Publication 17

About Publication 17, Your Federal Income Tax (For Individuals)

The first issue to be addressed in this problem is whether the taxpayer’s Social Security benefits are taxable and, if so, to what extent: 50% or 85%. In general, the higher the income amount of the taxpayer, the more likely the benefits will be taxable. Because this taxpayer has income (ignoring Social Security benefits) of $67,000, the 85% rule is the better starting point. In particular, 85% of a person’s Social Security benefits are taxable if either of the following situations applies (Publication 17, pages 62–64):

• The total of one-half of the person’s benefits and all other income is more than $34,000 ($44,000 if the taxpayer is married filing jointly) or
• The taxpayer is married filing separately and lived with his or her spouse at any time during the tax year.

In this case, the taxpayer satisfies the first situation with a total dollar amount of $74,000 ($67,000 plus one-half of $14,000). Hence, the taxpayer has an AGI amount of $78,900, which is his other income of $67,000 plus 85% of his Social Security benefits of $14,000 ($11,900).

Publication 17, pages 62–64

Publication 17, page 48, states, in part, that sick pay is a payment to a taxpayer that they receive from their employer while the person is sick or injured. It is part of the person’s salary or wages. In addition, the taxpayer must include in their income sick pay benefits received from any of the following payers:

• A welfare fund.
• A state sickness or disability fund.
• An association of employers or employees.
• An insurance company, if their employer paid for the plan.

However, if the taxpayer paid the premiums on an accident or health insurance policy, the benefits they receive under the policy are not taxable. For more information, see Publication 525.

Debby, in this case, would include in gross income the sick pay from her employer’s plan of $2,500 and not the benefits from her own plan of $1,000.

Publication 17, page 48

According to Publication 17, page 11, an automatic 6-month extension can be obtained by filing Form 4868 in paper form or by e-file by the due date for filing the taxpayer’s tax return (generally, April 15).

Form 4868 can be filed by mail up through April 15 by mailing it to the address shown in the form instructions. An extension does not abate any interest that is accruing for underpaying a person’s income tax by the filing date.

An extension also can be obtained by e-file by means of a person’s personal computer or a tax professional providing certain information from the prior year’s tax form. An extension by e-file can be obtained by paying part or all of the taxpayer’s estimated tax by use of a credit or debit card. The taxpayer can accomplish this by phone or over the Internet.

For more information on the ways to e-file Form 4868, see Publication 17, page 11.

Publication 17, page 11