A U.S. Court of Appeals has ruled that a taxpayer’s Social Security (SS) benefits are includable in income. In the case, a former health insurance company employee didn’t report her SS income. She argued that the SS benefits were tax exempt because they were part of her employer-provided disability benefits. The U.S. Tax Court and the appeals court ruled that the argument was misguided and went against the plain language of the tax code. A taxpayer whose modified adjusted gross income plus one-half of SS benefits received exceeds an adjusted base amount of $34,000 must add 85% of the SS benefits (including SS disability benefits) into gross income. (Murphy, CA 10, 8/31/22)
Our Blog 