Question
(PLEASE EXPLAIN) Colin and Coleen are married and both turned 70 this August. They have $2,000 of muni-bond interest, $34,000 of Social Security benefits, and
(PLEASE EXPLAIN)
Colin and Coleen are married and both turned 70 this August. They have $2,000 of muni-bond interest, $34,000 of Social Security benefits, and $3000 of preferred stock dividends. Last year, none of their Social Security benefits were taxable. However, this year, $5,000 of their benefits were taxable. Why would the taxation change from last year to this year?
a. Based on their income, the benefits should not be taxable.
b. The annual limits on Social Security taxation change each year, which likely resulted in the benefits being subject to taxation.
c. If they had to take a minimum distribution of $20,000, then that would explain the taxation of the Social Security benefits.
d. They must have filed separate returns.
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