Examples
The following are a few examples you can use as a guide to figure the taxable part of
your benefits.
Example 1. George White is single and files Form 1040 for 2002.
He received the following income in 2002:
| Fully taxable pension |
$18,600 |
| Wages from part-time job |
9,400 |
| Taxable interest income |
990 |
| Total |
$28,990 |
George also received social security benefits during 2002. The Form SSA-1099 he
received in January 2003 shows $5,980 in box 5. To figure his taxable benefits, George
completes the worksheet shown here.
Worksheet 1. Figuring Your Taxable Benefits
| 1. |
Enter the total amount from box 5 of ALL your Forms
SSA-1099 and RRB-1099 |
$5,980 |
| Note. If line 1 is zero or less, stop here; none of your
benefits are taxable. Otherwise, go on to line 2. |
|
| 2. |
Enter one-half of line 1 |
2,990 |
| 3. |
Enter the total of the amounts from: |
|
|
Form 1040: Lines 7, 8a, 8b, 9-14, 15b, 16b, 17-19, and 21. |
|
|
Form 1040A: lines 7, 8a, 8b, 9, 10, 11b, 12b, and 13 |
28,990 |
| 4. |
Form 1040A filers: Enter the total of any exclusions for qualified
U.S. savings bond interest ( Form 8815, line 14) or for adoption benefits ( Form 8839,
line 30). |
|
|
Form 1040 filers: Enter the total of any exclusions/adjustments for: |
|
|
· Qualified U.S. savings bond interest (Form 8815, line 14), |
|
|
· Adoption benefits (Form 8839, line 30), |
|
|
· Foreign earned income or housing (Form 2555, lines 43 and 48, or Form
2555-EZ, line 18), and |
|
|
· Certain income of bona fide residents of American Samoa (Form 4563,
line 15) or Puerto Rico |
-0- |
| 5. |
Add lines 2, 3, and 4 |
31,980 |
| 6. |
Form 1040A filers: Enter the amount from Form 1040A, line 20, minus
any amounts on Form 1040A, lines 18 and 19. |
|
|
Form 1040 filers: Enter the amount from Form 1040, line 34, minus any
amounts on Form 1040, lines 25 and 26 |
-0- |
| 7. |
Subtract line 6 from line 5 |
31,980 |
| 8. |
Enter $25,000 ($32,000 if married filing jointly; $0 if married filing separately and
you lived with your spouse at any time during 2002) |
25,000 |
| 9. |
Subtract line 8 from line 7. If zero or less, enter -0- |
6,980 |
|
Note. If line 9 is zero or less, stop here; none of your benefits are
taxable. (Do not enter any amounts on Form 1040, line 20a or 20b, or on Form 1040A, line
14a or 14b. But if you are married filing separately and you lived apart from your spouse
for all of 2002, enter D to the right of the word benefits on line 20a,
Form 1040, or to the right of the word benefits on line 14a, Form 1040A. Also
enter -0- on Form 1040, line 20b or on Form 1040A, line 14b.) Otherwise, go on to line 10. |
|
| 10. |
Enter $9,000 ($12,000 if married filing jointly; $0 if married filing separately and
you lived with your spouse at any time in 2002) |
9,000 |
| 11. |
Subtract line 10 from line 9. If zero or less, enter -0- |
-0- |
| 12. |
Enter the smaller of line 9 or line 10 |
6,980 |
| 13. |
Enter one-half of line 12 |
3,490 |
| 14. |
Enter the smaller of line 2 or line 13 |
2,990 |
| 15. |
Multiply line 11 by 85% (.85). If line 11 is zero, enter -0- |
-0- |
| 16. |
Add lines 14 and 15 |
2,990 |
| 17. |
Multiply line 1 by 85% (.85) |
5,083 |
| 18. |
Taxable benefits. Enter the smaller of line 16 or line 17 |
$2,990 |
|
· Enter the amount from line 1 above on Form 1040, line 20a or on Form
1040A, line 14a. |
|
|
· Enter the amount from line 18 above on Form 1040, line 20b or on Form
1040A, line 14b. |
|
The amount on line 18 of George's worksheet shows that $2,990 of his social security
benefits is taxable. On line 20a of his Form 1040, George enters his net benefits of
$5,980. On line 20b, he enters his taxable part of $2,990.
