hello could someone help with this assignment please.
question: Jack and June are retired and receive $10000 of Social Security benefits and taxable
pension totaling $25000. They have been offered $20000 for an automobile that they restored
after they retired.
They did most of the restoration work themselves and the sale will result in a gain of $12000.
What tax issues should Jack and June consider?
Solution
The big issue is that if Jack and June sell the car and get $12,000 in capital gains, this along with
their pension will put them above the threshold for their social security income to be tax free.
They will have $37,000 in capital gains and pension income. The most you are allowed is
$32,000 a year to keep your social security free of Federal income tax. As a result, this sale
would not only cause a capital gains on the profit from the sale of the stock but also on their
social security income.
Here is more information on how it works:
more than $44,000, up to 85 percent of your benefits may be taxable.