Publication 915 |
2001 Tax Year |
Are Any of Your Benefits Taxable?
To find out whether any of your benefits are taxable, compare the
base amount (explained later) for your filing status with
the total of:
- One-half of your benefits, plus
- All your other income, including tax-exempt interest.
When making this comparison, do not reduce your other 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.
The RRB issues Form RRB-1099 and Form RRB-1042S. The
SSA issues Form SSA-1099 and Form SSA-1042S. These forms
(tax statements) report the amounts paid and repaid, and taxes
withheld for a tax year. You may receive more than one of these forms
for the same tax year. You should add the amounts shown on all forms
you receive from the SSA and/or RRB for the same tax year to determine
the "total" amounts paid and repaid, and taxes withheld for that
tax year. See Appendix, at the end of this publication for
more information.
Each original Form RRB-1099 is valid unless it has been
corrected. The RRB will issue a corrected Form RRB-1099 if there
is an error in the original. A corrected Form RRB-1099 is
indicated as "CORRECTED" and replaces the corresponding original
Form RRB-1099. You must use the latest corrected Form
RRB-1099 you received and any original Form RRB-1099 that
the RRB has not corrected when you determine what amounts to report on
your tax return.
Figuring total income.
To figure the total of one-half of your benefits plus your other
income, use the worksheet later in this discussion. If the total is
more than your base amount, part of your benefits may be taxable.
If you are married and file a joint return for 2001, 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.
If the only income you received during 2001 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.
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 2001,
- $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 2001.
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 2001, for 2001 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 any exclusions from income (listed 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, shown later. |
Example.
You and your spouse (both over 65) are filing a joint return for
2001 and you both received social security benefits during the year.
In January 2002, you received a Form SSA-1099 showing net
benefits of $6,600 in box 5. Your spouse received a Form
SSA-1099 showing net benefits of $2,400 in box 5. You also
received a taxable pension of $17,000 and interest income of $500. You
did not have any tax-exempt interest income. Your benefits are
not taxable for 2001 because your income, as figured in the
following worksheet, is not more than your base amount ($32,000) for
married filing jointly.
Even though none of your benefits are taxable, you must file a
return for 2001 because your taxable gross income ($17,500) exceeds
the minimum filing requirement amount for your filing status.
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
2001, for 2001 and earlier years. (If you received more than one form,
combine the amounts from box 5 and write in the total.) |
A. |
$ 9,000 |
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. |
4,500 |
C. |
Add your taxable pensions,
wages, interest, dividends, and other taxable income and write in the
total |
C. |
17,500 |
D. |
Write in any tax-exempt
interest income (such as interest on municipal bonds) plus any
exclusions from income (listed earlier). |
D. |
-0-
|
E. |
Add lines B, C, and D and
write in the total |
E. |
$22,000 |
Note. Compare the amount on line E to
your base amount for 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, shown
later. |
Who is taxed.
The person who has the legal right to receive the benefits must
determine whether the benefits are taxable. For example, if you and
your child receive benefits, but the check for your child is made out
in your name, you must use only your part of the benefits to see
whether any benefits are taxable to you. One-half of the part that
belongs to your child must be added to your child's other income to
see whether any of those benefits are taxable to your child.
Repayment of benefits.
Any repayment of benefits you made during 2001 must be subtracted
from the gross benefits you received in 2001. It does not matter
whether the repayment was for a benefit you received in 2001 or in an
earlier year. If you repaid more than the gross benefits you received
in 2001, 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 2001 (box 3 minus box 4). Use the
amount in box 5 to figure whether any of your benefits are taxable.
Example.
In 2000, you received $3,000 in social security benefits, and in
2001 you received $2,700. In March 2001, SSA notified you that you
should have received only $2,500 in benefits in 2000. During 2001, you
repaid $500 to SSA. The Form SSA-1099 you received for 2001
shows $2,700 in box 3 (gross amount) and $500 in box 4 (repayment).
The amount in box 5 shows your net benefits of $2,200 ($2,700 minus
$500).
Tax withholding and estimated tax.
You can choose to have federal income tax withheld from your social
security benefits 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. You can choose withholding at 7%, 10%, 15%, or 27% of
your total benefit payment.
If you do not choose to have income tax withheld, you may have to
request additional withholding from other income or pay estimated tax
during the year. For details, get Publication 505
or the instructions
for Form 1040-ES.
U.S. citizens residing abroad.
U.S. citizens who reside in the following countries are exempt from
U.S. tax on their benefits.
- Canada.
- Egypt.
- Germany.
- Ireland.
- Israel.
- Italy. (You must also be a citizen of Italy for the
exemption to apply.)
- Romania.
The SSA will not withhold U.S. tax from your benefits if you are a
U.S. citizen.
The RRB will withhold U.S. tax from your benefits unless you claim
an exemption from withholding. For information on how to claim an
exemption from withholding, see Exemption from withholding
under Nonresident aliens, next.
Nonresident aliens.
A nonresident alien is an individual who is not a citizen or
resident of the United States. If you are a nonresident alien, the
rules discussed in this publication do not apply to you. Instead, 85%
of your benefits are taxed at a 30% rate, unless exempt (or subject to
a lower rate) by treaty. You will receive a Form SSA-1042S or
Form RRB-1042S showing the amount of your benefits. These forms
will also show the tax rate and the amount of tax withheld from your
benefits.
Under tax treaties with the following countries, residents of these
countries are exempt from U.S. tax on their benefits.
- Canada.
- Egypt.
- Germany.
- Ireland.
- Israel.
- Italy.
- Japan.
- Romania.
- The United Kingdom.
Under a treaty with India, benefits paid to individuals
who are both residents and nationals of India are exempt from U.S. tax
if the benefits are for services performed for the United States, its
subdivisions, or local government authorities.
If you are a resident of Switzerland, 85% of your
benefits are taxed at a 15% rate.
For more information, get Publication 519,
U.S. Tax Guide for
Aliens.
Exemption from withholding.
If your social security benefits are exempt from tax because you
are a resident of one of the treaty countries listed, the SSA will not
withhold U.S. tax from your benefits.
If your railroad retirement benefits are exempt from tax because
you are a resident of one of the treaty countries listed, you can
claim an exemption from withholding by filing Form RRB-1001,
Nonresident Questionnaire, with the RRB. Contact the RRB to
get this form.
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