Question

Social Security retirement income beneficiaries who have significant incomes must include up to 85% of their Social Security benefits as income for federal income tax purposes. In regard to the taxation of Social Security retirement benefits, which of these statements are CORRECT?

A) The first threshold or base amount is $25,000 of provisional income for all single, unmarried taxpayers.
B) The first threshold or base amount is $32,000 of provisional income for married taxpayers filing jointly.
C) The second threshold or base amount is $34,000 of provisional income for all single (unmarried) taxpayers.
D) The second threshold or base amount is $44,000 of provisional income for married taxpayers filing jointly.

Answer 1

The taxation of Social Security retirement benefits must count up to 85% of benefits as taxable income above certain thresholds. Single taxpayers have thresholds at $25,000 and $34,000, while married filing jointly have thresholds at $32,000 and $44,000.

Step-by-step explanation:

In regard to the taxation of Social Security retirement benefits, the correct statements are:

• (A) The first threshold or base amount is $25,000 of provisional income for all single, unmarried taxpayers.
• (B) The first threshold or base amount is $32,000 of provisional income for married taxpayers filing jointly.
• (C) The second threshold or base amount is $34,000 of provisional income for all single (unmarried) taxpayers.
• (D) The second threshold or base amount is $44,000 of provisional income for married taxpayers filing jointly.

These thresholds are the amounts of income at which Social Security beneficiaries must begin to count a portion of their benefits as taxable income. For single filers, if provisional income is between $25,000 and $34,000, up to 50% of Social Security benefits may be taxable. If provisional income is more than $34,000, up to 85% of benefits may be taxable. For married couples filing jointly, these limits are $32,000 and $44,000, respectively.