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income when the sum of the recipient’s modified adjusted gross
income plus one-half of the Social Security benefits exceeds
certain threshold amounts. In the case of a joint return, when
this sum exceeds $32,000, the lesser of such excess or 50 percent
of the Social Security benefits received during the taxable year
must be included in gross income. Sec. 86(a)(1), (c)(1)(B).
When this sum exceeds $44,000 in the case of a joint return, up
to 85 percent of the Social Security benefits received during the
taxable year must be included in gross income. Sec. 86(a)(2),
(c)(2)(B). Under section 86, modified adjusted gross income in
general equals adjusted gross income with adjustments not
relevant here. Sec. 86(b)(2).
Social Security benefits are included in the recipient’s
gross income in the taxable year in which the benefits are
received. Sec. 86(a)(1). An election may be made by taxpayers
who receive lump-sum payments of Social Security benefits during
the taxable year in which a portion of the benefits is
attributable to previous taxable years. Sec. 86(e). Section
86(e) provides that, if the election is made, the amount included
in gross income for the taxable year of receipt must not exceed
the sum of the increases in gross income for those previous
taxable years that would result from taking into account the
portion of the benefits attributable to the previous taxable
years. Accordingly, if no election is made by the taxpayer under
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Last modified: May 25, 2011