Manuel's employer provides him with $80,000 of group term life insurance coverage for the year at no cost.The amount from the group term life insurance premium table for someone who is 40 years old is $0.10.How much must Manuel include in income as a result of this benefit if he is 40 years old and is not considered a key employee?

Question

Quizplus · Accepted Answer

The cost of the first $50,000 of employer-provided group term life insurance is excluded from income, so Manuel must include the cost of the coverage over $50,000. The taxable amount is calculated on the $30,000 excess ($80,000 - $50,000). At $0.10 per $1,000 of coverage per month, the monthly cost is $3 ($30,000 / $1,000 * $0.10). Over 12 months, this totals $36 ($3 * 12).

Manuel's Employer Provides Him with $80,000 of Group Term Life