Example 2. Ray and Alice Hopkins file a joint return on Form
1040A for 2002. Ray is retired and received a fully taxable pension of $15,500. He also
received social security benefits, and his Form SSA-1099 for 2002 shows net benefits of
$5,600 in box 5. Alice worked during the year and had wages of $14,000. She made a
deductible payment to her IRA account of $1,000. Ray and Alice have two savings accounts
with a total of $250 in interest income. They complete Worksheet 1 and find that none of
Ray's social security benefits are taxable. They leave lines 14a and 14b of their Form
1040A blank.
Worksheet 1. Figuring Your Taxable Benefits
| 1. |
Enter the total amount from box 5 of ALL your Forms
SSA-1099 and RRB-1099 |
$5,600 |
| Note. If line 1 is zero or less, stop here; none of your
benefits are taxable. Otherwise, go on to line 2. |
|
| 2. |
Enter one-half of line 1 |
2,800 |
| 3. |
Enter the total of the amounts from: |
|
|
Form 1040: Lines 7, 8a, 8b, 9-14, 15b, 16b, 17-19, and 21. |
|
|
Form 1040A: lines 7, 8a, 8b, 9, 10, 11b, 12b, and 13 |
29,750 |
| 4. |
Form 1040A filers: Enter the total of any exclusion for qualified U.S.
savings bond interest (Form 8815, line 14) or for adoption benefits ( Form 8839, line 30). |
|
|
Form 1040 filers: Enter the total of any exclusions/adjustments for: |
|
|
· Qualified U.S. savings bond interest (Form 8815, line 14), |
|
|
· Adoption benefits (Form 8839, line 30), |
|
|
· Foreign earned income or housing (Form 2555, lines 43 and 48, or Form
2555-EZ, line 18), and |
|
|
· Certain income of bona fide residents of American Samoa (Form 4563,
line 15) or Puerto Rico |
-0- |
| 5. |
Add lines 2, 3, and 4 |
32,550 |
| 6. |
Form 1040A filers: Enter the amount from Form 1040A, line 20, minus
any amounts on Form 1040A, lines 18 and 19. |
|
|
Form 1040 filers: Enter the amount from Form 1040, line 34, minus any
amounts on Form 1040, lines 25 and 26 |
1,000 |
| 7. |
Subtract line 6 from line 5 |
31,550 |
| 8. |
Enter $25,000 ($32,000 if married filing jointly; $0 if married filing separately and
you lived with your spouse at any time during 2002) |
32,000 |
| 9. |
Subtract line 8 from line 7. If zero or less, enter -0- |
-0- |
|
Note. If line 9 is zero or less, stop here; none of your benefits are
taxable. (Do not enter any amounts on Form 1040, line 20a or 20b, or on Form 1040A, line
14a or 14b. But if you are married filing separately and you lived apart from your spouse
for all of 2002, enter D to the right of the word benefits on line 20a,
Form 1040, or to the right of the word benefits on line 14a, Form 1040A. Also
enter -0- on Form 1040, line 20b or on Form 1040A, line 14b.) Otherwise, go on to line 10. |
|
| 10. |
Enter $9,000 ($12,000 if married filing jointly; $0 if married filing separately and
you lived with your spouse at any time in 2002) |
|
| 11. |
Subtract line 10 from line 9. If zero or less, enter -0- |
|
| 12. |
Enter the smaller of line 9 or line 10 |
|
| 13. |
Enter one-half of line 12 |
|
| 14. |
Enter the smaller of line 2 or line 13 |
|
| 15. |
Multiply line 11 by 85% (.85). If line 11 is zero, enter -0- |
|
| 16. |
Add lines 14 and 15 |
|
| 17. |
Multiply line 1 by 85% (.85) |
|
| 18. |
Taxable benefits. Enter the smaller of line 16 or line 17 |
|
|
· Enter the amount from line 1 above on Form 1040, line 20a or on Form
1040A, line 14a. |
|
|
· Enter the amount from line 18 above on Form 1040, line 20b or on Form
1040A, line 14b. |
|
Example 3. Joe and Betty Johnson file a joint return on Form
1040 for 2002. Joe is a retired railroad worker and in 2002 received the social security
equivalent benefit (SSEB) portion of tier 1 railroad retirement benefits. Joe's Form
RRB-1099 shows $10,000 in box 5. Betty is a retired government worker and receives a fully
taxable pension of $38,000. They had $2,300 in interest income plus interest of $200 on a
qualified U.S. savings bond. The savings bond interest qualified for the exclusion. Thus,
they have a total income of $40,300 ($38,000 + $2,300). They figure their taxable benefits
by completing Worksheet 1.
