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Publication 590
Individual Retirement Arrangements (IRAs)

For use in preparing 2002 Returns
APPENDIX B. (Continued)
Worksheet 3
Computation of Taxable Social Security Benefits
(For use by taxpayers who receive social security benefits and take a traditional IRA deduction)
Filing Status - Check only one box:
[ ] A. Married filing jointly
[ ] B. Single, Head of Household, Qualifying Widow(er), or Married filing separately and lived    apart from your spouse during the entire year
[ ] C. Married filing separately and lived with your spouse at any time during the year
1. Adjusted gross income (AGI) from Form 1040 or Form 1040A (not taking into account any IRA deduction, any student loan interest deduction, any tuition and fees deduction, any social security benefits from Form SSA-1099 or RRB-1099, or any exclusion of interest from savings bonds to be reported on Form 8815) 1.
2. Deduction(s) from line 7 of Worksheet(s) 2 2.
3. Subtract line 2 from line 1 3.
4. Enter amount in box 5 of all Forms SSA-1099 and Forms RRB-1099 4.
5. Enter one half of line 4 5.
6. Enter the amount of any foreign earned income exclusion, foreign housing exclusion, exclusion of income from U.S. possessions, exclusion of income from Puerto Rico you claimed as a bona fide resident of Puerto Rico, or exclusion of employer-paid adoption expenses 6.
7. Enter the amount of any tax-exempt interest reported on line 8b of Form 1040 or 1040A 7.
8. Add lines 3, 5, 6, and 7 8.
9. Enter the amount listed below for your filing status.
  • $32,000 if you checked box A above.
  • $25,000 if you checked box B above.
  • $0 if you checked box C above.
9.
10. Subtract line 9 from line 8. If zero or less, enter 0 on this line. 10.
11. If line 10 is zero, STOP HERE. None of your social security benefits are taxable. If line 10 is more than 0, enter the amount listed below for your filing status.
  • $12,000 if you checked box A above.
  • $9,000 if you checked box B above.
  • $0 if you checked box C above.
11.
12. Subtract line 11 from line 10. If zero or less, enter 0 12.
13. Enter the smaller of line 10 or line 11 13.
14. Enter one half of line 13 14.
15. Enter the smaller of line 5 or line 14 15.
16. Multiply line 12 by .85. If line 12 is zero, enter 0 16.
17. Add lines 15 and 16 17.
18. Multiply line 4 by .85 18.
19. Taxable social security benefits. Enter the smaller of line 17 or line 18 19.