Question

Grady received $8,800 of Social Security benefits this year. Grady also reported salary and interest income this year.

What amount of the benefits must Grady include in his gross income under the following five independent situations? (Leave no answer blank. Enter zero if applicable.)

a. Grady files single and reports salary of $13,600 and interest income of $400.

b. Grady files single and reports salary of $23,650 and interest income of $750.

c. Grady files married joint and reports salary of $78,000 and interest income of $650.

d. Grady files married joint and reports salary of $44,000 and interest income of $850.

e. Grady files married separate and reports salary of $23,650 and interest income of $750.

Answer 1

(a):- When Grady files single & reports Salary of $13,600 & interest income of $400:-

Salary 13,600

Interest Income 400

Half of Social Security Benefit 4,400

Total 18,400

Since Total is less than the base amount of 25000, Social security benefit is not taxable, hence it will not be included in calculating the taxable income.

(b) When Grady files single & reports Salary of $23,650 & interest income of $750:-

Salary 23,650

Interest Income 750

Half of Social Security Benefit 4,400

Total 28,800

Here total is more than the base amount of 25,000 however it is less than the additional amount of 34,000 , hence only 50% of the social security benefit is taxable and $4,400 is included in calculating the taxable income.

(c) When Grady files married & jointly & reports Salary of $78,000 & interest income of $650:-

Salary 78,000

Interest Income 650

Half of Social Security Benefit 4,400

Total 83,050

Here the total is more than the base amount of 32000 & the additional amount of 44,000, hence 85% of the Social security benefit is considered as taxable income & included in calculation of Taxable income , hence 85% of 8800 i.e. 7480 is included in Taxable Income as Social Security Benefit.

(d) When Grady files married & jointly & reports Salary of $44,000 & interest income of $850:-

Salary 44,000

Interest Income 850

Half of Social Security Benefit 4,400

Total 49,250

Here the total is more than the base amount of 32000 & the additional amount of 44,000, hence 85% of the Social security benefit is considered as taxable income & included in calculation of Taxable income , hence 85% of 8800 i.e. 7480 is included in Taxable Income as Social Security Benefit.

(e) When Grady files married seperate & reports Salary of $23,650 & interest income of $750:-

Salary 23,650

Interest Income 750

Half of Social Security Benefit 4,400

Total 28,800

Here since Grady is married but files seperately, calculation is to be done as if he is filing as a single person. Here though the amount exceeds the base amount of 25000, however it does not exceed the additional amount of 34,000 , hence only 50% of the social security benefit is taxable i.e. $4,400 is to be included in while calculating the taxable income.