Solved Question: A married couple received $8,000 of social security benefits

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Question:

A married couple received $8,000 of social security benefits.

Calculate the taxable amount of those benefits if the couple’s provisional income is $17,500.

Calculate the taxable amount of those benefits if the couple’s provisional income is $35,000.

Calculate the taxable amount of those benefits if the couple’s provisional income is $50,000.

Answer:

The base figure for married couples filing their returns together is $32,000 Social security benefits received $8,000 a) If 50% of benefits + provisional income exceeds base figure then the exceeded amount is taxable 50% of benefits + Provisional income-$4,000 + $17,500-$21,500 Because this is less than $32,000 the social security benefits are not taxable The taxable amount is equal to the lesser of 50% of the excess of provisional income over $2,000 or 50% of social security benefits 50% of social security benefits-$4,000 50% of excess of provisional income over $32,000-0.5(35000-32000)-$1,500 Therefore, taxable amount is $1,500 b) c) Here the provisional income is greater than $44,000 The amount of taxable social security benefits is equal to the lesser of 85% of the benefits or (85% of the excess of provisional income over $44,000 plus the lesser of (1) $6,000 or (2) 50% of benefits.) 85% of benefits-$6,800 85% of the excess of provisional income over $44,000 plus the lesser of (1) $6,000 or (2) 50% of benefits-0.85(50000-44000) + 4000-$9,100 Therefore, taxable amount is $6,800

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