Sunday, April 20, 2008

Parents' Income Causes Taxation of Benefits

My parents are 86 and 92. Recently they sold assets to pay for medical expenses and that capital gain boosted their AGI on their tax form to high amounts. Their social security benefits appear to have been reduced because of their high AGI. Is that the case?

Many thanks
Mary Anne from Nevada

Yes. The AGI figure includes the capital gain, so 85% of the SS benefits are taxed if their joint return is over $32,000.

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