Jennifer elects to reduce her salary by $2,500 so she can participate in her employer's flexible spending arrangement. Her salary reduction is allocated as follows: $1,700 for medical and dental expenses and $800 for child care expenses. During the year, Jennifer uses $1,500 of her salary reduction for medical and dental care and $700 for child care assistance.
a. How much of the $2,500 set aside in the FSA is included in Jennifer's gross income?
b. How much of the $2,200 reimbursed from the FSA is included in Jennifer's gross income?
c. What happens to the remaining $300?