Question

6.

Rex, age 55, is an officer of Blue Company, which provides him with the following nondiscriminatory fringe benefits in 2019:

• Hospitalization insurance premiums for Rex and his dependents. The cost of the coverage for Rex is $2,900 per year, and the additional cost for his dependents is $3,800 per year. The plan has a $2,000 deductible, but his employer contributed $1,500 to Rex's Health Savings Account (HSA). Rex withdrew only $800 from the HSA, and the account earned $50 of interest during the year. • Insurance premiums of $840 for salary continuation payments. Under the plan, Rex will receive his regular salary in the event he is unable to work due to illness. Rex collected $4,500 on the policy to replace lost wages while he was ill during the year. • Rex is a part-time student working on his bachelor's degree in engineering. His employer reimbursed his $5,200 tuition under a plan available to all full-time employees.

For each of the following items, enter the amount to be included in Rex's gross income.

If an amount is zero, enter "0".

Amount Included a. Hospitalization insurance premiums for Rex and his dependents. $ b. Insurance premiums of $840 for salary continuation payments. $ c. The $4,500 Rex collected on the salary continuation policy to replace lost wages while he was ill during the year. $ d. Tuition reimbursement under a plan available to all full-time employees. $

plz answers this Questions with the explanations.

Answer 1

	Amount Included	Amount Taxable	Explanation
a.	Hospitalization insurance premiums for Rex and his dependents.	$0	The Health Saving Account is very advantageous to account owners since funds are contributed to the account using pre-tax income. The withdrawal from HSA towards medical expenses are not taxable In addition, contributions made to an HSA are 100% tax-deductible, and any interest earned in the account is tax-free.
b.	Insurance premiums of $840 for salary continuation payments.	$0	Section 105 allows the establishment of qualified sick pay plans. Section 162 allows deductibility of funds spent on the sick pay plan and Section 106 states that if the plan is funded with insurance the premiums are not considered part of the taxable income of covered employees.
c.	The $4,500 Rex collected on the salary continuation policy to replace lost wages while he was ill during the year.	$4,500	This amount is included in gross income since employer had paid for the policy & it is in lieu of wages only
d.	Tuition reimbursement under a plan available to all full-time employees.	$0	Under following criteria tuition reimbursement program is not taxable in hands of employee : a. The program does not favor highly compensated employees b. The tuition reimbursement must not exceed $5,250. c. The money can only be used towards tuition, fees, and school supplies (including books).