Worksheet 1. Figuring Your Taxable Benefits
| 1. |
Enter the total amount from box 5 of ALL your Forms
SSA-1099 and RRB-1099 |
$10,000 |
| Note. If line 1 is zero or less, stop here; none of your
benefits are taxable. Otherwise, go on to line 2. |
|
| 2. |
Enter one-half of line 1 |
5,000 |
| 3. |
Enter the total of the amounts from: |
|
|
Form 1040: Lines 7, 8a, 8b, 9-14, 15b, 16b, 17-19, and 21. |
|
|
Form 1040A: lines 7, 8a, 8b, 9, 10, 11b, 12b, and 13 |
40,300 |
| 4. |
Form 1040A filers: Enter the total of any exclusion for qualified U.S.
savings bond interest (Form 8815, line 14) or for adoption benefits (Form 8839, line 30). |
|
|
Form 1040 filers: Enter the total of any exclusions/adjustments for: |
|
|
· Qualified U.S. savings bond interest (Form 8815, line 14), |
|
|
· Adoption benefits (Form 8839, line 30), |
|
|
· Foreign earned income or housing (Form 2555, lines 43 and 48, or Form
2555-EZ, line 18), and |
|
|
· Certain income of bona fide residents of American Samoa (Form 4563,
line 15) or Puerto Rico |
200 |
| 5. |
Add lines 2, 3, and 4 |
45,500 |
| 6. |
Form 1040A filers: Enter the amount from Form 1040A, line 20, minus
any amounts on Form 1040A, lines 18 and 19. |
|
|
Form 1040 filers: Enter the amount from Form 1040, line 34, minus any
amounts on Form 1040, lines 25 and 26 |
-0- |
| 7. |
Subtract line 6 from line 5 |
45,500 |
| 8. |
Enter $25,000 ($32,000 if married filing jointly; $0 if married filing separately and
you lived with your spouse at any time during 2002) |
32,000 |
| 9. |
Subtract line 8 from line 7. If zero or less, enter -0- |
13,500 |
|
Note. If line 9 is zero or less, stop here; none of your benefits are
taxable. (Do not enter any amounts on Form 1040, line 20a or 20b, or on Form 1040A, line
14a or 14b. But if you are married filing separately and you lived apart from your spouse
for all of 2002, enter D to the right of the word benefits on line 20a,
Form 1040, or to the right of the word benefits on line 14a, Form 1040A. Also
enter -0- on Form 1040, line 20b or on Form 1040A, line 14b.) Otherwise, go on to line 10. |
|
| 10. |
Enter $9,000 ($12,000 if married filing jointly; $0 if married filing separately and
you lived with your spouse at any time in 2002) |
12,000 |
| 11. |
Subtract line 10 from line 9. If zero or less, enter -0- |
1,500 |
| 12. |
Enter the smaller of line 9 or line 10 |
12,000 |
| 13. |
Enter one-half of line 12 |
6,000 |
| 14. |
Enter the smaller of line 2 or line 13 |
5,000 |
| 15. |
Multiply line 11 by 85% (.85). If line 11 is zero, enter -0- |
1,275 |
| 16. |
Add lines 14 and 15 |
6,275 |
| 17. |
Multiply line 1 by 85% (.85) |
8,500 |
| 18. |
Taxable benefits. Enter the smaller of line 16 or line 17 |
$6,275 |
|
· Enter the amount from line 1 above on Form 1040, line 20a or on Form
1040A, line 14a. |
|
|
· Enter the amount from line 18 above on Form 1040, line 20b or on Form
1040A, line 14b. |
|
More than 50% of Joe's net benefits are taxable because the income on line 7 of the
worksheet ($45,500) is more than $44,000. Joe and Betty enter $10,000 on line 20a, Form
1040, and $6,275 on line 20b, Form 1040.
- Continue - |
