Debbie is age 67 and unmarried and her only sources of income are $240,000 in taxable interest and $20,000 of Social Security benefits.Debbie's adjusted gross income for the year is:
A)$240,000.
B)$250,000.
C)$257,000.
D)$260,000.
E)None of the above.

Question

Quizplus · Accepted Answer

Debbie's adjusted gross income is calculated by adding taxable interest and half of her Social Security benefits. 
$240,000 (taxable interest) + $10,000 (half of Social Security benefits) = $250,000 
However, since Debbie is unmarried and her adjusted gross income is over $25,000, up to 85% of her Social Security benefits may be included in her taxable income. 
$250,000 + $7,000 (85% of Social Security benefits) = $257,000. 
Therefore, the correct answer is C.

Debbie Is Age 67 and Unmarried and Her Only Sources