QuestionFebruary 3, 2026

Discussion Question 4-18(L0.4) Carlos is retired and receives Social Security benefits During the year; Carlos appeared on a television game show and won 5,000 What is the largest amount by which Carlos gross income can increase as a result of the prize? Other income is square in the computation of modified adjusted gross income (used to determine taxable Social Security benefits). Therefore, any increase in other income square the Social Security benefits to be taxable potentially square taxable income.

Discussion Question 4-18(L0.4) Carlos is retired and receives Social Security benefits During the year; Carlos appeared on a television game show and won 5,000 What is the largest amount by which Carlos gross income can increase as a result of the prize? Other income is square in the computation of modified adjusted gross income (used to determine taxable Social Security benefits). Therefore, any increase in other income square the Social Security benefits to be taxable potentially square taxable income.
Discussion Question 4-18(L0.4)
Carlos is retired and receives Social Security benefits During the year; Carlos appeared on a television game show and
won 5,000 What is the largest amount by which Carlos gross income can increase as a result of the prize?
Other income is square  in the computation of modified adjusted gross income (used to determine
taxable Social Security benefits). Therefore, any increase in other income square  the Social Security
benefits to be taxable potentially square  taxable income.

Solution
4.7(230 votes)

Answer

The largest amount by which Carlos's gross income can increase as a result of the prize is 5,000. However, the taxable income could increase by more than 5,000 if Social Security benefits become taxable. Explanation 1. Determine the Impact of Prize on Gross Income The 5,000 prize is fully included in Carlos's gross income as it is considered taxable income. 2. Assess the Impact on Social Security Benefits Social Security benefits may become taxable if other income, including the prize, increases Carlos's modified adjusted gross income (MAGI). 3. Calculate Potential Increase in Taxable Income The increase in taxable income depends on the interaction between the prize and the Social Security benefits. The prize itself increases gross income by 5,000. However, if this increase causes Social Security benefits to become taxable, the taxable income could increase by more than 5,000.

Explanation

1. Determine the Impact of Prize on Gross Income<br /> The $5,000$ prize is fully included in Carlos's gross income as it is considered taxable income.<br /><br />2. Assess the Impact on Social Security Benefits<br /> Social Security benefits may become taxable if other income, including the prize, increases Carlos's modified adjusted gross income (MAGI).<br /><br />3. Calculate Potential Increase in Taxable Income<br /> The increase in taxable income depends on the interaction between the prize and the Social Security benefits. The prize itself increases gross income by $5,000$. However, if this increase causes Social Security benefits to become taxable, the taxable income could increase by more than $5,000$.
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