Question

Meg's employer carries insurance on its employees that will pay an employee his or her regular salary while the employee is away from work due to illness. The premiums for Meg's coverage were $1,800. Meg was absent from work for two months as a result of a kidney infection. Her employer's insurance company paid Meg's regular salary of $8,000 while she was away from work. Meg also collected $2,000 on a wage continuation policy she had purchased. Meg must include $11,800 in her gross income.

A. True
B. False

Answer 1

Meg must include both the $8,000 received from her employer's insurance and the $2,000 from the wage continuation policy, totaling $11,800, in her gross income for tax purposes, which will be considered taxable income.

Step-by-step explanation:

The question you've asked pertains to whether Meg must include both her regular salary paid by her employer's insurance and her wage continuation policy income in her gross income for tax purposes. In the United States, generally, the amounts received from these insurance policies for lost wages due to illness or disability are considered taxable income, and therefore must be included in your gross income. This means that the $10,000 Meg received from her employer's insurance and the $2,000 from the wage continuation policy would both need to be reported on her tax return, totaling $11,800 in taxable income. The answer to the statement would be True.