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 interest | 2,000 | 2,000 | 2,000 |
| One-half of Social Security benefits | 6,000 | 6,000 | 6,000 |
| 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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