Mr. W is 66 years old and single. His income for 2018 consisted of the following....

Mr. W is 66 years old and single. His income for 2018 consisted of the following. Taxable pension $10000, Taxable interest $2000, Taxable dividendes $5000, Social security payments $5000, Tax-Exempt interest #7000 He did not have any adjustments to income. What amount of W's Social Security benefits is taxable?

Expert Solution

Based on the worksheet provided in the most recent IRS Publication 915, your Social Security benefit(s) of $5,000 will be 15% taxable increasing your taxable income by $750 and creating a federal income tax liability of $165.

Summary Table

Social Security Taxation - IRS Publication 915
1	Total Social Security benefit	$5,000
2	One-half of line #1	$2,500
3	Adjusted Gross Income items (without 'adjustments')	$17,000
4	Add back tax-free interest	$7,000
5	Add lines 2,3 and 4	$26,500
6	Adjustments (deductible IRA contributions)	$0
7	Subtract line 6 from line 5	$26,500
8	MAGI base amount	$25,000
9	Subtract base amount (line 8 from line 7)	$1,500
10	Enter factor based on filing status	$9,000
11	Subtract 10 from 9 (min = 0)	$0
12	Enter the smaller of line 9 or line 10	$1,500
13	Enter one-half of line 12	$750
14	Enter the smaller of line 2 and line 13	$750
15	Multiply line 11 by 85% (min = 0)	$0
16	Add lines 14 and 15	$750
17	Multiply line 1 by 85%	$4,250
18	Enter the smaller of line 16 or 17	$750
	Taxable Social Security benefit	$750
	Percent of Social Security benefit subject to taxation	15%

ekkarill92 answered 2 years ago

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