If part of your benefits are 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 2001, 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 2001, also 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 2001, 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 are 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.
Generally, up to 50% of your benefits will be taxable. 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 2001.
Which worksheet to use.
A worksheet to figure your taxable benefits is in the instructions for your Form 1040 or Form 1040A. You can use either that worksheet or
Worksheet 1 in Publication 915,
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.
See Lump-sum election.
Lump-sum election.
You must include the taxable part of a lump-sum (retroactive) payment of benefits received in 2001 in your 2001 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 2001 income to figure the taxable part of the total benefits received in 2001. 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.
Making the election.
If you received a lump-sum benefit payment in 2001 that includes benefits for one or more earlier years, follow the instructions in Publication 915
under Lump-Sum Election to see whether making the election will lower your taxable benefits. That discussion also explains how to make the
election.
Since the earlier year's taxable benefits are included in your 2001 income, no adjustment is made to the earlier year's return. Do not
file an amended return for the earlier year.
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