# Question & Answer: Pension Income. Beth retires when she turns 65. She begins receiving a monthly pension of \$300 from her employer's qualified retirement plan…..

Pension Income. Beth retires when she turns 65. She begins receiving a monthly pension of \$300 from her employer’s qualified retirement plan. While employed, Beth contributed \$13,000 to the plan. a. Beth uses the simplified method to compute her exclusion. Why? b. Compute her monthly exclusion. c. How much gross income does she report in the first year if she receives 12 monthly checks? Social Security Benefits. Dan and Diana file a joint return. Dan earned \$31,000 during the year before losing his job. Diana received Social Security benefits of \$5,000. a. Determine the taxable portion of the Social Security benefits. b. What is the taxable portion of the Social Security benefits if Dan earned \$46,000? Social Security Benefits. Lucia is a 69-year-old single individual who receives a taxable pension of \$10,000 per year and Social Security benefits of \$7,000. Lucia is considering the possibility of selling stock she has owned for years and using the funds to purchase a summer home. She will realize a gain of \$20,000 when she sells the stock, which has been paying \$1,000 of dividends each year. Lucia says her brother recommended that she sell half of the stock this year and half next year because selling all of the stock at once would affect the tax treatment of her Social Security benefits. a. Compute her AGI under the assumption she sells all of the stock now after receiving \$1,000 dividends from the stock. b. Repeat the computation under the assumption she sells only half of the stock this year and also receives \$1,000 dividends from the stock.