Question

US tax question

Norm and Pat are married filing jointly and have the following sources of income

Wages 35000

interest income 4000

divident income 3000

social security benefits 9000

they are both over 65 years old, what is their taxable income?

Answer 1

Gross income = Wages + Interest + Dividend

                        = $35,000 + $4,000 + $3,000=$42000

Provision for social security inclusion in the gross income (for filing the joint return):

Since the gross income exceeds $32,000 but less than $44,000, lesser of following two should be considered:

1) 50% of benefit = 50% × $9,000 = $4,500

2) Excess of $32,000 income = $$42,000 - $32,000 = $10,000

Since the $4,500 is smaller it should be included.

Taxable income = Gross income + Social security benefits

                        = $42,000 + $4,500

                        = $46,500 (Answer)