Andres has received the following benefits this year. Salary $99,750 Contribution to qualified pension plan 10,600...

Andres has received the following benefits this year.

Salary $99,750

Contribution to qualified pension plan 10,600

Qualified health insurance premiums 15,600

Year-end bonus (received on December 25) 21,800

Group-term life insurance premiums (face = $40,000) 2,010

Whole-life insurance premiums (face = $100,000) 2,820

Disability insurance premiums 1,855

Besides these benefits Andres missed work for two months due to an illness. During his illness Andres received $7,270 in sick pay from a disability insurance policy. Assume Andres has disability insurance provided by his employer as a nontaxable fringe benefit. What amount, if any, must Andres include in gross income this year? (Round to whole number, do not use any commas or dollar signs.)

Solutions

Expert Solution

The salary received, the bonus received and the contribution to qualified pension plan is only considered to form part of the gross income of Andred for the year. The qualified health insurance premium is a tax-free benefit and so is not included in gross income. The group-term life insurance premiums with face value not more than $50,000 will also not form part of gross income. Disability insurance premium by the employee is not included in gross income. However, the sick pay received from diability insurance provided by employer is taxable and forms part of gross income. The amount which must be included by Andres as gross income in this year is calculated as follows:

Amount to be included in Gross Income of the year
Salary	=	99750
Contribution to qualified pension plan	=	10600
Year end Bonus	=	21800
Sick pay received	=	7270
Total amount to be included in gross income		139420

ekkarill92 answered 1 year ago

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