Tonya's employer pays the full premium on a disability income policy from an insurance company on behalf of all employees. After a skiing accident, Tonya was out of work for three months and collected $2,000 per month ($6,000 total) of disability benefits from this policy. In addition, Tonya received another $1,000 per month ($3,000 total) from a disability policy she had purchased herself. Tonya had paid a total of $1,300 in premiums on her policy. How much of the $9,000 total received is taxable?

Question

Quizplus · Accepted Answer

The $6,000 received from the employer-paid policy is taxable because the premiums were paid by the employer. The $3,000 from Tonya's own policy is not taxable because she paid the premiums herself.

Tonya's Employer Pays the Full Premium on a Disability Income