R and G, both are 65 years of age and have the following sources of income:...
R and G, both are 65 years of age and have the following sources of income: Consulting income $36,000 Interest income $4,000 Tax exempt interest $4,000 Social Security benefits $12,000 R and G have itemized deductions of $16,000. Compute their taxable income and tax liability.
Homework Answers
Solution : -
Social Security Computation
Income is over 44,000 for married filing jointly so we use the 2 part calculation:
a)85% times social security benefit: 12,000 *85% = 10,200
b)The totalof the following:
(1) 85 percent of the amount that provisional income exceeds the higher threshold amounts, plus
(2) The smaller of (a) the amount of Social Security benefits included under lower limits, or (b) $4,500 for single taxpayers, or $6,000 for joint filers.
[($50,000 - $44,000) × 85%] + $6,000 = $11,100
![Solution: Gross Income Consulting income One-half social security Interest income Tax-Exempt Interest Modified AGI Plus h Social Security Benefits 36,000 6,000 4,000 4,000 50,000 Social Security Computation Income is over 44,000 for married filing jointly so we use the 2 part calculation: a)85% times social security benefit 12,000 *85% 10,200 b)The totalof the following: (1) 85 percent of the amount that provisional income exceeds the higher threshold amounts, plus (2) The smaller of (a) the amount of Social Security benefits included under lower limits, or (b) $4,500 for single taxpayers, or S6,000 for joint filers. [(s50,000 - S44,000) x 85%] S6,000 $11,100 Taxable income Consulting Income Social Security Calculation Interest Income 36,000 10,200 4,000 50,200 (16,000) 34,200 8,000 26,200 Less:ltemized Deduction Less:Personal Exemptions (4,000 x2) Taxable Income Please Rate or comment if you have any doubt regarding this solution](http://img.homeworklib.com/questions/e34f3fd0-b30b-11ea-8cf6-1f61c2726984.png?x-oss-process=image/resize,w_560)
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