Question

A single individual has an adjusted gross income of $15,000, no tax-exempt interest, and Social Security benefits of $14,000. How much of this individual’s Social Security benefits is subject to income tax? $0. $7,500. $11,900. $15,500.

Answer 1

$0

Step-by-step explanation:

The social security Benefits are taxable only if the MAGI and half of the Adjusted Gross Income exceeds $25,000, in case of a single individual.

Modified Adjusted Gross Income (MAGI) includes all the wages, interest or any other taxable income. Also the tax exempt interest income is also included in such income.

Thus, MAGI here = $15,000

Further one half of the Social Security Benefits = $14,000/2 = $7,000

Jointly MAGI + One half of Social Security Benefits = $15,000 + $7,000 = $22,000

Since it is below $25,000, no social security benefit shall be taxable in the hands of individual.