Elizabeth (67) who files single, waited until this year to start collecting her social security benefits. She retired at age 55 and receives a pension of $11,000 each year, fully taxable. Her first year of social security reported in Box 5 of Form SSA-1099 was $18,359 and Medicare Part B was $1,626. She also received $3,324 in interest reported on Form 1099-INT, and $1,496 in qualified dividends and LT capital gain of $27 reported on Form 1099-DIV. With this information, what can you determine to be true about her social security benefits?

Because the qualified dividends and LT capital gains will be taxed at 0%, they are not included in the determination of taxable social security. Her social security is tax-free.

When the medicare amount ($1,626) is subtracted from the net benefits paid, her total other income plus one-half of her social security benefits would be under the $25,000 limitation. Her social security benefits would be tax-free.

Elizabeth waited until after her full retirement age to begin receiving her social security benefits. She will not be required to pay anything back and she will owe no tax on the benefits.

Because Elizabeth has exceeded the limit where none of her benefits are taxable, she will pay tax on a portion of the social security benefits received. Up to 50% of her benefits will be taxable.