Imputed income
Imputed income is the taxable value of a non-cash benefit that must be added to an employee’s wages, such as group life coverage over $50,000 or domestic partner health coverage.
Some benefits are taxable even though no cash changes hands. The common examples on a PEO-administered payroll: employer-paid group term life insurance above $50,000 of coverage (taxed on IRS table rates), health coverage for a domestic partner or other dependent who does not qualify as a tax dependent, personal use of a company vehicle, and some gym or gift benefits. The value is "imputed" to the employee’s W-2 wages and is generally subject to Social Security and Medicare tax.
In a PEO, imputed income is a shared-responsibility trap: the PEO produces the W-2, but it only knows about the benefits it administers. If your company provides a vehicle, pays for a country-club membership, or runs any benefit outside the PEO’s system, someone must report the value into payroll or the W-2 will be wrong. Ask the PEO which imputed-income items it calculates automatically, which it needs reported and by when, and who amends the W-2 when an item is missed.