Betty is a single retiree who receives Social Security benefits of $12,000, tax-exempt interest of $4,000 and a taxable pension. Determine the amount of taxable Social Security benefits assuming her annual pension isa. $10,000.b. $20,000.c. $50,000.

What will be an ideal response?


?a.b.c.
Pension$10,000$20,000$50,000
Tax-exempt interest2,0002,0002,000
One-half of Social Security benefits6,0006,0006,000
Provisional income$18,000$28,000$58,000
Threshold$25,000$25,000$34,000
Excess income-0-$3,000$24,000
b. Lesser of 50% of Social Security benefits or 50% of excess income?$1,500?
c. Lesser of???
(1) 85% of Social Security benefits or??$10,200
(2) 85% of excess income, plus the lesser of  ??$20,400
 $4,500 or 50% of benefits-$6,000  ??4,500
???$24,500
Taxable Social Security benefits-0-$1,500$10,200

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