Question

Caroline, who files as head of household, received $9,000 of social security benefits. Her AGI before the social security benefits was $27,000. She also received $200 of tax- exempt interest. What is the amount of taxable social security benefits?

Answer 1

Answer:

$4,500

Explanation:

First we have to calculate the provisional income which shall be calculated as follow:

AGI amount:                                                         $27,000

Tax exempt interest                                              $200

50% of your social security benefit                       $4,500

(0.50*9,000)

Total provisional income                                       $31,700

Since the amount of provisional income is greater than the base amount of  $25,000 for Head of house hold but less than $34,000, therefore the Caroline will have to pay taxes on 50% of the social security benefits and hence the amount of taxable social security benefit shall be $4,500