46. LO.2,5 Rosa's employer has instituted a flexible benefits program. Rosa will use the plan to pay for her daughter's dental expenses and other medical expenses that are not covered by healtl insurance. Rosa is in the 28% marginal tax bracket and estimates that the medical and dental expenses not covered by health insurance will be within the range of $4,000 to $5,000. Her employer's plan permits her to set aside as much as $5,000 in the exible benefits account. Rosa does not itemize her deductions. a. Rosa is liable for the additional $1,000 underestimated expense. b. Rosa loses $1,000 due to over estimating the expense. c. By underfunding the account, Rosa has to report an additional $1,000 as taxable income while still having to pay the dental expense. By over-funding the account, Rosa now has less income and will lose the additional $1,000 put aside as these amormts are non-recoverable. d. I would suggest the account he ftmded closer to the lower end of the estimate since if the full amount is not used, the difference cannot be recovered