Tanya's employer offers a cafeteria plan that allows employees to choose among a number of benefits.Each employee is allowed $6,000 in benefits.For 2019,Tanya selected $3,420 ($285 per month)of parking,$1,780 in 401(k)contributions,and $800 of cash.How much must Tanya include in taxable income?

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Quizplus · Accepted Answer

Tanya's total benefits amount to $6,000. She selected $3,420 for parking, $1,780 for 401(k) contributions, and $800 in cash. The parking and 401(k) contributions are typically non-taxable benefits, so only the $800 cash is taxable. Therefore, $6,000 - ($3,420 + $1,780) = $800, and $6,000 - $800 = $5,200, leaving $1,040 to be included in taxable income.

Tanya's Employer Offers a Cafeteria Plan That Allows Employees to Choose