Tim earns a salary of $40,000. This year, Tim's employer establishes a cafeteria plan under which Tim signed a salary reduction of $2,500 for which $1,500 is to cover his health insurance premiums and $1,000 is transferred to a flexible spending account to reimburse medical expenses. During the year, he is reimbursed $900 for medical expenses. What is the total taxable to Tim this year?

Question

Quizplus · Accepted Answer

The salary reduction of $2,500 is not taxable, so Tim's taxable income is $40,000 - $2,500 = $37,500.

Tim Earns a Salary of $40,000