Question

Grady received $8,680 of Social Security benefits this year. Grady also reported salary and interest income this year.

What amount of the benefits must Grady include in his gross income under the following five independent situations? (Leave no answer blank. Enter zero if applicable.)

b. Grady files single and reports salary of $23,320 and interest income of $720.

Amount to be included:

Answer 1

Grady is single and his modified AGI is (23,320+720+4,340(50% of Social Security benefits) falls between 25,000 and 34,000

Hence, benefits will be lower of

(1)

50 percent of the Social Security benefits = 4,340

(2)

50 percent of [(23,320+720(modified AGI) + 4,340 (50 percent of Social Security benefits) - 25,000] = 1,690

Hence, amount of the benefits must Grady include in his gross income is $1,690 (lower of (1) or (2)