Publication 554 |
2000 Tax Year |
Social Security & Equivalent Railroad Retirement Benefits
This discussion explains the federal income tax rules for social
security benefits and equivalent tier 1 railroad retirement benefits.
Social security benefits include monthly survivor and disability
benefits. They do not include supplemental security income payments
(SSI) which are not taxable.
Equivalent tier 1 railroad retirement benefits
are the part of
tier 1 benefits that a railroad employee or beneficiary would have
been entitled to receive under the social security system. They are
commonly called the social security equivalent benefit (SSEB) portion
of tier 1 benefits.
If you received these benefits during 2000, you should have
received a Form SSA-1099 or Form RRB-1099 (Form
SSA-1042S or Form RRB-1042S if you are a nonresident alien
of the United States) showing the amount.
Note.
When the term "benefits" is used in this section, it applies
to both social security benefits and equivalent tier 1 railroad
retirement benefits.
Are Any of Your Benefits Taxable?
To find out whether any of your benefits are taxable, compare the
base amount for your filing status with the total of:
- One-half of your benefits, plus
- All your other income, including tax-exempt interest.
Exclusions.
When making this comparison, do not reduce your income by any
exclusions for:
- Interest from qualified U.S. savings bonds,
- Employer-provided adoption benefits,
- Foreign earned income or foreign housing, or
- Income earned in American Samoa or Puerto Rico by bona fide
residents.
Figuring total income.
To figure the total of one-half of your benefits plus your other
income, use the worksheet shown later in this discussion. If the total
is more than your base amount, part of your benefits may be taxable.
If the only income you received during 2000 was your social
security or the SSEB portion of tier 1 railroad retirement benefits,
your benefits generally are not taxable and you probably do not have
to file a return. If you have income in addition to your benefits, you
may have to file a return even if none of your benefits are taxable.
If you are married and file a joint return for 2000, you and your
spouse must combine your incomes and your benefits to figure whether
any of your combined benefits are taxable. Even if your spouse did not
receive any benefits, you must add your spouse's income to yours to
figure whether any of your benefits are taxable.
Base Amount
Your base amount is:
- $25,000 if you are single, head of household, or qualifying
widow(er),
- $25,000 if you are married filing separately and lived
apart from your spouse for all of 2000,
- $32,000 if you are married filing jointly, or
- $-0- if you are married filing separately and
lived with your spouse at any time during 2000.
Worksheet. You can use the following worksheet to figure
the amount of income to compare with your base amount. This is a quick
way to check whether some of your benefits may be taxable.
A. |
Write in the amount from box 5 of
all your Forms SSA-1099 and RRB-1099. Include the full amount of any
lump-sum benefit payments received in 2000, for 2000 and earlier
years. (If you received more than one form, combine the amounts from
box 5 and write in the total.) |
A. |
|
Note: If the amount on line A
is zero or less, stop here; none of your benefits are taxable this
year. |
B. |
Enter one-half of the amount on line A |
B. |
|
C. |
Add your taxable pensions, wages, interest,
dividends, and other taxable income and write in the total |
C. |
|
D. |
Write in any tax-exempt interest income (such
as interest on municipal bonds) plus exclusions from income (shown in
the list under Exclusions, earlier) |
D. |
|
E. |
Add lines B, C, and D and write in the total
|
E. |
|
Note. Compare the amount on
line E to your base amount for your filing
status. If the amount on line E equals or is less than the base
amount for your filing status, none of your benefits are taxable
this year. If the amount on line E is more than your base
amount, some of your benefits may be taxable. You then need
to complete Worksheet 1 in Publication 915. |
Repayment of Benefits
Any repayment of benefits you made during 2000 must be subtracted
from the gross benefits you received in 2000. It does not matter
whether the repayment was for a benefit you received in 2000 or in an
earlier year. If you repaid more than the gross benefits you received
in 2000, see Repayments More Than Gross Benefits, later.
Your gross benefits are shown in box 3 of Form SSA-1099 or
Form RRB-1099. Your repayments are shown in box 4. The amount in
box 5 shows your net benefits for 2000 (box 3 minus box 4). Use the
amount in box 5 to figure whether any of your benefits are taxable.
Tax Withholding and Estimated Tax
You can choose to have federal income tax withheld from your social
security and/or the SSEB portion of your tier 1 railroad retirement
benefits. If you choose to do this, you must complete a Form
W-4V, Voluntary Withholding Request. You can choose
withholding at 7%, 15%, 28%, or 31% of your total benefit payment.
If part of your benefits are taxable, you may have to request
additional withholding from other income or pay estimated tax during
the year. For details, get Publication 505,
Tax Withholding and
Estimated Tax, or the instructions for Form 1040-ES.
How To Report Your Benefits
If part of your benefits is 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 2000, also enter "D" to the
left of 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 2000, 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 2000, make the following
entries. On Form 1040, enter "D" to the left of 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 is 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.
- 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).
- 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 Publication 915,
Social Security and
Equivalent Railroad Retirement Benefits, unless any of the
following situations applies to you.
- 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.
- 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 Publication 915
to
figure your taxable benefits.
- You received a lump-sum payment for an earlier year. In this
situation, also complete Worksheet 2 or 3 and
Worksheet 4 in Publication 915.
Lump-Sum Election
You must include the taxable part of a lump-sum (retroactive)
payment of benefits received in 2000 in your 2000 income, even if the
payment includes benefits for an earlier year.
This type of lump-sum benefit payment should not be confused with
the lump-sum death benefit that both the SSA and RRB pay to many of
their beneficiaries. No part of the lump-sum death benefit is subject
to tax.
Generally, you use your 2000 income to figure the taxable part of
the total benefits received in 2000. However, you may be able to
figure the taxable part of a lump-sum payment for an earlier year
separately, using your income for the earlier year. You can elect this
method if it lowers your taxable benefits. See Publication 915
for
more information.
Repayments More
Than Gross Benefits
In some situations, your Form SSA-1099 or Form RRB-1099
will show that the total benefits you repaid (box 4) are more than the
gross benefits (box 3) you received. If this occurred, your net
benefits in box 5 will be a negative figure (a figure in parentheses)
and none of your benefits will be taxable. If you receive more than
one form, a negative figure in box 5 of one form is used to offset a
positive figure in box 5 of another form for that same year.
If you have any questions about this negative figure, contact your
local Social Security Administration office or your local U.S.
Railroad Retirement Board field office.
Joint return.
If you and your spouse file a joint return, and your Form
SSA-1099 or RRB-1099 has a negative figure in box 5 but
your spouse's does not, subtract the amount in box 5 of your form from
the amount in box 5 of your spouse's form. You do this to get your net
benefits when figuring if your combined benefits are taxable.
Repayment of benefits received in an earlier year.
If the total amount shown in box 5 of all of your Forms
SSA-1099 and RRB-1099 is a negative figure, you can take
an itemized deduction for the part of this negative figure that
represents benefits you included in gross income in an earlier year.
If this deduction is $3,000 or less, it is subject to
the 2%-of-adjusted-gross-income limit that applies to certain
miscellaneous itemized deductions. Claim it on line 22, Schedule A
(Form 1040).
If this deduction is more than $3,000, you have some
special instructions to follow. Get Publication 915
for those
instructions.
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