Question

This year Zach was injured in an auto accident. As a result, he received the following payments. Zach received $18,000 of disability pay. Zach has disability insurance provided by his employer as a nontaxable fringe benefit. Zach's employer paid $4,300 in disability premiums for Zach this year. Zach's hospital bills totaled $4,500 and were paid by his health insurance. Zach has health insurance provided by his employer as a nontaxable fringe benefit. Zach's employer paid $6,250 in health insurance premiums for Zach this year. What amount must Zach include in his gross income?

Answer 1

$18,000

Explanation:

Given:

Disability pay received = $18,000

Disability premiums for Zach = $4,300

Zach's hospital bills = $4,500

Health insurance premiums for Zach = $6,250

Now,

Any of the payment which is related to the insurance policy and health insurance will not be included in the gross income, but the employee must include the disability pay which is provided by his employer as a nontaxable fringe benefit in the Gross income

Therefore,

The amount Zach must include $18,000 in his gross income