Nellie, a single individual age 77, receives Social Security benefits of $7,000 during the current year. Her only other income consists of $5,000 of interest from bank CDs and $1,000 of tax exempt interest distributed from a trust fund. Nellie's gross income is:

Question

Quizplus · Accepted Answer

Gross income for tax purposes includes all income unless specifically excluded by the tax code. Social Security benefits are partially taxable depending on total income, but in this scenario, given the low total income, it's likely none of the Social Security benefits are taxable. Tax-exempt interest, while needing to be reported, does not count towards gross income. Therefore, only the $5,000 of interest from bank CDs is included in Nellie's gross income.

Nellie, a Single Individual Age 77, Receives Social Security Benefits