Question

24. Charles Adams, who is single, retired on March 3, 2019, at the age of 65. For the year 2019, he receives the following income: Salary Interest income Dividend income Tax-exempt income Social Security benefits Net rental income $14,000 2,000 1,000 1,000 5,000 6,000 Provisional Ancom What is Charles' modified AGI? What amount, if any, of his Social Security benefits must Charles include in his 2019 gross income? What is Charles' taxable income for 2019?

Answer 1

Ans:

1.

Particulars	Amount($)
Salary	14,000
Interest income	2,000
Dividend income	1,000
Net rent income	6,000
Tax exempt income	1,000
Social security Tax(5,000*50%)	2,500
Modified AGI	26,500

B). Social security Taxable portion= 50% of (MAGI-25,000)

= 50% (26,500-25,000)

= 50% of 1,500

= $750. (As per IRS ruling if modified AGI exceeds than $25,000 then lower of Social security tax i.e. $2,500 or $750)

C). Taxable income as per 2019 rule:

AGI= 14,000+2,000+1,000+6,000+750 = 23,750

Less: Standard deduction (12,200+1,650)= (13,850)

Taxable income= 9,900