Question

Rachel receives reimbursement from her employer for dependent care expenses for up to $10,000. Rachel applies for and receives reimbursement of $7,000 for her 1-year-old son. How much, if any, is includible in her income

Answer 1

$2,000

Step-by-step explanation:

The reason is that the employees are exempt up to $5,000 of dependent care benefits which means the benefit above $5,000 are taxable her.

The benefit received is $7,000 and the exempt amount from tax is $5,000. So the taxable benefit = $7,000 - $5,000 = $2,000