How Much Is Taxable?

If part of your benefits are taxable, how much is taxable depends on the total amount of your benefits and other income. Generally, the higher that total amount, the greater the taxable part of your benefits.

Maximum taxable part. The taxable part of your benefits cannot usually be more than 50%. However, up to 85% of your benefits can be taxable if either of the following situations applies to you.

1. The total of one-half of your benefits and all your other income is more than $34,000 ($44,000 if you are married filing jointly).
2. You are married filing separately and lived with your spouse at any time during 2000.

Which worksheet to use. A worksheet to figure your taxable benefits is in the instructions for your Form 1040 or 1040A. You can use either that worksheet or Worksheet 1 in this publication, unless any of the following situations applies to you.

1. You contributed to a traditional individual retirement arrangement (IRA) and your IRA deduction is limited because you or your spouse is covered by a retirement plan at work. In this situation you must use the special worksheets in Appendix B of Publication 590 to figure both your IRA deduction and your taxable benefits.
2. Situation (1) does not apply and you take an exclusion for interest from qualified U.S. savings bonds (Form 8815), for adoption benefits (Form 8839), for foreign earned income or housing (Form 2555 or Form 2555-EZ), or for income earned in American Samoa (Form 4563) or Puerto Rico by bona fide residents. In this situation, you must use Worksheet 1 in this publication to figure your taxable benefits.
3. You received a lump-sum payment for an earlier year. In this situation, also complete Worksheet 2 or 3 and Worksheet 4 in this publication. See Lump-Sum Election, later.

Examples

The following pages contain a few examples you can use as a guide to figure the taxable part of your benefits.

George White

Hopkins

Johnson

Jones

Previous| First | Next

Publication Index | IRS-Forms Main | Home