Answer: c. Tax-free interest income must be included in the formula used to determine if Social Security is included in taxable income.
Step-by-step explanation:
The portion of Social Security benefits that is taxed depends on how much Income the person has.
For instance, a person is charged up to 50 percent if their income is $25,000 to $34,000 for an individual.
So now how do we calculate the 'income' on which the taxation is based.
The IRS, for the purposes of determining how much you pay, treats income as a person's adjusted gross income plus NONTAXABLE INTEREST INCOME plus half of their Social Security benefits.
From the above we can see that option C is therfore correct.