Question

Albert filed his tax return, properly claiming the head of household filing status. Albert's employer paid or provided the following to Carl:

Wages	$72,000
Fair market value of qualified dependent care services	4,600
Premiums for $50,000 qualified group term life insurance	450
Medical insurance premiums	1,200

How much of this income should Carl report (assume benefits are provided on a nondiscriminatory basis)?

A) $65,000

B) $72,000

C) $76,600

D) $77,050

Answer 1

• The right answer is option (b) $ 72,000.
• From the above details, only wages are taxable and hence same will be reported as income.
• From the above details, Qualified dependent care services are $ 4600 and same is not taxable because it is below $ 5,000.
• From the above details, Premiums for $50,000 qualified group term life insurance is $ 450 and the same is not taxable because premium up to $ 50,000 is not taxable.
• The medical insurance premium is completely exempt from the tax. Therefore, $ 1200 will not form part of income.
• Hence, the right answer is $ 72,000.