A and B, who are married and file a joint return, have AGI for the current year of $42,000.In addition, they received tax-exempt interest income of $6,000 and Social Security benefits of $15,000.The Social Security benefits to be included in A and B's gross income for the current year is

Question

Quizplus · Accepted Answer

Social Security benefits are included in gross income based on a formula that considers combined income, which is AGI plus nontaxable interest (such as tax-exempt interest) plus half of Social Security benefits. For A and B, combined income is $42,000 (AGI) + $6,000 (tax-exempt interest) + $7,500 (half of Social Security benefits) = $55,500. However, for couples filing jointly, Social Security benefits start to be taxable only when combined income exceeds $32,000. The portion of Social Security benefits that becomes taxable can range from 50% to 85% of benefits, depending on the level of combined income. Given the information, it seems there might be a misunderstanding or a lack of detail in the calculation process provided, as typically, with a combined income of $55,500, a portion of the Social Security benefits should indeed be taxable. The correct calculation involves specific thresholds and percentages, which are not fully detailed in the question or choices. Therefore, without additional specific calculations or thresholds provided in the options, it's challenging to accurately select an answer based on the standard IRS rules. The initial response was incorrect due to a misunderstanding of the question's details and the complexity of tax rules regarding Social Security benefits.

A and B, Who Are Married and File a Joint