An employee will be taxed on the cost of group life insurance paid by the employer if the amount of coverage exceeds which of the following amounts?

An employee will be taxed on the cost of group life insurance paid by the employer if the amount of coverage exceeds which of the following amounts?

• A. $10,000
• B. $15,000
• C. $25,000
• D. $50,000

Answer: (D)

In the context of group life insurance, the Internal Revenue Service (IRS) has established specific thresholds for how life insurance premiums paid by an employer are treated for tax purposes. If the total amount of group life insurance coverage provided to an employee exceeds $50,000, the employee will incur a taxable benefit based on the amount of coverage over that threshold. This taxable amount is calculated using a standardized table provided by the IRS, which assigns a value to the cost of coverage beyond the $50,000 limit. This rule is designed to differentiate between a legitimate employee benefit and a fringe benefit that may provide an undue advantage. Consequently, the correct threshold for group life insurance income taxation is indeed $50,000, as any coverage exceeding this amount necessitates the reporting of a taxable benefit on the employee's income tax return.

In the context of group life insurance, the Internal Revenue Service (IRS) has established specific thresholds for how life insurance premiums paid by an employer are treated for tax purposes. If the total amount of group life insurance coverage provided to an employee exceeds $50,000, the employee will incur a taxable benefit based on the amount of coverage over that threshold.

This taxable amount is calculated using a standardized table provided by the IRS, which assigns a value to the cost of coverage beyond the $50,000 limit. This rule is designed to differentiate between a legitimate employee benefit and a fringe benefit that may provide an undue advantage. Consequently, the correct threshold for group life insurance income taxation is indeed $50,000, as any coverage exceeding this amount necessitates the reporting of a taxable benefit on the employee's income tax return.