Question

Dow, 42, is a manager for Winter Company. In addition to his $89,000 salary, he receives the following benefits from Winter during the current year:

Winter pays all its employees' health and accident insurance. Premiums paid by Winter for Dow's health insurance are $1,200.

Winter provides all employees with group term life insurance coverage equal to their annual salary. Premiums on Dow's $89,000 in coverage are $890.

Winter has a flexible benefits plan in which employees may participate to pay any costs not reimbursed by their health insurance. Dow has $2,600 withheld from his salary under the plan. His actual unreimbursed medical costs are $3,340. Winter pays Dow the $2,600 paid into the plan during the year.

All management-level Winter employees are entitled to employer-provided parking. The cost of Dow's parking in a downtown garage is $4,200 for the year.

Winter pays Dow’s $100 monthly membership fee in a health club located in the building in which Dow works. Dow uses the club during his lunch time and on weekends.

I got $88,787 but that's not the right answer. Here's my work:

Winter's company salary = $ 89,000

        Health and accident insurance premiums - excluded 0

        Group term life - premiums on $50,000 of coverage excluded

             Excess premiums - $39,000 (39 x $1.20 from Table 4-1) = 46.8

        Payments into flexible benefits plan                                                    (2600)

        Free parking - $4,200 - (12 x $255)^* = 1140

        Health club membership fee - $100 x 12 = 1200

Total gross income                                                                          $ 88786.8 ----> $88787

*Employer-provided parking of up to $255 per month is excluded as a working condition fringe.

Answer 1

WINTER COMPANY SALARY $89000

Health and accident insurance premiums - excluded   0

        Group term life - premiums on $50,000 of coverage excluded

             Excess premiums - $39,000 (39 x $1.20 from Table 4-1) = 46.8

UNREMBURSED MEDICAL COST $3340

LESS:PAYMENT TO DOW ($2600)

Free parking - $4,200 - (12 x $255)* = 1140

        Health club membership fee - $100 x 12 =  1200

Total gross income $92027