Will Barrett and Eric Martin are looking at the company’s health care options and trying to determine what their taxable income will be if they sign up for the qualified cafeteria plan offered by the company, which will allow them to deduct the health care contributions pre-tax. Will, a single man with one exemption, earns $1,600 per semimonthly payroll. Eric, a married man with six exemptions, earns $1,875 per semimonthly pay period. The semimonthly employee contribution to health care is $75 for Will, $250 for Eric. Calculate the taxable income when qualified health care deductions are involved.
