Base Amount of Income

• To determine whether your Social Security benefits are taxable, you must compare the base amount of income allowed for your filing status with the total of one-half of your Social Security benefits plus all of your other income, including tax-exempt interest.
  
  The base amounts of income for the 2010 tax year by filing status are:
  
  1. $25,000 if you are single, head of household, or a qualifying widow(er).
  
  2. $25,000 if you are married filing separately and lived apart from your spouse for all of the tax year.
  
  3. $32,000 if you are married filing jointly.
  
  4. $-0- if you are married filing separately and lived with your spouse at any time during the tax year.
  
  

Example For a Married Couple

• If you are married and both are receiving Social Security benefits, you probably are filing your federal tax return using the married filing jointly status. Let's assume that you have joint Social Security benefits of $22,000, pension income of $28,000 and interest income of $3,000.
  
  The base amount for a married couple is $32,000.
  
  To calculate whether your Social Security benefits are taxable, take one-half of the benefits ($11,000) and add it to your other income ($28,000 plus $3,000). With a total of $42,000, which is above the base amount of $32,000, you know that some of your Social Security benefits will be taxable.
  
  

How Much of Your Social Security Benefits Are Taxable

• If part of your Social Security benefits are taxable, the important question is how much must be included in your taxable income? How much of the benefits are taxable is based on the total amount of your benefits and other income. Generally speaking, the higher the total amount of benefits and other income, the greater the taxable amount of your benefits will be.
  
  Once you exceed the base amount for your filing status, up to 50 percent of your benefits are taxable. However, up to 85 percent of your benefits are taxable if (for tax year 2010):
  
  1. The total of one-half of your Social Security benefits and your other income is more than $34,000 ($44,000 if if married filing jointly).
  
  2. You are married filing separately and lived with your spouse at any time during the tax year.
  
  

Worksheet to Calculate Taxability of Social Security Benefits

• A very detailed worksheet to figure the taxability of your Social Security benefits is included in the instructions for IRS Form 1040 and 1040A, or you can use Worksheet 1 in IRS Publication 915, Social Security and Equivalent Railroad Retirement Benefits.
  
  The worksheet in Publication 915 provides step-by-step calculations to determine what portion of your Social Security benefits are taxable.