This chapter explains the federal income tax rules for social security benefits and equivalent tier 1 railroad retirement
benefits. It explains:
How to figure whether your benefits are taxable,
How to use the social security benefits worksheet (with examples),
How to report your taxable benefits, and
How to treat repayments that are more than the benefits you received during the year.
Social security benefits include monthly survivor and disability benefits. They do not include supplemental security income
(SSI) payments, 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 2005, you should have received a Form SSA-1099, Social Security Benefit Statement, or
Form RRB-1099, Payments
by the Railroad Retirement Board, (Form SSA-1042S, Social Security Benefit Statement, or Form RRB-1042S Statement for Nonresident
Alien Recipients of:
Payments by the Railroad Retirement Board, if you are a nonresident alien). These forms show the amounts received and repaid,
and taxes withheld for
the year. You may receive more than one of these forms for the same year. You should add the amounts shown on all forms you
receive for the year to
determine the “total” amounts received and repaid, and taxes withheld for that year. See the Appendix at the end of Publication 915
for more information.
Note.
When the term “benefits” is used in this chapter, it applies to both social security benefits and the SSEB portion of tier 1 railroad
retirement benefits.
What is not covered in this chapter.
This chapter does not cover the tax rules for the following railroad retirement benefits:
Non-social security equivalent benefit (NSSEB) portion of tier 1 benefits,
Tier 2 benefits,
Vested dual benefits, and
Supplemental annuity benefits.
For information on these benefits, see Publication 575, Pension and Annuity Income.
This chapter also does not cover the tax rules for foreign social security benefits. These benefits are taxable as
annuities, unless they are
exempt from U.S. tax or treated as a U.S. social security benefit under a tax treaty.
Useful Items - You may want to see:
Publication
575 Pension and Annuity Income
590 Individual Retirement Arrangements (IRAs)
915 Social Security and Equivalent Railroad Retirement Benefits
Forms (and Instructions)
1040-ES Estimated Tax for Individuals
W-4V Voluntary Withholding Request
Are Any of Your Benefits Taxable?
To find out whether any of your benefits may be 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.
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 by bona fide residents of American Samoa or Puerto Rico.
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 2005, 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 2005 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 2005,
$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 2005.
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.
Enter 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 2005, for 2005 and earlier years. (If you received more than one form, combine the
amounts from box 5 and
enter 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.
Enter your taxable pensions, wages, interest, dividends, and other taxable income
C.
D.
Enter 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
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 need to complete Worksheet 1 in
Publication 915 (or the Social Security Benefits Worksheet in your tax form instruction booklet).
Example.
You and your spouse (both over 65) are filing a joint return for 2005, and you both received social security benefits during
the year. In January
2006, you received a Form SSA-1099 showing net benefits of $7,500 in box 5. Your spouse received a Form SSA-1099 showing net
benefits of $3,500 in box
5. You also received a taxable pension of $19,000 and interest income of $500. You did not have any tax-exempt interest income.
Your benefits are not
taxable for 2005 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 2005 because your taxable gross income ($19,500)
exceeds the minimum
filing requirement amount for your filing status.
A.
Enter 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 2005, for 2005 and earlier years. (If you received more than one form, combine the
amounts from box 5 and
enter the total.)
A.
$ 11,000
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.
5,500
C.
Enter your taxable pensions, wages, interest, dividends, and other taxable income
C.
19,500
D.
Enter 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
E.
$25,000
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 (or the Social Security Benefits Worksheet in your tax form instruction booklet).
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 2005 must be subtracted from the gross benefits you received in 2005. It
does not matter whether the
repayment was for a benefit you received in 2005 or in an earlier year. If you repaid more than the gross benefits you received
in 2005, see
Repayments More Than Gross Benefits, later.
Your gross benefits are shown in box 3 of Form SSA-1099 or RRB-1099. Your repayments are shown in box 4. The amount
in box 5 shows your net
benefits for 2005 (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 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 25% 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, Tax Withholding and Estimated Tax, or the instructions for Form 1040-ES.
How To Report Your Benefits
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 2005, also enter “D” to the right of the word “benefits” on 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 2005, 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 2005, make the following entries. On Form 1040, enter “D” to the right of the word “benefits” on 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 2005.
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 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 2005 in your 2005 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 2005 income to figure the taxable part of the total benefits received in 2005. 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 2005 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.
Because the earlier year's taxable benefits are included in your 2005 income, no adjustment is made to the earlier year's
return. Do not file an
amended return for the earlier year.
Examples
The following are a few examples you can use as a guide to figure the taxable part of your benefits.
Example 1.
