Question

Exercise 4-27 (Algorithmic) (LO. 4)

Determine the taxable amount of social security benefits for the following situations. If required, round your answers to the nearest dollar. If an amount is zero, enter "0".

a. Erwin and Eleanor are married and file a joint tax return. They have adjusted gross income of $42,800, no tax-exempt interest, and $14,980 of Social Security benefits. As a result, $ of the Social Security benefits are taxable.

b. Assume Erwin and Eleanor have adjusted gross income of $18,200, no tax-exempt interest, and $20,020 of Social Security benefits. As a result, $ of the Social Security benefits are taxable.

c. Assume Erwin and Eleanor have adjusted gross income of $118,000, no tax-exempt interest, and $17,700 of Social Security benefits. As a result, $ of the Social Security benefits are taxable.

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Answer 1

	For a married couple, filling jointly, if the income is more than $32000, 50% of the social
	security benefits are taxable.
	And if the income is more than $44000, 85% of the social security benefits are taxable.
a	Adjusted gross Income	$42,800
	This income is between 32000-44000, thus 50% of the social security benefits are taxable
	Social security benefits	$14,980
	Taxable	50%
	Taxable amount of social security benefits	$7,490
b	Adjusted gross Income	$18,200
	This income is below $32,000, thus social security benefits are not taxable
	Social security benefits	$20,020
	Taxable	0%
	Taxable amount of social security benefits	$0
c	Adjusted gross Income	$118,000
	This income is above 44000, thus 85% of the social security benefits are taxable
	Social security benefits	$17,700
	Taxable	85%
	Taxable amount of social security benefits	$15,045