Rule Atlas
IRC § 79: FICA Taxes, Additional Medicare Tax, and Imputed Income (§79 GTL)
Under IRC § 79 (IRS / DOL FLSA / PayrollOrg), fICA Taxes, Additional Medicare Tax, and Imputed Income (§79 GTL) establishes the authoritative rules tested on the PayrollOrg CPP. Comprehensive understanding of Social Security and Medicare taxes, the Additional Medicare Tax threshold, and the calculation of imputed income for Group Term Life (GTL) insurance under IRC §79. VoraPrep verifies every threshold, worked table, and practice question below against the current PayrollOrg CPP blueprint.
Current Statutory Thresholds & Limits in Effect
Core Statutory Concepts
| Tax Component | Employee Rate | Employer Rate | Wage Base (2024)* | Notes |
|---|---|---|---|---|
| Social Security (OASDI) | 6.2% | 6.2% | $184,500 (2026 OASDI cap; or $168,600 in historical example) | No tax on wages above this base for the year. |
| Medicare (HI) | 1.45% | 1.45% | No limit | Applies to all wages. |
| Total FICA | 7.65% | 7.65% | Varies | Sum of SS and MC rates. |
An executive, age 60, receives $120,000 in group-term life insurance coverage from their employer. The IRS Uniform Premium Table I for a 60-year-old is $0.66 per $1,000 of coverage per month. The executive contributes $10 per month towards the premium. What is the monthly imputed income amount for this group-term life insurance that is subject to Social Security and Medicare taxes?
Practitioner Application: FICA Taxes, Additional Medicare Tax, and Imputed Income (§79 GTL)
As a payroll specialist, you're processing payroll for high-earning executives and managing employee benefits. One executive has already reached the Social Security wage base for the year, and another's year-to-date earnings are approaching the Additional Medicare Tax threshold. Furthermore, your company provides Group Term Life (GTL) insurance to all employees, with coverage exceeding the excludable amount for some. You must accurately calculate employee and employer FICA taxes, correctly apply the Additional Medicare Tax where applicable, and precisely determine the imputed income for GTL insurance according to IRC §79 to avoid compliance errors and potential penalties.
- Federal Insurance Contributions Act (FICA) Taxes (IRC §§3101-3128)
- FICA taxes fund Social Security and Medicare programs. Both employees and employers pay a share. These taxes are generally due on all wages, with specific wage bases for Social Security.
Common PayrollOrg CPP Distractors on IRC § 79
- 1⚠️ Exam trap: Social Security Wage Base: Forgetting to cap Social Security wages once the employee hits the annual wage base. This applies to both employee and employer portions.
- 2⚠️ Exam trap: GTL Imputed Income Taxability: A common mistake is subjecting GTL imputed income to Federal Income Tax withholding. It is only subject to Social Security and Medicare (FICA) taxes, not FIT or FUTA.
- 3⚠️ Exam trap: Forgetting the $50,000 GTL Exclusion: Always subtract $50,000 from the total coverage before calculating imputed income. If the coverage is less than or equal to $50,000, there is no imputed income.
- 4FICA Taxes: Comprise Social Security (6.2% employee/employer, with annual wage base) and Medicare (1.45% employee/employer, no wage base).
- 5Additional Medicare Tax: An employee-only tax of 0.9% on wages exceeding $200,000 from a single employer. Employers must begin withholding once this threshold is met.
Frequently Asked Questions: IRC § 79
What is the core rule under IRC § 79 (FICA Taxes, Additional Medicare Tax, and Imputed Income (§79 GTL))?
Under IRC § 79 (IRS / DOL FLSA / PayrollOrg), fICA Taxes, Additional Medicare Tax, and Imputed Income (§79 GTL) establishes the authoritative rules tested on the PayrollOrg CPP. Comprehensive understanding of Social Security and Medicare taxes, the Additional Medicare Tax threshold, and the calculation of imputed income for Group Term Life (GTL) insurance under IRC §79. VoraPrep verifies every threshold, worked table, and practice question below against the current PayrollOrg CPP blueprint.
How is IRC § 79 tested on the PayrollOrg CPP?
⚠️ Exam trap: Social Security Wage Base: Forgetting to cap Social Security wages once the employee hits the annual wage base. This applies to both employee and employer portions. ⚠️ Exam trap: GTL Imputed Income Taxability: A common mistake is subjecting GTL imputed income to Federal Income Tax withholding. It is only subject to Social Security and Medicare (FICA) taxes, not FIT or FUTA.
Where can I practice PayrollOrg CPP questions on FICA Taxes, Additional Medicare Tax, and Imputed Income (§79 GTL)?
Test yourself instantly with the free playable PayrollOrg CPP question on this page, or launch VoraPrep's full PayrollOrg CPP adaptive question bank, interactive lessons, and 1:1 exam simulator at voraprep.com/cpp.