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Problem 4-54 (LO. 4, 5) Linda and Don are married and file a joint return. In 2020, they received $12,000 in Social Security benefits and $35,000 in taxable pension benefits and interest. The applicable higher/lower bases for Social Security computations for married filing jointly are $32,000 and $44,000. a. Compute the couple's adjusted gross income on a joint return. $fill in the blank 7fe2a4f7afc4f82_1 b. Don would like to know whether they should sell for $100,000 (at no gain or loss) a corporate bond that pays 8% in interest each year and use the proceeds to buy a $100,000 nontaxable State of Virginia bond that will pay $6,000 in interest each year. Assume that their marginal tax rate is 12%. Although the interest received on the state bond is , it still is in modified adjusted gross income, impacting the taxability of the Social Security benefit. Their AGI would be $fill in the blank c572caf67feefd0_3 . c. In the preceding situation part (a), if Linda works part-time and earns $30,000, by how much would Linda and Don's adjusted gross income increase

Sagot :

Answer:

The answer to this question can be defined as follows:

Explanation:

For point a:

Chargeable advantages to social welfare:

[tex]=0.5(\$35000+0.5(\$12000)-\$32000)\\\\ =0.5(9000)\\\\=\$4500[/tex]

Pension benefits etc $35 thousand

Total AGI= [tex]\$39,500[/tex]

For point b:

Additional revenue [tex](\$3,500-\$8,000) = \$27,000[/tex]

Taxable [tex]SSB0.5(27000+\$6000+0.5\times 12000-\$32000)=\$3500[/tex]

AGI = [tex]\$30,500[/tex]

Less: AGI in (a) [tex](\$39,500)[/tex]

Decrease [tex](\$9000)[/tex]

Tax payers' financial income has been down by [tex]\$2000[/tex], but taxable AGI is down by $9,000. The reduction of [tex]\$650(\$2000-\$9000\times 15 \%)[/tex] with a [tex]15\%[/tex]MTR after the tax income.

For point c:

The least of follows [tex]1). \ \ 0.85( \$65000+0.5 \times 12000-\$44000) = \$22950[/tex]

Smaller than that one

Calculated amount with the first formula

Less:

[tex]0.5\times 12000 = \$6000\\\\0.5(\$65000+0.5 \times 12000-\$32000)= \$19500 \ \ or \ \ \$6000\\\\\$22950 +\$6000 = \$28950 \\\\2.0.85 \times 12000 = \$10200[/tex]

That is why Linda and Don have [tex]85\%[/tex]of their gross income from the SSB [tex]\$10200[/tex].

The benefits of social security [tex]\$10200[/tex]

Additional revenues [tex]=\$35000+\$30000 \ \ (addl.inc)= \$ 65000[/tex]

AGI [tex]\$75,200[/tex] 

Less (a) AGI ([tex]\$39,500[/tex])

Increases [tex]\$ 35,700[/tex] 

AGI growth exceeds earnings increases because more SSB is taxed.

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