Chapter 12 - Social Security & Equivalent Railroad Retirement Benefits

Examples

This is archived information that pertains only to the 2000 Tax Year. If you
are looking for information for the current tax year, go to the Tax Prep Help Area.

Example 2. Ray and Alice Hopkins file a joint return on Form 1040A for 2000. Ray is retired and received a fully taxable pension of $15,500. He also received social security benefits, and his Form SSA-1099 for 2000 shows net benefits of $5,600 in box 5. Alice worked during the year and had wages of $14,000. She made a deductible payment to her IRA account of $1,000. Ray and Alice have two savings accounts with a total of $250 in interest income. They complete Worksheet 1 and find that none of Ray’s social security benefits are taxable. They leave lines 14a and 14b of their Form 1040A blank.

Worksheet 1. Social Security and Equivalent Railroad Retirement Benefits

Note. If line 1 is zero or less, stop here; none of your benefits are taxable. Otherwise, go on to line 2.

Note. If line 9 is zero or less, stop here; none of your benefits are taxable. (Do not enter any amounts on Form 1040, line 20a or 20b, or on Form 1040A, line 14a or 14b. But if you are married filing separately and you lived apart from your spouse for all of 2000, enter "D" to the left of line 20a, Form 1040, or to the right of the word "benefits" on line 14a, Form 1040A. Also enter -0- on Form 1040, line 20b or on Form 1040A, line 14b.) Otherwise, go on to line 10.

1.	Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099		5,600
2.	Enter one-half of line 1		2,800
3.	Enter the total of the amounts from:
Form 1040: Lines 7, 8a, 8b, 9-14, 15b, 16b, 17-19, and 21.
Form 1040A: lines 7, 8a, 8b, 9, 10, 11b, 12b, and 13		29,750
4.	Form 1040A filers: Enter the total of any exclusion for qualified U.S. savings bond interest ( Form 8815, line 14) or for adoption benefits ( Form 8839, line 26).
Form 1040 filers: Enter the total of any exclusions/adjustments for:
• Qualified U.S. savings bond interest ( Form 8815, line 14),
• Adoption benefits ( Form 8839, line 26),
• Foreign earned income or housing ( Form 2555, lines 43 and 48, or Form 2555-EZ, line 18), and
• Certain income of bona fide residents of American Samoa ( Form 4563, line 15) or Puerto Rico		-0-
5.	Add lines 2, 3, and 4		32,550
6.	Form 1040A filers: Enter the amount from Form 1040A, line 16
Form 1040 filers: Enter the amount from Form 1040, line 32, minus any amount on Form 1040, line 24		1,000
7.	Subtract line 6 from line 5		31,550
8.	Enter $25,000 ($32,000 if married filing jointly; $0 if married filing separately and you lived with your spouse at any time during 2000)		32,000
9.	Subtract line 8 from line 7. If zero or less, enter -0-		-0-
10.	Enter $9,000 ($12,000 if married filing jointly; $0 if married filing separately and you lived with your spouse at any time in 2000)
11.	Subtract line 10 from line 9. If zero or less, enter -0-
12.	Enter the smaller of line 9 or line 10
13.	Enter one-half of line 12
14.	Enter the smaller of line 2 or line 13
15.	Multiply line 11 by 85% (.85). If line 11 is zero, enter -0-
16.	Add lines 14 and 15
17.	Multiply line 1 by 85% (.85)
18.	Taxable benefits. Enter the smaller of line 16 or line 17
• Enter the amount from line 1 above on Form 1040, line 20a or on Form 1040A, line 14a.
• Enter the amount from line 18 above on Form 1040, line 20b or on Form 1040A, line 14b

Example 3. Joe and Betty Johnson file a joint return on Form 1040 for 2000. Joe is a retired railroad worker and in 2000 received the social security equivalent benefit (SSEB) portion of tier 1 railroad retirement benefits. Joe’s Form RRB-1099 shows $10,000 in box 5. Betty is a retired government worker and receives a fully taxable pension of $38,000. They had $2,300 in interest income plus interest of $200 on a qualified U.S. savings bond. The savings bond interest qualified for the exclusion. Thus, they have a total income of $40,300 ($38,000 + $2,300). They figure their taxable benefits by completing Worksheet 1.

Worksheet 1. Social Security and Equivalent Railroad Retirement Benefits

Note. If line 1 is zero or less, stop here; none of your benefits are taxable. Otherwise, go on to line 2.

Note. If line 9 is zero or less, stop here; none of your benefits are taxable. (Do not enter any amounts on Form 1040, line 20a or 20b, or on Form 1040A, line 14a or 14b. But if you are married filing separately and you lived apart from your spouse for all of 2000, enter "D" to the left of line 20a, Form 1040, or to the right of the word "benefits" on line 14a, Form 1040A. Also enter -0- on Form 1040, line 20b or on Form 1040A, line 14b.) Otherwise, go on to line 10.

1.	Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099		10,000
2.	Enter one-half of line 1		5,000
3.	Enter the total of the amounts from:
Form 1040: Lines 7, 8a, 8b, 9-14, 15b, 16b, 17-19, and 21.
Form 1040A: lines 7, 8a, 8b, 9, 10, 11b, 12b, and 13		40,300
4.	Form 1040A filers: Enter the total of any exclusion for qualified U.S. savings bond interest ( Form 8815, line 14) or for adoption benefits ( Form 8839, line 26).
Form 1040 filers: Enter the total of any exclusions/adjustments for:
• Qualified U.S. savings bond interest ( Form 8815, line 14),
• Adoption benefits ( Form 8839, line 26),
• Foreign earned income or housing ( Form 2555, lines 43 and 48, or Form 2555-EZ, line 18), and
• Certain income of bona fide residents of American Samoa ( Form 4563, line 15) or Puerto Rico		200
5.	Add lines 2, 3, and 4		45,500
6.	Form 1040A filers: Enter the amount from Form 1040A, line 16
Form 1040 filers: Enter the amount from Form 1040, line 32, minus any amount on Form 1040, line 24		-0-
7.	Subtract line 6 from line 5		45,500
8.	Enter $25,000 ($32,000 if married filing jointly; $0 if married filing separately and you lived with your spouse at any time during 2000)		32,000
9.	Subtract line 8 from line 7. If zero or less, enter -0-		13,500
10.	Enter $9,000 ($12,000 if married filing jointly; $0 if married filing separately and you lived with your spouse at any time in 2000)		12,000
11.	Subtract line 10 from line 9. If zero or less, enter -0-		1,500
12.	Enter the smaller of line 9 or line 10		12,000
13.	Enter one-half of line 12		6,000
14.	Enter the smaller of line 2 or line 13		5,000
15.	Multiply line 11 by 85% (.85). If line 11 is zero, enter -0-		1,275
16.	Add lines 14 and 15		6,275
17.	Multiply line 1 by 85% (.85)		8,500
18.	Taxable benefits. Enter the smaller of line 16 or line 17		6,275
• Enter the amount from line 1 above on Form 1040, line 20a or on Form 1040A, line 14a.
• Enter the amount from line 18 above on Form 1040, line 20b or on Form 1040A, line 14b.

More than 50% of Joe’s net benefits are taxable because the income on line 7 of the worksheet ($45,500) is more than $44,000. Joe and Betty enter $10,000 on line 20a, Form 1040, and $6,275 on line 20b, Form 1040.

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