During the year, Ted Knight received worker's compensation payments totaling $10,000 as a result of an injury he suffered at work.His only other source of income for the year was his wages of $25,000.Which one of the following represents Ted's Net and Taxable Incomes for the year?
A)Net Income $25,000, Taxable Income $25,000.
B)Net Income $30,000, Taxable Income $30,000.
C)Net Income $35,000, Taxable Income $25,000.
D)Net Income $35,000, Taxable Income $35,000.
TIF PROBLEM FOUR - 4
Tax Payable For Individuals - Exam Exercises

Question

Quizplus · Accepted Answer

The worker's compensation payments are not taxable, so Ted's taxable income is only his wages of $25,000. Therefore, his net income is $35,000 ($25,000 wages + $10,000 worker's compensation) and his taxable income is $25,000.

During the Year, Ted Knight Received Worker's Compensation Payments Totaling