Under current law, employer-paid health insurance premiums are deductible by the employer and not taxable to the employee. Suppose instead only the first $1,000 of such premiums were nontaxable. If an employee was in the 15% tax bracket, how much would his employer have to pay him in cash to make him indifferent between the cash and $3,000 of health insurance premiums? Assume the employee can- not deduct any health insurance premiums he pays himself because his medical expenses are far below 7.5% of adjusted gross income. What if his tax bracket were 31%?
Answer to relevant QuestionsSuppose you are an employee of Toys4u.com and incurred $8,000 of company-related meals and entertainment (M&E) during the year. The company is evaluating whether to reimburse you directly or to pay additional salary and have ...Wahoo, Inc., is a high-tech Internet company. It is trying to decide whether to issue NQOs or ISOs to its employees. Each employee will get 10 options. For purposes of this problem, assume that the options are exercised in 3 ...What factors are relevant to determining whether retiree medical benefits should be funded in advance? What is the meaning of the term overfunded in terms of a pension plan? What are the advantages and disadvantages to the corporation and its employees of an overfunded pension plan? The chief financial officer of a profitable firm asks you to explain the advantages, if any, to his firm of overfunding the firm’s defined benefit pension plan. Do these advantages accrue to a firm with a defined ...
Post your question