Question

How is the cost of employer-provided group life insurance with coverage amounts above $50,000 treated for tax purposes?

- A) Fully deductible by the employer
- B) Tax-free for the employee
- C) Subject to income tax for the employee
- D) Tax-exempt for both employer and employee

Answer 1

The cost of employer-provided life insurance coverage over $50,000 is a taxable benefit and must be included in the employee's gross income for tax purposes.

Step-by-step explanation:

The cost of employer-provided group life insurance coverage amounts above $50,000 is treated as a taxable benefit for the employee. This means that the value of the life insurance coverage above this amount is subject to income tax for the employee and must be included in the employee's gross income. It's important to note that employers typically can deduct the premiums they pay for their employees' life insurance as a business expense.