In: Accounting
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.)
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 | |