Bernie is a former executive who is retired.This year Bernie received $250,000 in pension payments and $10,000 of Social Security payments.What amount must Bernie include in his gross income?

Question

Quizplus · Accepted Answer

Bernie must include both his pension payments and Social Security payments in his gross income. Therefore, his gross income would be $250,000 + $10,000 = $260,000. However, the question is asking what amount he must include in his gross income, not what his gross income is. The $250,000 in pension payments must be included, but up to 85% of his Social Security payments may be taxable, depending on his other income. Therefore, the correct answer is $250,000 + (85% x $10,000) = $258,500.

Bernie Is a Former Executive Who Is Retired