If a taxpayer is 67 years old with a MAGI of $82,000, how will their Social Security benefits be taxed?

If a taxpayer is 67 years old with a MAGI of $82,000, how will their Social Security benefits be taxed?

• A. None of it will be taxable
• B. All of it will be taxable
• C. Only half will be taxable
• D. Some portion may be taxable

Answer: (D)

For taxpayers receiving Social Security benefits, the taxation of those benefits is influenced by their provisional income, which includes Modified Adjusted Gross Income (MAGI) and tax-exempt interest. In the case of a 67-year-old taxpayer with a MAGI of $82,000, it's important to understand how the taxation thresholds work. Individuals with a provisional income below certain thresholds may not have to pay taxes on their Social Security benefits at all. However, once their MAGI surpasses these thresholds, a portion of their benefits can become taxable. The thresholds for a single filer are typically set at $25,000 and $34,000. Since the taxpayer’s MAGI is significantly above these figures, the present situation indicates that some of the Social Security benefits will indeed be subject to taxation. The specific calculation stipulates that up to 50% of the Social Security benefits can be included in taxable income initially and can go up to 85% if the income is particularly high. Therefore, it can be concluded that while some portion of the benefits may be taxable due to the taxpayer's MAGI being above the thresholds, it does not mean that all or necessarily exactly half would be taxable. The correct choice denotes that a portion of the benefits may be

For taxpayers receiving Social Security benefits, the taxation of those benefits is influenced by their provisional income, which includes Modified Adjusted Gross Income (MAGI) and tax-exempt interest. In the case of a 67-year-old taxpayer with a MAGI of $82,000, it's important to understand how the taxation thresholds work.

Individuals with a provisional income below certain thresholds may not have to pay taxes on their Social Security benefits at all. However, once their MAGI surpasses these thresholds, a portion of their benefits can become taxable. The thresholds for a single filer are typically set at $25,000 and $34,000. Since the taxpayer’s MAGI is significantly above these figures, the present situation indicates that some of the Social Security benefits will indeed be subject to taxation.

The specific calculation stipulates that up to 50% of the Social Security benefits can be included in taxable income initially and can go up to 85% if the income is particularly high. Therefore, it can be concluded that while some portion of the benefits may be taxable due to the taxpayer's MAGI being above the thresholds, it does not mean that all or necessarily exactly half would be taxable. The correct choice denotes that a portion of the benefits may be