Question

Tanya's employer offers a cafeteria plan that allows employees to choose among a number of benefits. Each employee is allowed 6,000 in benefits. For 2013, Tanya selected 3,000 of parking, 2,000 in 401(k) contributions, and 1,000 of cash. How much must Tanya include in taxable income?

1) 60
2) 1,000
3) 1,060
4) 4,000

Answer 1

Tanya must include $6,000 in taxable income.

Step-by-step explanation:

To calculate the amount Tanya must include in taxable income, we need to add up the value of the benefits she selected. Tanya selected $3,000 for parking, $2,000 for 401(k) contributions, and $1,000 in cash. Therefore, the total amount Tanya must include in taxable income is $3,000 + $2,000 + $1,000 = $6,000.