Question

Norm and Par, a married couple filing a join rerurn, have the following sources of income Intei Divis Тах. 72 SC Net 118 $35.00 Interest income 4. Dividend nome 4.000 Sociales Both Norm and Pac are over 65 years of age. Determine their taxable income

Answer 1

Since Norm and Pat’s combined income = 50% of social security benefit + wages + Interest + Dividend

= $4,500 (50% of $9,000) + $ 35,000 + $ 4,000 + $ 4,000

= $ 47,500 which is greater than $ 44,000

Determine taxable Social Security benefit

Calculation of Base amount	$
50% of Social Security Benefit	4,500
Other Total income for the year	43,000
($ 35,000 + 4,000 +4,000)
Total combined income	47,500
Since its greater than $ 44,000	-44,000
subtotal	3,500
Base amount is at 85% of 3,500	2,975

Taxable portion of SS Benefit whichever is lesser from below working

1	Base amount	2,975
	Add $ 6,000 (As per IRS)	6,000
	Option 1	8,975
2	Total Combined income	47,500
	Subtract $ 32,000 (As per IRS)	-32,000
		15,500
	Option 2 = 50% of subtotal 15,500	7,750
3	Social Security Benefits	9,000
	Option 3 = 85% of 9,000	7,650

Social Security Benefit subject to taxable = $ 7,650

Total Taxable Income of Norm and Pat:

Combined income	$
Wages	35,000
Interest income	4,000
Dividend income	4,000
Social Security Benefits	7,650
Taxable income	50,650