Question

eBook Calculator Print Item Exercise 4-26 (Algorithmic) (LO. 4) Determine the taxable amount of social security benefits for the following situations. If required, round your answers to the nearest dollar. If an amount is zero, enter "0". Erwin and Eleanor are married and file a joint tax return. They have adjusted gross income of $42,600, no tax-exempt interest, and $14,910 of Social Security benefits. As a result, 7,455 x of the Social Security benefits are taxable. b. Assume Erwin and Eleanor have adjusted gross income df'$15,800, no tax-exempt interest, and $17,380 of Social Security benefits. As a result, Ov of the Social Security benefits are taxable. C. Assume Erwin and Eleanor have adjusted gross income of $88,000, no tax-exempt interest, and $13,200 of Social Security benefits. As a result, $ 11,220 V of the Social Security benefits are taxable. Feedback Check My Work If a taxpayer's income exceeds a specified base amount, as much as 85 percent of Social Security retirement benefits must be included in gross income. The taxable amount of benefits is determined through the application of one of two formulas that utilize a unique measure of income- modified adjusted gross income (MAGI).

Answer 1

1	Total Social Security benefit	$14,910
2	One-half of line #1	$7,455
3	Adjusted Gross Income items (without 'adjustments')	$42,600
4	Add back tax-free interest	$0
5	Add lines 2,3 and 4	$50,055
6	Adjustments (deductible IRA contributions)	$0
7	Subtract line 6 from line 5	$50,055
8	MAGI base amount	$32,000
9	Subtract base amount (line 8 from line 7)	$18,055
10	Enter factor based on filing status	$12,000
11	Subtract 10 from 9 (min = 0)	$6,055
12	Enter the smaller of line 9 or line 10	$12,000
13	Enter one-half of line 12	$6,000
14	Enter the smaller of line 2 and line 13	$6,000
15	Multiply line 11 by 85% (min = 0)	$5,147
16	Add lines 14 and 15	$11,147
17	Multiply line 1 by 85%	$12,674
18	Enter the smaller of line 16 or 17	$11,147
	Taxable Social Security benefit	$11,147