Simplified Method Worksheet at a glance
What it is: The Simplified Method Worksheet is for Lines 5a and 5b of Form 1040 or 1040-SR: the total pension or annuity payments and the taxable amount. Keep it for your records.
Where and when to file: Taxable amount: Subtract line 8 from line 1, but not less than zero, and enter it on Form 1040 or 1040-SR, line 5b.
A filled-in Simplified Method Worksheet example: a retiree figures the taxable part of her pension
How to fill out Simplified Method Worksheet, box by box
Line 1, the total pension or annuity payments
Line 1: Enter the total pension or annuity payments from Form 1099-R, box 1. Also, enter this amount on Form 1040 or 1040-SR, line 5a.
Line 2, your cost in the plan
Enter your cost in the plan at the annuity starting date.
If you are the beneficiary of a deceased employee or former employee who died before August 21, 1996, include any death benefit exclusion that you are entitled to (up to $5,000) in the amount entered on line 2 (checked October 19, 2026).
Lines 3 and 4, the number from Table 1 or Table 2
If you completed this worksheet last year, skip line 3 and enter the amount from line 4 of last year's worksheet on line 4 (even if the amount of your pension or annuity has changed). Otherwise, go to line 3.
Line 3: Enter the appropriate number from Table 1. But if your annuity starting date was after 1997 and the payments are for your life and that of your beneficiary, enter the appropriate number from Table 2.
Line 4: Divide line 2 by the number on line 3.
Table 1 and Table 2 for line 3
Table 1 for line 3, if your annuity starting date was after November 18, 1996: if the age at annuity starting date was 55 or under, enter 360 on line 3; 56-60, enter 310; 61-65, enter 260; 66-70, enter 210; 71 or older, enter 160.
Table 1 for line 3, if your annuity starting date was before November 19, 1996: if the age at annuity starting date was 55 or under, enter 300 on line 3; 56-60, enter 260; 61-65, enter 240; 66-70, enter 170; 71 or older, enter 120.
Table 2 for line 3: if the combined ages at annuity starting date were 110 or under, enter 410 on line 3; 111-120, enter 360; 121-130, enter 310; 131-140, enter 260; 141 or older, enter 210.
Lines 5 to 8, the amount recovered tax free
Line 5: Multiply line 4 by the number of months for which this year's payments were made. If your annuity starting date was before 1987, skip lines 6 and 7 and enter this amount on line 8. Otherwise, go to line 6.
Line 6: Enter the amount, if any, recovered tax free in years after 1986. If you completed this worksheet last year, enter the amount from line 10 of last year's worksheet.
Line 7: Subtract line 6 from line 2.
Line 8: Enter the smaller of line 5 or line 7.
Line 9, the taxable amount
Line 9, Taxable amount: Subtract line 8 from line 1. Enter the result, but not less than zero. Also, enter this amount on Form 1040 or 1040-SR, line 5b.
If your Form 1099-R shows a larger amount, use the amount on line 9 instead of the amount from Form 1099-R.
If you are a retired public safety officer, see Insurance Premiums for Retired Public Safety Officers before entering an amount on line 5b.
Line 10, was your annuity starting date before 1987?
Yes: Stop. Do not complete the rest of this worksheet.
No: Add lines 6 and 8. This is the amount you have recovered tax free through 2025. You will need this number if you need to fill out this worksheet next year.
Line 11, the balance of cost to be recovered
Line 11, Balance of cost to be recovered: Subtract line 10 from line 2. If zero, you won't have to complete this worksheet next year. The payments you receive next year will generally be fully taxable.
If your situation is different
You had more than one partially taxable pension or annuity
If you had more than one partially taxable pension or annuity, figure the taxable part of each separately. Enter the total of the taxable parts on Form 1040 or 1040-SR, line 5b. Enter the total pension or annuity payments received in 2025 on Form 1040 or 1040-SR, line 5a.
Sources
[1] Simplified Method Worksheet, Lines 5a and 5b, Internal Revenue Service (the Official source link on this page).