Question

The following information applies to the questions displayed below.]

Hardaway earned $131,500 of compensation this year. He also paid (or had paid for him) $5,650 of health insurance (not through an exchange).\

What is Hardaway's AGI in each of the following situations (ignore the effects of Social Security and self-employment taxes)?

28.

Required information

a. Hardaway is an employee and his employer paid Hardaway’s $5,650 of health insurance for him as a nontaxable fringe benefit. Consequently, Hardaway received $125,850 of taxable compensation and $5,650 of nontaxable compensation.

b. Hardaway is a self-employed taxpayer, and he paid $5,650 of health insurance himself. He is not eligible to participate in an employer-sponsored plan.