How To Report Your Benefits

If part of your benefits are taxable, you must use Form 1040 or Form 1040A. You cannot use Form 1040EZ.

Reporting on Form 1040.   Report your net benefits (the amount in box 5 of your Form SSA-1099 or Form RRB-1099) on line 20a and the taxable part on line 20b. If you are married filing separately and you lived apart from your spouse for all of 2002, also enter D to the right of the word benefits on line 20a.

Reporting on Form 1040A.   Report your net benefits (the amount in box 5 of your Form SSA-1099 or Form RRB-1099) on line 14a and the taxable part on line 14b. If you are married filing separately and you lived apart from your spouse for all of 2002, also enter D to the right of the word benefits on line 14a.

Benefits not taxable.   If none of your benefits are taxable, do not report any of them on your tax return. But if you are married filing separately and you lived apart from your spouse for all of 2002, make the following entries. On Form 1040, enter D to the right of the word benefits on line 20a and -0- on line 20b. On Form 1040A, enter D to the right of the word benefits on line 14a and -0- on line 14b.

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.   Generally, up to 50% of your benefits will be taxable. 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 2002.

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.

Example 1.
	George White is single and files Form 1040 for 2002. In addition to receiving social security payments, he received a fully taxable pension of $18,600, wages from a part-time job of $9,400, and taxable interest income of $990, for a total of $28,990. He received a Form SSA-1099 in January 2003 that shows his net social security benefits of $5,980 in box 5. To figure his taxable benefits, George completed Worksheet 1, shown below. On line 20a of his Form 1040, George enters his net benefits of $5,980. On line 20b, he enters his taxable benefits of $2,990.

Filled-in Worksheet 1. Figuring Your Taxable Benefits
Before you start: Is your filing status Married filing separately?
	No.	Go to line 1 below.
	Yes.	Did you live apart from your spouse all year?
		No.	Go to line 1 below.
		Yes.	Do the following if you file:
			Form 1040:	Enter D to the right of the word benefits on line 20a, then go to line 1 below.
			Form 1040A:	Enter D to the right of the word benefits on line 14a, then go to line 1 below.
1.	Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099				1.	$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.	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				3.	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				4.	-0-
5.	Add lines 2, 3, and 4				5.	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				6.	-0-
7.	Subtract line 6 from line 5				7.	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)				8.	25,000
9.	Subtract line 8 from line 7. If zero or less, enter -0-				9.	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 -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 during 2002)				10.	9,000
11.	Subtract line 10 from line 9. If zero or less, enter -0-.				11.	-0-
12.	Enter the smaller of line 9 or line 10				12.	6,980
13.	Enter one-half of line 12				13.	3,490
14.	Enter the smaller of line 2 or line 13				14.	2,990
15.	Multiply line 11 by 85% (.85). If line 11 is zero, enter -0-				15.	-0-
16.	Add lines 14 and 15				16.	2,990
17.	Multiply line 1 by 85% (.85)				17.	5,083
18.	Taxable benefits. Enter the smaller of line 16 or line 17				18.	$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.
	Note: If you received a lump-sum payment in this year that was for an earlier year, also complete Worksheet 2 or 3 and Worksheet 4 to see whether you can report a lower taxable benefit.

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 (below) and find that none of Ray's benefits are taxable. They leave lines 14a and 14b of their Form 1040A blank.

Filled-in Worksheet 1. Figuring Your Taxable Benefits
Before you start: Is your filing status Married filing separately?
	No.	Go to line 1 below.
	Yes.	Did you live apart from your spouse all year?
		No.	Go to line 1 below.
		Yes.	Do the following if you file:
			Form 1040:	Enter D to the right of the word benefits on line 20a, then go to line 1 below.
			Form 1040A:	Enter D to the right of the word benefits on line 14a, then go to line 1 below.
1.	Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099				1.	$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.	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				3.	29,750
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				4.	-0-
5.	Add lines 2, 3, and 4				5.	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				6.	1,000
7.	Subtract line 6 from line 5				7.	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)				8.	32,000
9.	Subtract line 8 from line 7. If zero or less, enter -0-				9.	-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 -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 during 2002)				10.
11.	Subtract line 10 from line 9. If zero or less, enter -0-.				11.
12.	Enter the smaller of line 9 or line 10				12.
13.	Enter one-half of line 12				13.
14.	Enter the smaller of line 2 or line 13				14.
15.	Multiply line 11 by 85% (.85). If line 11 is zero, enter -0-				15.
16.	Add lines 14 and 15				16.
17.	Multiply line 1 by 85% (.85)				17.
18.	Taxable benefits. Enter the smaller of line 16 or line 17				18.
	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.
	Note: If you received a lump-sum payment in this year that was for an earlier year, also complete Worksheet 2 or 3 and Worksheet 4 to see whether you can report a lower taxable benefit.

