Ch 9 Quiz Flashcards
When may an insured deduct unreimbursed medical expenses paid under a long-term care policy?
A When the expenses exceed a certain percentage of the insured’s adjusted gross income
B Only if the insured is age 65 or older
C All LTC expenses are tax deductible.
D Only if the insured does not itemize the expenses
A When the expenses exceed a certain percentage of the insured’s adjusted gross income
In either medical expense insurance policies or long-term care insurance policies, unreimbursed medical expenses paid for the insured, the insured’s spouse and dependents may be claimed as deductions if the expenses exceed a certain percentage of the insured’s adjusted gross income.
Under which condition would an employee’s group medical benefits be exempt from income taxes?
A An employee’s group medical benefits are generally exempt from taxation as income.
B An employee’s group medical benefits are never exempt from taxation as income.
C When the premiums and other unreimbursed medical expenses exceed 5% of the employee’s adjusted gross income
D When the premiums and other unreimbursed medical expenses exceed 10% of the employee’s adjusted gross income
A An employee’s group medical benefits are generally exempt from taxation as income.
Group medical and dental benefits are received tax-free to employees. Also, premiums paid by the employer are deductible as business expenses.
Which of the following describes taxation of individual disability income insurance premiums and benefits?
A Premiums are tax deductible, but benefits are not taxable.
B Premiums are tax deductible, and benefits are taxable.
C Premiums are not tax deductible, and benefits are not taxable.
D Premiums are not tax deductible, but benefits are taxable.
C Premiums are not tax deductible, and benefits are not taxable.
In individual disability income, benefits are not taxable, and premiums are not tax deductible
The sole proprietor of a business makes a total salary of $50,000 a year. This year, his medical expenses have reached a total of $75,000. What amount may the sole proprietor deduct in regards to his medical expenses? A $10,000 B $25,000 C $50,000 D $75,000
C $50,000
The proprietors of a business may deduct the cost of a medical expense plan because they are considered to be self-employed individuals instead of employees. The deduction cannot legally exceed the taxpayer’s earned income for the year even if the cost of the medical expense plan exceeds this amount (in this scenario, $50,000).
Under which of the following employer-provided plans are the benefits taxable to an employee in proportion to the amount of premium paid by the employer? A Basic Medical Expense B Disability Income C Major Medical D Dental Expense
B Disability Income
The part of the benefit that is provided by the employer’s contribution is income taxable to the employee.
Individuals who itemize deductions can claim deductions for medical expenses not covered by health insurance that exceed what percent of their adjusted gross income? A 5% B 7% C 7.5% D 15%
C 7.5%
Most people who itemize their deductions can claim deductions for unreimbursed medical expenses, those that are not covered by health insurance, that exceed 7.5% of their adjusted gross income.
Which of the following is correct regarding the taxation of group medical expense premiums and benefits?
A Premiums are not tax deductible and benefits are taxed.
B Premiums are not tax deductible and benefits are not taxed.
C Premiums are tax deductible and benefits are taxed.
D Premiums are tax deductible and benefits are not taxed.
D Premiums are tax deductible and benefits are not taxed.
Premiums paid by employers for Group Medical Expense insurance are tax deductible for the employer as a business expense. Also, policy benefits paid out to employees are not taxable as income to the employee.
An insured is the recipient of an Accidental Death and Dismemberment (AD&D) policy purchased by his employer. The policy pays triple indemnity in case of accidental death. If the insured died as a result of an accident stipulated in the policy, how will the benefits paid be taxed?
A Benefits received are considered income tax free.
B Benefits received will be taxed as capital losses.
C No taxes will be taken because no benefits will be paid.
D Benefits will be taxed as ordinary income.
A Benefits received are considered income tax free.
The life insurance portion or death benefit payable on an AD&D policy will be treated as non-taxable from the federal government.
Which of the following is true regarding benefits paid to disabled employees?
A Tax withholding is required if the employee paid the premium.
B Disability benefits are not taxed.
C They may be subject to taxation if the premium was paid by the employer.
D They are exempt from taxation if any portion of the premium was paid by the employee.
C They may be subject to taxation if the premium was paid by the employer.
Any portion of the benefit paid for and deducted by the employer will be considered taxable income to the employee.
Under what condition are group disability income benefits received by an employee NOT taxable as income?
A When the employer makes all the premium payments.
B When the employee is 59 ½.
C When the amount of the benefit is equal or less than the amount of contributed by the employer.
D When the benefits received are equal or less than the employee’s percentage of the contribution.
D When the benefits received are equal or less than the employee’s percentage of the contribution.
Benefits received by the employee that are attributable to his or her portion of the contribution are not taxable as income.
All of the following are true regarding Key Employee Disability Income insurance EXCEPT
A Benefits are taxable to the employer.
B The employer owns the policy.
C Benefits are paid to the employer to retrain a new person.
D Premiums are not tax deductible for the employer.
A Benefits are taxable to the employer.
Key person disability income premiums are not deductible to the business, but the benefits are received income tax free by the business.
All of the following are true of the Key Person disability income policy EXCEPT
A The income may be used to find a replacement for the key employee.
B Benefits are considered taxable income to the business.
C Premiums are not deductible to the business.
D It is typically written to protect the company in the event a key employee becomes disabled and is unable to work.
B Benefits are considered taxable income to the business.
Key person disability benefits are not considered taxable income to the business.
Premium payments for personally-owned disability income policies are
A Not tax deductible.
B Eligible for tax credits.
C Tax deductible.
D Tax deductible to the extent that they exceed 10% of the adjusted gross income of those itemizing deductions.
A Not tax deductible.
Premiums for personally-owned individual disability income policies are not deductible.
For group medical and dental expense insurance, what percentage of premium paid by the employer is deductible as a business expense? A 50% B 60% C 90% D 100%
D 100%
For group medical and dental expense insurance any premium paid by the employer is deductible as a business expense.
A noncontributory group disability income plan has a 30-day elimination period and offers benefits of $2,000 a month. If an employee is unable to work for 7 months due to a covered disability, the employee will receive A $14,000, none of which is taxable. B $14,000, all of which is taxable. C $12,000, none of which is taxable. D $12,000, all of which is taxable.
D $12,000, all of which is taxable.
In noncontributory group health plans, the employer pays the entire cost, so the income benefits are included in the employee’s gross income and taxed as ordinary income.
