| Course Project Solutions |
| Provisional Income Calculation (Taxable Social Security Benefits) |
| Adjusted Gross Income (AGI) excluding Social Security Benefits | | | | $ 33,700 | ($9,000 +$ 2,200 + $900 + $21,600) |
| Add: |
| Tax-exempt interest | | | | - 0 |
| Excluded foreign income | | | | - 0 |
| 50% of Social Security Benefits | | | | 10,200 | ($20,400 * .50) |
| Provisional income | | | | 43,900 |
| Because William files his tax return using the Single filing status and his provisional income is less more than $34,000, $12,915 of his Social Security Benefits are taxable. $12,915 is computed as follows: |
| If provisional income is over $34,000, taxable Social Security Benefits are the lesser of: |
| 85% of Social Security Benefits or | | | | 17,340 | ($20,400 * .85) |
| 85% of provisional income over $34,000, plus | | | | 8,415 | (($43,900 - $34,000) * .85) |
| the lesser of (1) $4,500 or | | | | 4,500 |
| (2) 50% of Social Security Benefits | | | | 10,200 | ($20,400 * .50) |
| Taxable Social Security Benfits | | | | 12,915 | ($8,415 + $4,500) |
| | | | | This amount goes on Line 20b |
| | | | | of Form 1040 |
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