Question

Mary has received the following income and fringe benefits during the current year: a $73,000 salary; $600 in employer-provided disability premiums; $5,000 in workers; compensation; $1,200 in corporate bond interest; a $23,000 car won on a game show; and a $1,200 health insurance reimbursement for medical expenses paid during the year. Which of these amounts should Mary include in her gross income?

a. $1,200 health insurance reimbursement
b. $1,200 corporate bond interest
c. $5,000 workers' compensation
d. $600 disability premiums
e. $73,000 salary

Answer 1

Mary must include her $73,000 salary, $1,200 in corporate bond interest, and the $23,000 value of the car in her gross income. The $600 in disability premiums, $5,000 workers' compensation, and $1,200 health insurance reimbursement are generally not included in gross income.

Step-by-step explanation:

Based on the information provided, Mary should include the following amounts in her gross income:

• $1,200 corporate bond interest
• $23,000 value of the car won on a game show
• $73,000 salary

The $600 in employer-provided disability premiums, $5,000 in workers' compensation, and $1,200 health insurance reimbursement for medical expenses generally are not included in gross income. Employer-provided disability insurance premiums are typically excluded from income. Workers' compensation for personal injuries or sickness is also not taxable, and reimbursements for medical expenses already paid are not included in gross income.

It's important for individuals to understand which types of income and benefits are taxable versus those that are not, as it affects their taxable income and the amount of tax they may owe.