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In 2020, Maria, single, received municipal bond interest of $10,000, Californiastate disability insurance (CA SDI, not...

In 2020, Maria, single, received municipal bond interest of $10,000, Californiastate disability insurance (CA SDI, not a replacement for unemploymentcompensation) of $5,000, Workers' Compensation of $15,000 and SocialSecurity benefits of $10,000. Maria has no adjustments. What amount ofMaria’ SS benefits are included in gross income?

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Answer #1

Disability Insurance benefits are not reportable for Tax purpose except when con sidered to be a substitute for unemployment compensation. In the given case it is clearly mentioned that CA SDI is not a replacement for unemployment compensation, hence this amount of $5000 is not taxable , hence does not form part of Adjusted Gross Income.

Similarly Workers compensation of $15000 is not taxable , hence it is not included in Adjusted Gross Income.

Interest on Municipal Bonds 10000

1/2 of Social Security Benefits 5000

Provisional Income 15000

SSB are Tax free as Provisional Income is less than base amount of 25000 as Maria's Filing status is single.

Hence NO amount of Social Security Benefits are included in Gross Income.

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