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?

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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 1 year ago

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