During the 2019 tax year, Thomas and Yolanda received $30,000 in Social Security benefits. The amount...

During the 2019 tax year, Thomas and Yolanda received $30,000 in Social Security benefits. The amount of their pension for the year was $33,000 and they received tax-exempt interest income of $18,000. Calculate the amount of the Social Security benefits that Thomas and Yolanda must include in their gross income for 2019. SHOW ALL WORK!

Expert Solution

CALCULATION OF SOCIAL SECURITY BENEFITS TO BE INCLUDED IN GROSS INCOME

Here we can assume the thomas and yolanda are married couple

STEP -1

First we want to calculate adjusted gross income.

Taxable pension recieved by the couple =$33000

ADD: tax exempt interest =$18000

ADD:1/2 of social security benefits(1/2x$30000)=$15000

Adjusted gross incoem =$66000

STEP 2-

CALCULATION OF SOCIAL SECURITY BENEFITS TO BE ADDED WITH GROSS INCOME

Adjusted gross income is greater than $32000 (slab for married couple) then 50% of the excess should be added to gross income

Adjusted gross income is greater than $44000 (slab for married couple) then 85% of the excess should be added to gross income

then the calculation is as follows

50% of excess amount from slab $32000 to $44000 ,that is $ 12000x 50%=6000

85% of excess amount in excess of slab $44000 ,that is ($66000-$44000)x 85%=$18700

So total would be added to gross income is ($6000+$18700)=$24700

ekkarill92 answered 1 year ago

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