Question

George and Weezy received $31,100 of Social Security benefits this year ($12,000 for George; $19,100 for Weezy). They also received $5,300 of interest from jointly owned City of Ranburne Bonds and dividend income.

What amount of the Social Security benefits must George and Weezy include in their gross income under the following independent situations? (Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount. Leave no answer blank. Enter zero if applicable.)

c. George and Weezy file married joint and receive $34,200 of dividend income from stocks owned by George.

Answer 1

Social Security benefits and modified AGI = 50 percent of received social security + Interest + Dividend income
= ($31,100 x 50%) + $5,300 + $34,200
= $70,600

Modified AGI = Dividend + Interest income
= $34,200 + ($5,300 x 50%)
= $34,200 + $2,650
= $36,850

50% of the social security benefit and modified AGI = Modified AGI + 50% of social security benefit
= $36,850 + (12,000 x 50%)
= $36,850 + $6,000
= $42,850

Taxable income = Lower of (85% x Social security benefits) or (85% (Modified AGI + (50% x Social security benefits)))
= Lower of (85% x $12,000)or (85% x $42,850)
= Lower of ($10,200) or ($36,422.50)
= $10,200