If an insured covered by a partially contributory group disability income plan pays 25% of the premium, how much of a $4,000 monthly benefit will be taxable?

In a partially contributory group disability income plan, the tax implications for benefits received depend on how much of the premium is paid by the insured versus the employer. When an insured pays part of the premium, only the benefits related to the employer's contribution are typically taxable.

In this case, the insured pays 25% of the premium. This means that the employer contributes the remaining 75% of the premium. To determine the taxable portion of the $4,000 monthly benefit, you need to calculate the percentage of the benefit that corresponds to the employer's portion of the premium payment.

Since the employer pays 75% of the premium, the taxable portion of the benefit will also be 75%. Thus, the taxable amount is calculated as follows:

Taxable portion = Total benefit x Employer's percentage of premium

Taxable portion = $4,000 x 75% = $3,000

Therefore, of the $4,000 monthly benefit, $3,000 is taxable. This correct understanding of how contributions affect taxability allows individuals to accurately assess their taxable income when receiving disability benefits.