- 3 - The inclusion of Social Security benefits in gross income is governed by section 86. Social Security disability benefits are treated in the same manner as other Social Security benefits. Sec. 86(d)(1); Thomas v. Commissioner, T.C. Memo. 2001-120. Taxpayers who file a joint return and whose modified adjusted gross income plus half of the Social Security benefits received is greater than $32,000 must include a portion of the benefits in their income. Sec. 86(a) through (c). The portion, never exceeding 85 percent, varies according to a formula set forth in section 86(a). Petitioners had modified adjusted gross income of at least $58,534, see sec. 86(b)(2), and received benefits of $13,857. Because their modified adjusted gross income plus half their benefits exceeds $44,000 by at least $21,463, they must include in income 85 percent of the benefits. See sec. 86(a), (c). Thus, respondent is correct in his determination that petitioners must include in income 85 percent of the Social Security disability benefits, or $11,778. Petitioners do not dispute receiving $13,857 in Social Security benefits. Their sole argument is that the IRS has made inconsistent rulings regarding whether the benefits are taxable. They assert that an IRS employee agreed that the benefits were not taxable with respect to a prior year. We note that the law governing this area has changed over the years. However, we need not address whether the employee’s treatment was correct withPage: Previous 1 2 3 4 5 Next
Last modified: May 25, 2011