Sheryl is a single taxpayer with a taxable pension of $200,000,taxable interest and dividends of $600,000,capital gains of $400,000 and Social Security benefits of $30,000.What is the amount of her taxable Social Security benefits?

Question

Quizplus · Accepted Answer

To calculate the taxable amount of Social Security benefits for a single taxpayer, you need to add half of the Social Security benefits to all other sources of income. In this case, half of Sheryl's Social Security benefits ($15,000) plus her taxable pension ($200,000), taxable interest and dividends ($600,000), and capital gains ($400,000) total $1,215,000. Since this amount is greater than the Social Security base amount for single taxpayers ($25,000), some of her Social Security benefits will be taxable. To calculate the amount, you subtract the base amount from the combined income: $1,215,000 - $25,000 = $1,190,000. Then you apply the formula to calculate the taxable benefits which in this case is $25,000. Therefore, the amount of her taxable Social Security benefits is $25,500 (the lesser of 50% of her Social Security benefits or $25,000).

Sheryl Is a Single Taxpayer with a Taxable Pension of $200,000,taxable