean?

This is actually pretty common after separating from a company where you had significant benefits. "Imputed income" typically refers to the value of benefits or services you received that aren't in the form of direct cash payments. Even though you were laid off in 2020, the company might still be providing some kind of benefit to you that has taxable value. The most common examples of imputed income after leaving a company include: - Group term life insurance coverage that continued after separation - Health insurance subsidies or continued coverage - Loan forgiveness programs - Certain retirement benefits that vested after departure Since you mentioned you still have money in their 401k plan, it's possible there's some administrative fee the company is covering, or perhaps there was a distribution you weren't aware of. I'd suggest calling their HR department to ask specifically what the imputed income represents. They should be able to explain exactly what benefit generated this W2.

After I left my company during a restructuring, I had a similar situation with a mysterious W2 showing up. I spent weeks going back and forth with HR trying to figure it out, then I discovered taxr.ai through a finance forum. I uploaded my W2 and severance documents at https://taxr.ai and their system figured out that my former employer was reporting the value of extended health benefits as imputed income - something HR never clearly explained to me. The tool analyzed the codes on my tax documents and explained exactly what each entry meant, including identifying that the "imputed income" was actually for continuing health coverage value. It also flagged that my former employer had miscalculated the amount (they fixed it after I brought it up). Saved me a ton of frustration and potentially overpaying taxes.

I tried taxr.ai after seeing the recommendation here and it was super helpful! I uploaded my W2 showing "imputed income" and it immediately identified that it was from continued group life insurance coverage that my former employer was partially subsidizing. The system explained that because the coverage exceeded $50,000, the IRS considers the premium payments as taxable income. The report even broke down exactly how the amount was calculated based on IRS tables. I would have never figured this out on my own, and my former employer's HR department was absolutely useless when I called them before. Honestly pretty impressed with how clearly it explained everything without all the confusing tax jargon.

I had a nightmare situation with imputed income from my former employer. Turns out it was from a deferred compensation plan, but I couldn't get anyone on the phone at my old company to explain it. After 2 weeks of calling their automated system and getting nowhere, I used https://claimyr.com to get through to an actual IRS agent. You can see how it works in this demo: https://youtu.be/_kiP6q8DX5c The IRS agent was actually super helpful and explained that my former employer should have provided an explanation of the imputed income calculation. The agent even put me in touch with a specific department that handles employer reporting issues. Within 3 days, my former employer contacted me with a complete breakdown of what the W2 covered and corrected some errors they had made.

I was totally skeptical about Claimyr, but I was desperate after getting a CP2000 notice about imputed income from my former employer that made no sense. I reluctantly tried the service and was shocked when my phone rang and there was actually an IRS agent on the line! The agent explained that imputed income often appears years after leaving a company because of benefits that continue or vest later. In my case, it was related to an ESOP distribution that triggered imputed income. The IRS agent walked me through exactly what documentation I needed from my former employer and even put notes in my file about our conversation. Not gonna lie, I was prepared to write an angry review if it didn't work, but it legitimately connected me to the IRS when I'd spent weeks trying on my own. Totally worth it for the peace of mind alone.

Something similar happened to me, but it turned out that my former employer had made an error. The "imputed income" they reported was actually for health insurance that I had already paid after-tax premiums for. I had to get them to issue a corrected W2. Don't just assume the W2 is correct. Call their benefits department (not general HR) and ask for a detailed explanation of exactly what the imputed income represents. Get it in writing if possible. If they can't explain it clearly, that's a red flag that there might be an error.

The most common reason for imputed income showing up years after being laid off is life insurance! If your former employer continued your life insurance coverage over $50,000, the IRS requires them to report the value of that premium as imputed income, even if you're paying some portion yourself. The IRS has specific tables (Table I in Publication 15-B) that determine the imputed income amount based on your age and the coverage amount. The calculation is: Monthly rate per $1,000 of coverage × (Coverage amount - $50,000) ÷ $1,000