They did not have any adjustments to income. What amount of Mr. & Mrs. Tsayongs Social Security benefits is taxable this year?
Mr. & Mrs. Tsayong are both over 66 years of age and are filing a joint return. Their income this year consisted of the following:
A) $0
B) $4,500
C) $10,000
D) $20,000
B) $4,500
Provisional income is $41,000 ($10,000 + $16,000 + $10,000 [one-half of Social Security payments] + $5,000 tax-exempt interest). $41,000 - $32,000 baseline amount = $9,000 × 0.50 = $4,500 taxable benefits (subject to the ceiling limit of one half of Social Security benefits, which is $10,000). Eighty-five percent of a portion of the Social Security benefits are subject to tax only if provisional income exceeds $44,000 on a joint return, or $34,000 for a single taxpayer.
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