I have seen the statements that for a single filer, if your SS adjusted income (1/2 SS + income + tax free bond interest) is less that $25,000 it is not taxed and if it is between $25,000 and $34,000, "up to 50% might be taxable.
It was never clearly explained whether this was some sort of sliding scale, so I looked up the line 20a and 20b worksheet in the 2016 1040 instructions and made a spreadsheet to calculate adjusted income from $25,001 to $33,999.
I was expecting that just under the $34,000 cut off, 50% of the SS benefits should be taxable, but that is not what I am coming up with. I end up with $4499.50 instead of the expected $18,000 (50% of SS).
As I was double checking my numbers I noticed that the $4499.50 is 50% of the difference between $25,000 and $34,000. This does not quite match, but makes me wonder if the 50% is only on the amount above $25,000 (as is the case with the tax brackets).
Can someone explain this?
Here is my calculation for just under $34,000 in case I am making some arithmetic mistake that I cannot see.
1. SSA-1099 line 5 (net payments) 36,000
2. line 1 * 50% 18,000
3. total 1040 income 15,999
4. tax free bond income 0
5. add line 2, 3, 4 33,999
6. total 1040 adjustments 0
7. subtract line 6 from 5 33,999
8. single filer enter 25,000 25,000
9. subtract line 8 from 7 8,999
10. single filer enter 9,000 9,000
11. subtract line 10 from 9, or enter 0 0
12. smaller of line 9, 10 8,999
13. one half of line 12 4,499.50
14. smaller of line 2, 13 4,499.50
15. multiply line 11 by 85% 0
16. add lines 14, 15 4,499.50
17. multiply line 1 by 85% 30,600
18. taxable benefits, smaller of line 16,17 4,499.50
Thanks.
Joe
It was never clearly explained whether this was some sort of sliding scale, so I looked up the line 20a and 20b worksheet in the 2016 1040 instructions and made a spreadsheet to calculate adjusted income from $25,001 to $33,999.
I was expecting that just under the $34,000 cut off, 50% of the SS benefits should be taxable, but that is not what I am coming up with. I end up with $4499.50 instead of the expected $18,000 (50% of SS).
As I was double checking my numbers I noticed that the $4499.50 is 50% of the difference between $25,000 and $34,000. This does not quite match, but makes me wonder if the 50% is only on the amount above $25,000 (as is the case with the tax brackets).
Can someone explain this?
Here is my calculation for just under $34,000 in case I am making some arithmetic mistake that I cannot see.
1. SSA-1099 line 5 (net payments) 36,000
2. line 1 * 50% 18,000
3. total 1040 income 15,999
4. tax free bond income 0
5. add line 2, 3, 4 33,999
6. total 1040 adjustments 0
7. subtract line 6 from 5 33,999
8. single filer enter 25,000 25,000
9. subtract line 8 from 7 8,999
10. single filer enter 9,000 9,000
11. subtract line 10 from 9, or enter 0 0
12. smaller of line 9, 10 8,999
13. one half of line 12 4,499.50
14. smaller of line 2, 13 4,499.50
15. multiply line 11 by 85% 0
16. add lines 14, 15 4,499.50
17. multiply line 1 by 85% 30,600
18. taxable benefits, smaller of line 16,17 4,499.50
Thanks.
Joe
