Question

Nicole's employer pays her $150 per month towards the cost of parking near a railway station where Nicole catches the train to work. The employer also pays the cost of the rail pass, $75 per month. Nicole can exclude both of these payments from her gross income.

A) True
B) False

Answer 1

Nicole can exclude both the $150 monthly parking payment and the $75 monthly rail pass cost from her gross income, as they are considered employer-provided fringe benefits for transportation purposes. The correct option is A.

Step-by-step explanation:

When considering the payments Nicole's employer makes towards her commuting costs, including the $150 per month for parking and the $75 per month for her rail pass, it is True that she can exclude both of these payments from her gross income.

This scenario touches upon the subject of employer-provided fringe benefits, particularly those related to transportation, which the IRS allows to be excluded from taxable income up to certain limits. Understanding such benefits is crucial for accurate tax reporting and financial planning.