Samantha was ill for four months this year.Samantha missed work during this period,but disability insurance paid $18,000 of disability pay to replace her missed salary.Samantha shares the cost of the insurance with her employer.This year Samantha's employer paid $2,200 in disability premiums for Samantha as a nontaxable fringe benefit and Samantha paid the remaining $1,100 of premiums from her salary.What amount of the disability pay must Samantha include in her gross income? (Round your answer to the nearest whole dollar)

Question

Quizplus · Accepted Answer

Samantha must include in her gross income the portion of the disability pay that corresponds to the premiums paid by her employer. Since her employer paid $2,200 out of the total $3,300 in premiums, 2/3 of the $18,000 disability pay is taxable. Therefore, $18,000 * (2,200/3,300) = $12,000 must be included in her gross income.

Samantha Was Ill for Four Months This Year