John is receiving $1,000 each month from Social Security, and he works at a local store as a part-time worker to earn extra $1,000 each month. He has very small amounts (less than $1,000 a year) of interest and dividends income. He is a single filer. How much should he pay taxes on his Social Security benefits?
a. No taxes on Social Security benefits because the combined income is less than $25,000 a year.
b. 25% taxes on Social Security benefits because the combined income is less than $25,000 a year.
c. 50% taxes on Social Security benefits because the combined income is less than $25,000 a year.
d. 5% taxes on Social Security benefits because the combined income is less than $25,000 a year.
e. 100% taxes on Social Security benefits regardless of the combined income level.