This year Zach was injured in an auto accident. As a result, he received the following payments. Zach received $18,000 of disability pay. Zach has disability insurance provided by his employer as a nontaxable fringe benefit. Zach's employer paid $4,300 in disability premiums for Zach this year.
Zach's hospital bills totaled $4,500 and were paid by his health insurance. Zach has health insurance provided by his employer as a nontaxable fringe benefit. Zach's employer paid $6,250 in health insurance premiums for Zach this year.
What amount must Zach include in his gross income?

Question

Quizplus · Accepted Answer

Zach must include the $18,000 disability pay in his gross income because the disability insurance was provided by his employer as a nontaxable fringe benefit, meaning the premiums were not paid with after-tax dollars. The hospital bills paid by health insurance are not included in gross income.

This Year Zach Was Injured in an Auto Accident