Discussion Topic

# Determining Frank's taxable social security benefits based on his income and other financial details

Summary:

Frank does not have to pay taxes on his social security benefits. For single individuals, social security benefits become taxable if the sum of half the benefits, all other income, and any tax-exempt interest exceeds \$25,000. Frank's total is \$18,850, which is below the threshold. Thus, his taxable social security benefits amount to \$0.

What is the amount of taxable social security benefits?Frank, who is single, received \$7,500 of social security benefits. His AGI before the social security benefits was \$15,000. He also had \$100 of tax-exempt interest.A. \$0B. \$3,500C. \$7,000D. \$18,600

The social security benefits for a person who is single are taxable if the total amount consisting of half the social security benefits, all other benefits, any tax exempt income and other deductions exceeds the base amount. The base amount is dependent on the marital status of the person and whether the tax return is being filed as a married couple or individually.

For a person who is single the base amount is \$25,000.

Frank is single and received \$7500 as social security benefits. His income is \$15000 and he also received \$100 as tax exempt interest.

Adding the required values we get \$3750 + \$15,000 + \$100 = \$18,850. This is less than the base amount of \$25,000.

Frank does not have to pay any taxes on his social security benefits. The taxable social security benefits is \$0, the correct option is option A.

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What is the amount of his taxable social security benefits?Frank, who is single, received \$7,000 of social security benefits. His adjusted gross income before the social security benefits was \$15,000. He also had \$100 of tax-exempt interest.A.) \$0B.) \$3,500C.) \$7,000D.) \$18,000

To determine the amount of social security benefits that are taxable, the following needs to be done. Add half of the social security benefits received during the year with any other income. The amount calculated should also include any tax exempt interest and other exclusions. The final figure obtained has to be compared to the appropriate base amount which is relevant to the marital status of the person filing the returns and whether they are being filed individually or jointly. If the total exceeds the base amount for the particular category, some taxes may be liable to be paid even on social security benefits.

In this particular problem it is given that Frank is single. The base amount applicable for him is \$25,000.

Frank received \$7000 in social security benefits. The adjusted gross income was \$15000 and the tax exempt interest was \$100. Adding half of \$7000 to \$15000 + \$100 gives 3500 + 15000 + 100 = \$18600. This is less than the base amount of \$25000.

Therefore no tax is liable on the social security benefits. The correct option is option A.