George White is single and files Form 1040 for 2005. He received the following income in 2005:
Fully taxable pension
$18,600
Wages from part-time job
9,400
Taxable interest income
990
Total
$28,990
George also received social security benefits during 2005. The Form SSA-1099 he received in January 2006 shows $5,980 in box
5. To figure his
taxable benefits, George completes the worksheet shown here.
Worksheet 1. Figuring Your Taxable Benefits
1.
Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099
$5,980
Note. If line 1 is zero or less, stop here; none of your benefits are taxable. Otherwise,
go to line 2.
2.
Enter one-half of line 1
2,990
3.
Enter the total of the amounts from:
Form 1040: Lines 7, 8a, 8b, 9a, 10 through 14, 15b, 16b, 17 through 19, and 21.
Form 1040A: Lines 7, 8a, 8b, 9a, 10, 11b, 12b, and 13
28,990
4.
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
30),
• 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
Form 1040A filers: Enter the total of any exclusions for qualified U.S. savings bond interest ( Form 8815,
line 14) or for adoption benefits ( Form 8839, line 30).
-0-
5.
Add lines 2, 3, and 4
31,980
6.
Form 1040 filers: Enter the amount from Form 1040, line 36, minus any amounts on Form 1040,
lines 33, 34, and 35
Form 1040A filers: Enter the amount from Form 1040A, line 20, minus any amounts on Form 1040A, lines 18 and 19.
-0-
7.
Is the amount on line 6 less than the amount on line 5?
No.
None of your social security benefits are taxable.
Yes.Subtract line 6 from line 5
31,980
8.
If you are:
Married filing jointly, enter $32,000
Single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of
2005, enter $25,000.
25,000
Note. If you are married filing separately and you lived with your spouse at any time in 2005, skip lines 8 through 15; multiply
line 7 by 85% (.85) and enter the result on line 16. Then go to line 17.
9.
Is the amount on line 8 less than the amount on line 7?
No.
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 2005, enter -0- on
Form 1040, line 20b, or on Form 1040A, line 14b.
Yes.Subtract line 8 from line 7
6,980
10.
Enter $12,000 if married filing jointly; $9,000 if single, head of household, qualifying widow(er), or
married filing separately and you lived apart from your spouse for all of 2005
9,000
11.
Subtract line 10 from line 9. If zero or less, enter -0-
-0-
12.
Enter the smaller of line 9 or line 10
6,980
13.
Enter one-half of line 12
3,490
14.
Enter the smaller of line 2 or line 13
2,990
15.
Multiply line 11 by 85% (.85). If line 11 is zero, enter -0-
-0-
16.
Add lines 14 and 15
2,990
17.
Multiply line 1 by 85% (.85)
5,083
18.
Taxable benefits. Enter the smaller of line 16 or line 17
$2,990
• 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.
The amount on line 18 of George's worksheet shows that $2,990 of his social security benefits is taxable. On line 20a of his
Form 1040, George
enters his net benefits of $5,980. On line 20b, he enters his taxable benefits of $2,990.
Example 2.
Ray and Alice Hopkins file a joint return on Form 1040A for 2005. Ray is retired and received a fully taxable pension of $15,500.
He also received
social security benefits, and his Form SSA-1099 for 2004 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. Figuring Your Taxable Benefits
1.
Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099
$5,600
Note. If line 1 is zero or less, stop here; none of your benefits are taxable. Otherwise,
go to line 2.
2.
Enter one-half of line 1
2,800
3.
Enter the total of the amounts from:
Form 1040: Lines 7, 8a, 8b, 9a, 10 through 14, 15b, 16b, 17 through 19, and 21.
Form 1040A: Lines 7, 8a, 8b, 9a, 10, 11b, 12b, and 13
29,750
4.
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
30),
• 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
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 30).
-0-
5.
Add lines 2, 3, and 4
32,550
6.
Form 1040 filers: Enter the amount from Form 1040, line 36, minus any amounts on Form 1040, lines 33,
34, and 35
Form 1040A filers: Enter the amount from Form 1040A, line 20, minus any amounts on Form 1040A, lines 18 and 19.
1,000
7.
Is the amount on line 6 less than the amount on line 5?
No.
None of your benefits are taxable.
Yes.Subtract line 6 from line 5
31,550
8.
If you are:
Married filing jointly, enter $32,000
Single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of
2005, enter $25,000.
32,000
Note. If you are married filing separately and you lived with your spouse at any time in 2005, skip lines 8 through 15; multiply
line 7 by 85% (.85) and enter the result on line 16. Then go to line 17.
9.
Is the amount on line 8 less than the amount on line 7?
No.
