Exercise 4-26 (Algorithmic) (LO. 4)

Determine the taxable amount of social security benefits for the following situations. If required, round your answers to the nearest dollar. If an amount is zero, enter "0".

a. Erwin and Eleanor are married and file a joint tax return. They have adjusted gross income of $39,400, no tax-exempt interest, and $13,790 of Social Security benefits. As a result, $___________ of the Social Security benefits are taxable.

My thoughts were that the answer is whichever is the lesser of 50% of Social Security benefits ($6895) or AGI ($39400) - $32000 = 7400*50% = $3700. However, both these calculations are incorrect. Please any assistance would be greatly appreciated, Thank You!!!!