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creativ13
20 days ago
6

Shirley received $500 monthly sick pay under a welfare fund and $6,500 monthly under a disability insurance policy offered by he

r employer on which she paid the premiums. How much, if any, of the $7,000 monthly benefits would be taxable to her?
A)$0.00

B)$500.00

C)$6,500.00

D)$7,000.00
Business
1 answer:
Mariulka [3.1K]20 days ago
3 0

Response:

The total amount subject to tax will come to $7000

Thus option (d) would be the correct choice

Clarification:

According to IRS regulations, benefits received under a disability policy are fully taxable only if

The employee pays premiums on the policy entirely with pre tax dollars

In this instance, the premium was paid by the employee herself and is assumed to have been with pre tax dollars, thus it is fully taxable i.e 6500$

Consequently, the $500 sick pay from the welfare fund is categorized as earned income and is therefore fully taxable.

Thus the total taxable income amounts to $6500 + $500 = $7000

Consequently, option (d) will be the correct answer

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Remaining inventory      2,539

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Read 2 more answers
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