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 2005, enter -0- on
Form 1040, line 20b, or on Form 1040A, line 14b.
Yes.Subtract line 8 from line 7
10.
Enter $12,000 if married filing jointly; $9,000 if single, head of household, qualifying widow(er), or
married filing separately and you lived apart from your spouse for all of 2005
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 2005. Joe is a retired railroad worker and in 2005 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. Figuring Your Taxable Benefits
1.
Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099
$10,000
Note. If line 1 is zero or less, stop here; none of your benefits are taxable. Otherwise,
go to line 2.
2.
Enter one-half of line 1
5,000
3.
Enter the total of the amounts from:
Form 1040: Lines 7, 8a, 8b, 9a, 10 through 14, 15b, 16b, 17 through 19, and 21.
Form 1040A: Lines 7, 8a, 8b, 9a, 10, 11b, 12b, and 13
40,300
4.
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
30),
• 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
Form 1040A filers: Enter the total of any exclusions for qualified U.S. savings bond interest (Form 8815,
line 14) or for adoption benefits (Form 8839, line 30).
200
5.
Add lines 2, 3, and 4
45,500
6.
Form 1040 filers: Enter the amount from Form 1040, line 36, minus any amounts on Form 1040, lines 33,
34, and 35
Form 1040A filers: Enter the amount from Form 1040A, line 20, minus any amounts on Form 1040A,
lines 18 and 19.
-0-
7.
Is the amount on line 6 less than the amount on line 5?
No.
None of your benefits are taxable.
Yes.Subtract line 6 from line 5
45,500
8.
. If you are:
Married filing jointly, enter $32,000
Single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of
2005, enter $25,000
32,000
Note. If you are married filing separately and you lived with your spouse at any time in 2005, skip lines 8 through 15;
multiply line 7 by 85% (.85) and enter the result on line 16. Then go to line 17
9.
Is the amount on line 8 less than the amount on line 7?
No.
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 2005,
enter -0- on Form 1040,
line 20b, or on Form 1040A, line 14b.
Yes.Subtract line 8 from line 7
13,500
10.
Enter $12,000 if married filing jointly; $9,000 if single, head of household, qualifying widow(er), or
married filing separately and you lived apart from your spouse for all of 2005
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 Form 1040, line 20a, and $6,275 on Form 1040, line 20b.
Deductions Related to Your Benefits
You may be entitled to deduct certain amounts related to the benefits you receive.
Disability payments.
You may have received disability payments from your employer or an insurance company that you included as income on
your tax return in an earlier
year. If you received a lump-sum payment from SSA or RRB, and you had to repay the employer or insurance company for the disability
payments, you can
take an itemized deduction for the part of the payments you included in gross income in the earlier year. If the amount you
repay is more than $3,000,
you may be able to claim a tax credit instead. Claim the deduction or credit in the same way explained under Repayments More Than Gross Benefits,
later.
Legal expenses.
You can usually deduct legal expenses that you pay or incur to produce or collect taxable income or in connection
with the determination,
collection, or refund of any tax.
Legal expenses for collecting the taxable part of your benefits are deductible as a miscellaneous itemized deduction
on Schedule A (Form 1040),
line 22.
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 SSA office or your local RRB 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.
Example.
John and Mary file a joint return for 2005. John received Form SSA-1099 showing $3,000 in box 5. Mary also received Form SSA-1099
and the amount in
box 5 was ($500). John and Mary will use $2,500 ($3,000 minus $500) as the amount of their net benefits when figuring if any
of their 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.
Deduction $3,000 or less.
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 Schedule A (Form 1040), line 22.
Deduction more than $3,000.If this deduction is more than $3,000, you should figure your tax two ways:
Figure your tax for 2005 with the itemized deduction included on Schedule A line 27.
Figure your tax for 2005 in the following steps.
Figure the tax without the itemized deduction included on Schedule A line 27.
For each year after 1983 for which part of the negative figure represents a repayment of benefits, refigure your taxable benefits
as if your
total benefits for the year were reduced by that part of the negative figure. Then refigure the tax for that year.
Subtract the total of the refigured tax amounts in (b) from the total of your actual tax amounts.
Subtract the result in (c) from the result in (a).
Compare the tax figured in methods (1) and (2). Your tax for 2005 is the smaller of the two amounts. If method (1) results
in less tax, take
the itemized deduction on line 27, Schedule A (Form 1040). If method (2) results in less tax, claim a credit for the amount
from step 2(c) above on
Form 1040, line 70, and enter “I.R.C. 1341” in the margin to the left of line 70. If both methods produce the same tax, deduct the repayment on
Schedule A (Form 1040), line 27.
