Mark for follow up Question 15 of 75 Kevin a 69yearold singl

Mark for follow up Question 15 of 75 Kevin, a 69-year-old single taxpayer, received $20,000 in social security benefits in 2016. He also earned $12,000 in wages and $6,000 in interest income, $4,000 of which was tax-exempt. What percentage of Kevin\'s benefits will most likely be considered taxable income? O None Up to 50%

Solution

Since social security benefits are in the range of 25000<= Modified AGI + 50% of social security received <= 34000

upto 50% of social security benefits are taxable:

workings:

Second question:

Since at separation age is less than 55, distribution is subject to early distribution penalty.

	Modified AGI
	AGI	14000
	Plus:
	Tax exempt interest income	4000
A	Modified AGI	18000
a	Social security benefits	20000
b	50% of a	10000
c=	A+b	28000
	Since c is greater than 25000.
	Taxable social security benefits are
d	Social security recevied	20000
e	Modified AGI + 50% of social security      -25000	3000
f	50% of lower of d and e	1500