Dirk and Diane Davis are both employed solely by XYZ Corporation and each earned

Question

Dirk and Diane Davis are both employed solely by XYZ Corporation and each earned $15,000 in wages for 2016. With respect to the following items, what amount should be reported as income in addition to their wages? Explain! Advance commission for services to be performed in the future $1,500 Payments by XYZ under a qualifi ed plan for dependent care 2,000 Sick pay due to illness paid by insurance company (premiums were paid for by XYZ) 3,000 Cash allowance to pay for meals during working hours 300 Payments by XYZ to a qualifi ed pension plan 1,000 Group-term life insurance paid by XYZ on insurance coverage of $50,000 200 Dirk and Diane Davis are both employed solely by XYZ Corporation and each earned $15,000 in wages for 2016. With respect to the following items, what amount should be reported as income in addition to their wages? Explain! Advance commission for services to be performed in the future $1,500 Payments by XYZ under a qualifi ed plan for dependent care 2,000 Sick pay due to illness paid by insurance company (premiums were paid for by XYZ) 3,000 Cash allowance to pay for meals during working hours 300 Payments by XYZ to a qualifi ed pension plan 1,000 Group-term life insurance paid by XYZ on insurance coverage of $50,000 200 Dirk and Diane Davis are both employed solely by XYZ Corporation and each earned $15,000 in wages for 2016. With respect to the following items, what amount should be reported as income in addition to their wages? Explain! Advance commission for services to be performed in the future $1,500 Payments by XYZ under a qualifi ed plan for dependent care 2,000 Sick pay due to illness paid by insurance company (premiums were paid for by XYZ) 3,000 Cash allowance to pay for meals during working hours 300 Payments by XYZ to a qualifi ed pension plan 1,000 Group-term life insurance paid by XYZ on insurance coverage of $50,000 200

Explanation / Answer

1)advance commission for services to be performed in future- To be included as part of their income

2)Payments by XYZ under a qualifi ed plan for dependent care 2,000- Not to be included upto USD2500 in case separate returns for married couple.

3)Sick pay due to illness paid by insurance company (premiums were paid for by XYZ) 3,000-Not to be included when payments are received with respect to sick pay from third party or insurers.

4)Cash allowance to pay for meals during working hours 300-Not included in income if actual expenses of same amount or more.

5)Payments by XYZ to a qualifi ed pension plan 1,000-Not tobe included since this income accrues tax free

6)Group-term life insurance paid by XYZ on insurance coverage of $50,000 200-taxable since the coverage amount excees $50,000.Cost of coverage exceeding USD50,000 will be taxable in hands of employee.

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