Answer:
Answer is explained in the explanation section below.
Explanation:
Solution:
We need to look at different cases for taxes.
Case 1: If Margaret and John chooses to file a federal tax as an individual.
Then, their accumulative income is between the range = $25000 - $34000
Then, they have to pay up to 50% of their benefits.
If income is more than this range, then obviously, 85% will be taxable.
Case 2: If Margaret and John file a joint return.
Then, your combined income must be between the range = $32000 - $44000
Then, they 50% of their benefits will be taxable.
If more than this range, then percentage will be go to 85%.
Case 3: If Margaret and John despite being married, file separate tax return:
Then, they would have to pay taxes on their individual benefits.
Let's suppose they choose the case 2 in which they file a joint return. Then, of course their combined income is greater than the upper limit of the range defined which is $44000. So, their 85% of their benefits will be taxable.
Benefit = $24000
Taxable amount = 85% x $24000 = $20,400
