Sue receives Social Security benefits of $8,670 on behalf of her dependent child, Tom. Which of the following statements is correct?
a. Incorrect. Any benefits that may be taxable are based on the income of individual receiving the benefits. Sue”s income is not used for this purpose.
b. Correct. Taxable benefits, if any, are based on Tom”s income because the benefits are his, not Sue”s.
c. Incorrect. The benefits belong to Tom and therefore are not taxable to Sue.
d. Incorrect. The benefits belong to Tom. Therefore, they may be taxed to Tom based on his income, not Sue”s.