Comprehensive and Detailed Explanation:Workers' compensation benefitsare NOT subject to FUTA (Federal Unemployment Tax Act)as long as they are paid under aworkers' compensation law.
* Option A (Not included in gross income) is correctbecauseworkers' compensation is tax-exemptunder IRS rules.
* Option B (Received for work-related injuries/illnesses) is correctbecause these paymentsreplace lost wagesdue to job-related incidents.
* Option D (Not subject to FICA under state laws) is correctbecauseworkers' compensation payments are exempt from Social Security & Medicare taxesif they are made under astate-approved program.
* Option C is incorrectbecause workers' compensation paymentsare NOT subject to FUTA, regardless of the amount paid.
Reference:
IRS Publication 525 - Taxability of Workers' Compensation
Payroll.org - Payroll Taxation of Disability and Workers' Compensation Benefits

Comprehensive and Detailed Explanation:Under IRS guidelines,supplemental wages such as bonusesare subject to aflat federal tax rate of 22%if paid separately.
* Federal Tax Calculation:
* $1,753.00 × 22% = $385.66
* Rounded to the nearest cent, the closest answer is$385.00.
Thus, the correct answer isA. $385.00.
Reference:
IRS Publication 15-T - Federal Income Tax Withholding Methods
Payroll.org - Supplemental Wage Withholding Rules

Voluntary deductions include:
401(k): $160.00
Medical insurance: $85.00
Dental insurance: $15.00
Total voluntary deductions:
$160 + $85 + $15 = $260.00
Federal income tax, Social Security, Medicare, and tax levies are mandatory deductions, so they are NOT included in voluntary deductions.
Reference:
IRS Publication 15 (Circular E)
Payroll Source®, Payroll.org