Sydney’s employer provides his employees with an insurance policy that pays sick benefits if the employee...
Sydney’s employer provides his employees with an insurance policy that pays sick benefits if the employee is out of work due to illness for longer than a specified period. His employer pays 70% of the premiums and Sydney pays the remaining 30%. When Sydney was out of work, he was paid $4,500 in sick pay from the policy. How much if any, of the sick pay received, is taxable to Sydney?
Select one:
a. $4,500
b. $3,150
c. $ 0
d. $1,350
Homework Answers
Ans: (B) $ 3,150
Explanation:
1) If the employer pays only portion of the insurance premium, then employee has to pay taxes on that amount only.
2) Here, employer has paid 70% of premium, therfore only that much amount would be taxable.
3) Amount Taxable To Sydney:
= $4500 * 70%
=$ 3150.
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