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 received 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 below. 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. (See Maximum taxable part under How Much Is Taxable earlier.) Joe and Betty enter $10,000 on line 20a, Form 1040, and $6,275 on line 20b, Form 1040.

Filled-in Worksheet 1. Figuring Your Taxable Benefits
Before you start: Is your filing status Married filing separately?
	No.	Go to line 1 below.
	Yes.	Did you live apart from your spouse all year?
		No.	Go to line 1 below.
		Yes.	Do the following if you file:
			Form 1040:	Enter D to the right of the word benefitson line 20a, then go to line 1 below.
			Form 1040A:	Enter D to the right of the word benefits on line 14a, then go to line 1 below.
1.	Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099				1.	$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				2.	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				3.	40,300
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				4.	200
5.	Add lines 2, 3, and 4				5.	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				6.	-0-
7.	Subtract line 6 from line 5				7.	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)				8.	32,000
9.	Subtract line 8 from line 7. If zero or less, enter -0-				9.	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 -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 during 2002)				10.	12,000
11.	Subtract line 10 from line 9. If zero or less, enter -0-.				11.	1,500
12.	Enter the smaller of line 9 or line 10				12.	12,000
13.	Enter one-half of line 12				13.	6,000
14.	Enter the smaller of line 2 or line 13				14.	5,000
15.	Multiply line 11 by 85% (.85). If line 11 is zero, enter -0-				15.	1,275
16.	Add lines 14 and 15				16.	6,275
17.	Multiply line 1 by 85% (.85)				17.	8,500
18.	Taxable benefits. Enter the smaller of line 16 or line 17				18.	$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.
	Note: If you received a lump-sum payment in this year that was for an earlier year, also complete Worksheet 2 or 3 and Worksheet 4 to see whether you can report a lower taxable benefit.

Example 4.
	Bill and Eileen Jones are married and live together, but file separate Form 1040 returns for 2002. Bill earned $8,000 during 2002. The only other income he had for the year was $4,000 net social security benefits (box 5 of his Form SSA-1099). Bill figures his taxable benefits by completing Worksheet 1 below. He must include 85% of his social security benefits in his taxable income because he is married filing separately and lived with his spouse during 2002. See How Much Is Taxable earlier.

Filled-in Worksheet 1. Figuring Your Taxable Benefits
Before you start: Is your filing status Married filing separately?
	No.	Go to line 1 below.
	Yes.	Did you live apart from your spouse all year?
		No.	Go to line 1 below.
		Yes.	Do the following if you file:
			Form 1040:	Enter D to the right of the word benefits on line 20a, then go to line 1 below.
			Form 1040A:	Enter D to the right of the word benefits on line 14a, then go to line 1 below.
1.	Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099				1.	$4,000
	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				2.	2,000
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				3.	8,000
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				4.	-0-
5.	Add lines 2, 3, and 4				5.	10,000
6.	Form 1040A filers: Enter the amount from Form 1040A, line 20, minus any amounts from 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				6.	-0-
7.	Subtract line 6 from line 5				7.	10,000
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)				8.	-0-
9.	Subtract line 8 from line 7. If zero or less, enter -0-				9.	10,000
	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 -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 during 2002)				10.	-0-
11.	Subtract line 10 from line 9. If zero or less, enter -0-.				11.	10,000
12.	Enter the smaller of line 9 or line 10				12.	-0-
13.	Enter one-half of line 12				13.	-0-
14.	Enter the smaller of line 2 or line 13				14.	-0-
15.	Multiply line 11 by 85% (.85). If line 11 is zero, enter -0-				15.	8,500
16.	Add lines 14 and 15				16.	8,500
17.	Multiply line 1 by 85% (.85)				17.	3,400
18.	Taxable benefits. Enter the smaller of line 16 or line 17				18.	$3,400
	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.
	Note: If you received a lump-sum payment in this year that was for an earlier year, also complete Worksheet 2 or 3 and Worksheet 4 to see whether you can report a lower taxable benefit.

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