Why is the 85% social security benefits taxed at 27% when taxpayers are in the 12% marginal rate?

Forum|Forum|6 years ago
December 7, 2019
6 replies
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Lacerte Tax

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Best answer by George4Tacks

It is likely due to the fact that much of their income is dividend and capital gain at the 0% tax rate.

T

TaxGuyBill

Level 15

Is it directly being taxed at 27%, or is the Social Security income reducing some credit or deduction?

Is the taxpayer a dependent?

M

mmc-cpaAuthor

Level 2

Thank you. The only change in tax return is 85% SS benefits. Tax result is 27% tax on taxable SS.

George4Tacks

Level 15

Post some round numbers and we can do a better job. MFJ, both 65+ Interest 5,000, QD 15.000, CG 25,000 SS 35,000 etc.

Answers are easy. Questions are hard!

M

mmc-cpaAuthor

Level 2

I just talked with Lacerte technical and they helped me. Looks like the Schedule D gain calculation, using the "tax tables" accounted for this increase in tax. Thank you all for your comments. MLM

abctax55

Level 15

Which, @George4Tacks pointed out 14 hours ago....

HumanKind... Be Both

George4TacksAnswer

Level 15

It is likely due to the fact that much of their income is dividend and capital gain at the 0% tax rate.

Answers are easy. Questions are hard!

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