If an employee earns $40,000 in annual income and her employer pays $10,000 in premiums for her group health insurance coverage, on what amount of total income will the employee be taxed when filing her annual tax return?
Explanation
Answer: C - If an employee earns $40,000 in annual income and her employer pays $10,000 in premiums for her group health insurance coverage, the employee would only be taxed on her gross income amount of $40,000. This is because the $10,000 that the employer pays for her group health insurance coverage is not considered income to the employee. In addition, the employer may deduct the $10,000 in premiums paid as a business expense.
