jennifer is single and received $29,500 of dividend income during the year. She also received $18,00...

jennifer is single and received $29,500 of dividend income during the year. She also received $18,00 of social security benefits. what portion of her social security benefits are taxable?

a. $0

b. $7,255

c. $9,000

d. $10,875

Expert Solution

IRS Code:

The Taxability portion of Social Security benefits depends on Combined income or Provisional income

Combined Income or Provisional income: Combined Income is calculated by summing up of Income from all sources (Including Nontaxable income and excluding the social security benefits) and Half of the total amount of Social Security benefits.

During 2018, Taxable portion of Social Security benefit received by tax payers (Single) is

0% or (Tax Free) - If the combined income is less than $25,000.
upto 50% of the social security benefit - If the combined income is $25,000 or more but less than $34,000.
upto 85% of the social security benefit - If the combined income is more than $34,000

Coming to the question:

Total Income (Including Nontaxable income and excluding the social security benefits) = $29,500

Half of the total amount of Social Security benefits = $1,800 ÷ 2 = $900

Combined income = $29,500 + $900 = $30,400

Since the combined income is more than the base limit of $25.000 but less than $34,000, 50% of Social security benefits is taxable.

Therefore, Taxable portion of her social security benefits = $1,800 x 50% = $900

ekkarill92 answered 1 year ago

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jennifer is single and received $29,500 of dividend income during the year. She also received $18,00...

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