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 (rounded to the nearest whole dollar) ?

Question

Quizplus · Accepted Answer

Since the employer paid $2,200 of the premiums as a nontaxable fringe benefit, the portion of the disability pay attributable to the employer's contribution is taxable. Samantha's employer paid two-thirds of the total premiums ($2,200 out of $3,300), so two-thirds of the $18,000 disability pay, which is $12,000, must be included in her gross income.

Samantha Was Ill for Four Months This Year