This year Zach was injured in an auto accident. As a result, he received the following payments.
Zach received $18,000 of disability pay. Zach has disability insurance provided by his employer as a nontaxable fringe benefit. Zach's employer paid $4,300 in disability premiums for Zach this year.
Zach's hospital bills totaled $4,500 and were paid by his health insurance. Zach has health insurance provided by his employer as a nontaxable fringe benefit. Zach's employer paid $6,250 in health insurance premiums for Zach this year.
What amount must Zach include in his gross income?
A. $22,500
B. $18,000
C. $4,500
D. $10,550
E. $0—none of these benefits are included in gross income
Answer: B