Question

George and Weezy received $28,100 of Social Security benefits this year ($10,500 for George; $17,600 for Weezy). They also received $4,550 of interest from jointly owned City of Ranburne Bonds and dividend income.

What amount of the Social Security benefits must George and Weezy include in their gross income under the following independent situations? (Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount. Leave no answer blank. Enter zero if applicable.)

c. George and Weezy file married joint and receive $31,200 of dividend income from stocks owned by George.

Amount to be included:

d. George and Weezy file married joint and receive $15,600 of dividend income from stocks owned by George.

Amount to be included:
    

    

Answer 1

c. Amount to be included: $10,845

Workings:

Modified AGI + 50% of their Social Security benefits = $4,450 (interest) + $31,200 (dividends) + 50% of $28,100 = $49,700

Now, since George and Weezy file married joint and their modified AGI + 50% of their Social Security benefits exceeds $44,000,
they must include in gross income the lesser of:
(a) 85 percent of their Social Security benefits = 85% of $28,100 = $23,885
(b) 85 percent of (their modified AGI + 50% of their Social Security benefits - $44,000) = 85% of ($4,450 (interest) + $31,200 (dividends) + 50% of $28,100 - $44,000) = $4,875
i. e., $4,875

plus the lesser of:
(1) $6,000
(2) 50 percent of Social Security benefits = 50% of $28,100 = $14,050
i. e., $6,000

Thus, they must include in income $4,875 + $6,000, i. e., $10,845.

d. Amount to be included: $1,050

Workings:

Modified AGI + 50% of their Social Security benefits = $4,450 (interest) + $15,600 (dividends) + 50% of $28,100 = $34,100

Now, since George and Weezy file married joint and their modified AGI + 50% of their Social Security benefits falls between $32,000 and $44,000,
they must include in gross income the lesser of:
(a) 50 percent of their Social Security benefits = 50% of $28,100 = $14,050
(b) 50 percent of (their modified AGI + 50% of their Social Security benefits - $32,000) = 50% of ($4,450 (interest) + $15,600 (dividends) + 50% of $28,100 - $32,000) = $1,050
i. e., $1,050

Thus, they must include in income $1,050.