Question

Kevin a 69 year old single taxpayer received 20,000 in social security benefits in 2017. He also earned 12000 in wages and 6000 in interest income 4000 of which was tax except. What percentage of Kevin benefit will most likely be considered taxable income?

Answer 1

Solution:

The taxability of social security benefits will depend upon the amount of combined income.
Combined Income = Half of Social Security benefits + Other Income(include exempt interest)
Combined Income = ($20,000/2)+$12,000+$6,000
Combined Income = $28,000

When the combined income of a single investor is between $25,000 and $34,000 then 50% of the Social Security Income is taxable.
So, taxable income will be as follows:
Wages = $12,000
Interest Income = $2,000($6000-$4000)
Social Security benefits = $10,000($20,000*50%)
Taxable Income = $12,000+$2,000+$10,000
Taxable Income = $24,000