Question

George and Weezy received $30,200 of Social Security benefits this year ($12,000 for George; $18,200 for Weezy). George also received $5,000 from WalMart where he works a greeter. What amount of the Social Security benefits must George and Weezy include in their gross income if:

i. George and Weezy file married joint and receive $30,000 of dividend income from stocks owned by George?

ii. What is their taxable income if George is age 66 and Weezy is age 64?

Note: No tax form is required for this problem, but a social security worksheet if located on page 5-33 of the text.

Answer 1

I.) $11,185

As George and Weezy file married joint and their modified AGI+50% of their social security benefits ($5000 from Walmart+$30000 from dividends+(50%of 30200))=$50100) exceeds $44000,

they should include in gross income the lesser of (a) 85% of social security benefits (85%of $30200)=$25670 or (b) 85% of their modified AGI +50% of their social security benefits-$44000=$5000+$30000+(50%of 30200)-44000= $6100), plus the lesser of $6000 or 50% of 30200($15100). Therefore they should include in income the lesser of (a) or (b) , plus lesser of $6000 or $15100, which results to $11,185.

ii.) The taxable income of George and Weezy would be $5000+$30000+25670= $60,670 because one of the spouse's age is more than 66 years and their income is $35000.