If an employee contributes 50% toward the disability plan premium provided by an employer, what would be considered the taxable income of a $1,000 monthly disability benefit?

When determining the taxable income from a disability benefit, the key factor is the proportion of the premium that the employee pays. In this case, since the employee contributes 50% of the premium for the disability plan, this portion represents the employee’s investment in the policy.

Disability benefits are generally taxable to the extent that the premiums were not paid by the employee. Since the employee is covering half of the premium cost, they have effectively paid for half of their benefits. Therefore, the benefit amount taxable to the employee would reflect the employer's contribution, which covers the other 50%.

In this scenario, with a $1,000 monthly disability benefit and the employee contributing 50% toward the premium, only the half paid by the employer is subject to taxation. This results in a taxable income of $500, which represents the amount corresponding to the employer’s share of the premium.

To summarize, the amount of the taxable income from the disability benefits directly correlates to the proportion of the premium that the employer covers, and since the employer contributes 50% of the premium in this case, the correct taxable income is $500.