Teresa has a dental plan through her employer.Recently,she has undergone dental work costing the plan $2,500.Luckily for Teresa,this particular dental work was covered completely by her dental plan.What are the tax consequences as a result of Teresa not having to pay for the dental work?

A) Her employer will add the $2,500 as an expense in their income statement.
B) She will have to include the $2,500 as additional income.
C) There are no tax consequences at all as benefits are tax-free.
D) Teresa will have to claim half of the benefit as income.

Question

Kalla Subodh · Accepted Answer

Final Answer : C, Explanation :  Benefits from an employer-provided dental plan are generally tax-free and do not need to be reported as income. Therefore, there are no tax consequences for Teresa in this scenario. Option A is incorrect because the employer's expenses do not affect Teresa's tax liability. Option B is incorrect because Teresa did not receive any additional income. Option D is incorrect because there is no requirement to claim a portion of the benefit as income.

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