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

[TaxGuyBill]

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

Is the taxpayer a dependent?

[mmc-cpa]

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

[George4Tacks]

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.

[mmc-cpa]

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]

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

[George4Tacks · Accepted solution]

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