No, you have the SS taxation calculation wrong. Married with $37,500 of provisional income exceeds the $32,000 threshold by $5,500. That $5,500 is multiplied by 50% to arrive at only $2,750 as taxable social security. Simply put, the 50% and 85% are simply factors in the equation to compute taxable SS. Ultimately, taxable SS will range from a low of 0% to a high of 85%. Let’s raise their SS to $50,000 while keeping the pension at $20,000. Their provisional income climbs to $45,000 which exceeds $44,000 by $1,000. The taxable SS calculation will be the sum of $12,000 @ 50% plus $1,000 @ 85% for a total of $6,850 taxable SS. That gets compared to their maximum taxable SS of 85% of $50,000 or $42,500. Since $6,850 is less than $42,500, the taxable SS will be $6,850 in this example. Their taxable income will be $26,850 and they will owe $0 in tax since that falls below their standard deduction.
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No, you have the SS taxation calculation wrong. Married with $37,500 of provisional income exceeds the $32,000 threshold by $5,500. That $5,500 is multiplied by 50% to arrive at only $2,750 as taxable social security. Simply put, the 50% and 85% are simply factors in the equation to compute taxable SS. Ultimately, taxable SS will range from a low of 0% to a high of 85%.
Let’s raise their SS to $50,000 while keeping the pension at $20,000. Their provisional income climbs to $45,000 which exceeds $44,000 by $1,000. The taxable SS calculation will be the sum of $12,000 @ 50% plus $1,000 @ 85% for a total of $6,850 taxable SS. That gets compared to their maximum taxable SS of 85% of $50,000 or $42,500. Since $6,850 is less than $42,500, the taxable SS will be $6,850 in this example. Their taxable income will be $26,850 and they will owe $0 in tax since that falls below their standard deduction.
Yep good catch you're right. Will amend the video.