Question

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".

a. Erwin and Eleanor are married and file a joint tax return. They have an adjusted gross income of $39,200, no tax-exempt interest, and $13,720 of Social Security benefits. As a result, $ of the Social Security benefits are taxable.

b. Assume Erwin and Eleanor have adjusted gross income of $18,800, no tax-exempt interest, and $20,680 of Social Security benefits. As a result, $ of the Social Security benefits are taxable.

c. Assume Erwin and Eleanor have adjusted gross income of $106,000, no tax-exempt interest, and $15,900 of Social Security benefits. As a result, $ of the Social Security benefits are taxable.

Answer 1

The taxable income exceeds the specified base amount than the social security benefits will be taxable. We need to take MAGI-Modified adjusted gross income into consideration

Base 1

Married taxpayer who files joint return-$32000

married taxpayer who do not live apart but file separate return- $0

and for other taxpayers -$25000

Base 2

Married taxpayer who files joint return-$44000

married taxpayer who do not live apart but file separate return- $0

and for other taxpayers -$34000

Now if MAGI add( plus) 50% 0f social security benefits are more than first base but less than second base that the social security benefit will be taxable as lesser of

1) 50%*social security benefit amount

2) 50%*(MAGI+50%*( social security benefit)-first base amount)

Now if MAGI add( plus) 50% 0f social security benefits are more second base that the social security benefit will be taxable as lesser of

1) 85%*social security benefit amount

2) 85%*(MAGI+50%*( social security benefit)-second base amount) and lesser of amount included using first set of formulas

ans a
Second set will be used as MAGI+50%* social security is 39200+(13720*.50%)= $46060 which is more than $44000
Lesser of
1) 85%*social security benefit 13720		11662
or
2) 1751+6860		8611
calculation
2)sum of 85%*(39200+(.5*13720)-44000)	1751
and lesser of
a) (13720*50%)	6860
b) 50%*(39200+(.5*13720)-32000)	7030
Social security benefit taxable is	8611
ans b
First set will be used
Lesser of:
1) 50%*social security benefit amount		10340
a) (20680*50%)
2) 50%*(MAGI+50%*( social security benefit)-first base amount)		-1430
b) 50%*(18800+(.5*20680)-32000)		so $0
Social security benefit taxable is	$0
ans c
Social security benefit taxable is	13515
Second set will be used as MAGI+50%* social security is more than $44000
Lesser of
1) 85%*social security benefit 15900		13515
or
2) (59458+13515)		72973
calculation
1) 85%*(106000+(.5*15900)-44000)	59458
and lesser of
a) (15900*50%)	13515
b) 50%*(106000+(.5*15900)-32000)	40975
ans
Social Security benefit taxable
a)	$8,611
b) $0
c)	$13,515
If any doubt please comment