Debbie and Harry are 67 and 65 years old and file jointly. Their only sources of income are $26,000 in taxable interest and $20,000 of Social Security benefits. The taxable amount of their social security benefits is:

$0

$20,000

$17,000

$10,000

$2,000

________

In December 2020 Sally purchased an annuity that pays her $1,000 per month for 16 years. She paid $150,000 for the annuity. Of the $12,000 Sally received in 2021, how much will she include in her gross income?

$9,375

$2,625

$12,000

$3,600

$0