You can let the IRS figure the credit for you. If you choose to calculate it yourself, you should first fill out the front part of Schedule R if you are filing Form 1040, or Schedule 3 if you are filing Form 1040A. (You cannot file Form 1040EZ if you want to claim this credit.) Next you fill out Part III of Schedule R or Schedule 3 to calculate your credit.
Basically, your credit is 15% of the amount by which your “initial amount” (a fixed amount based on your filing status and situation) exceeds the total of your nontaxable benefits plus half the amount by which your adjusted gross income exceeds a certain base amount.
There are four steps involved in calculating the credit:
Determine your initial amount.
Total any nontaxable social security and certain other nontaxable pensions and benefits you received.
Determine your excess adjusted gross income.
Determine your credit.
Step 1 – Initial Amount
The initial amount is indicated in a table in Part III of Schedule R (Form 1040) or Schedule 3 (Form 1040A), and depends on your filing status, whether you are claiming the credit for being age 65 or older or because you are under age 65 and disabled, and if you are married, whether you are claiming the credit for one or both spouses.
If you are under age 65, your initial amount cannot be more than your taxable disability income. In this case, the amount you use for step 1 would be the lesser of your taxable disability income or the fixed amount indicated for your filing status and situation.