An employee receives $110,000 of group term life insurance coverage per year. The cost of this coverage to his employer is $90. The cost based on the IRS's uniform premium table is $1.08 per year per $1,000 of coverage. What amount is taxable to the employee?

Question

Quizplus · Accepted Answer

The IRS allows the first $50,000 of group term life insurance coverage to be tax-free. The taxable amount is based on the coverage exceeding $50,000. The excess coverage is $60,000 ($110,000 - $50,000). Using the IRS table rate of $1.08 per $1,000, the taxable amount is $64.80 ($1.08 x 60).

An Employee Receives $110,000 of Group Term Life Insurance Coverage