If Wanda paid 100% of her group disability premiums, what percentage of her benefits would be tax free?

When an individual pays 100% of their group disability insurance premiums using after-tax dollars, the benefits they receive from that policy are completely tax-free. This is because the IRS treats premiums paid with after-tax money as not having been deducted from taxable income. Therefore, the full amount of benefits that Wanda would receive from her group disability plan would not be subject to income tax.

In the context of disability insurance, if an employer pays the premiums or if the premiums are deducted pre-tax from the employee's paycheck, the benefits received would typically be subject to taxation. However, since Wanda has paid for her premiums entirely with her after-tax income, she is entitled to receive the full benefit amount tax-free. This makes the correct answer 100%.

Understanding this principle is crucial for individuals regarding financial planning and the implications of how insurance premiums are paid.