Steve has a group disability income policy where the premiums are paid by his employer. Which statement is true?

In the context of group disability income policies where premiums are paid by the employer, it is important to understand how tax implications work regarding benefits and premiums. When an employer pays the premiums for a group disability income policy, the benefits that the employee, such as Steve, receives are generally considered taxable income. This means that when Steve receives disability benefits from the policy, he will have to pay taxes on those benefits, as they are a form of income replacement.

On the other hand, the options suggesting tax-deductibility or tax-free status of benefits are not applicable in this scenario. If Steve personally paid any premiums, he might have had some tax considerations regarding those amounts, but in cases where premiums are employer-paid and thus not deducted from the employee's income, the benefits are indeed taxable upon receipt. Therefore, it is accurate to state that Steve will pay taxes on the disability benefits received from his employer.

Residual disability benefits can sometimes have different tax treatment depending on how they are structured, but generally, if they stem from the same employer-paid plan, they would also be taxable. Overall, the critical factor here is the employer's role in paying the premiums, which establishes the taxability of the benefits to the employee.