Meg's employer carries insurance on its employees that will pay an employee his or her regular salary while the employee is away from work due to illness.The premiums for Meg's coverage were $1,800.Meg was absent from work for two months as a result of a kidney infection.Her employer's insurance company paid Meg's regular salary of $8,000 while she was away from work.Meg also collected $2,000 on a wage continuation policy she had purchased.Meg must include $11,800 in her gross income.

Question

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The amount Meg must include in her gross income would be $10,000 ($8,000 paid by the employer's insurance and $2,000 from her wage continuation policy). The premiums for the employer's insurance are not included in Meg's gross income.

Meg's Employer Carries Insurance on Its Employees That Will Pay