Question
*This is all the information given, it is expected of us to know the taxation information* Range of Benefits Bob, a 66 years old worker,
*This is all the information given, it is expected of us to know the taxation information*
Range of Benefits
Bob, a 66 years old worker, is deciding between retirement either this year or the next year. His average monthly benefit is determined to be $1,089.50. Assume that the benefit is the same for this year and the next year.
Compute Bobs annual benefit reduction amounts in each of the following scenarios.
If Bob retires this year and secures a part-time job earning $18,000, his annual benefit reduction amount is . | |
If Bob retires this year, secures the same part-time job, and in addition projects interest and dividend earnings of $7,000 per year, what his annual benefit reduction amount is . | |
If Bob retires next year and secures the same part-time job, the annual benefit reduction amount is . |
Taxes on Benefits
Social Security is paid in with after-tax dollars but may be subject to tax if annual income exceeds a base amount. A single taxpayers base is $25,000. Married taxpayers filing jointly have a base of $32,000. Married taxpayers filing separately have a base of zero.
Suppose Eric is retiring this year at age 67. The following table shows his data.
Part-time salary | $31,500 | Annual savings account interest | $275 |
Annual dividends | $2,500 | Annual interest on Denver municipal bonds | $1,350 |
Based on the income calculated, Eric will have _____% of his Social Security benefits taxed.
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