IRS Pub. 17, Your Federal Income Tax
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 1998, 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 13a and the taxable
part on line 13b. If you are married filing separately and you lived
apart from your spouse for all of 1998, also enter "D" to the
right of the word "benefits" on line 13a.
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 1998, 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 13a and
"-0-" on line 13b.
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 one 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), or
- You are married filing separately and lived with your
spouse at any time during 1998.
Which worksheet to use.
A worksheet to figure your taxable benefits is in the instructions
for your tax form. You can use either that worksheet or Worksheet 1 in
Publication 915,
unless one of the following situations applies to
you.
- You contributed to an 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 receive 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 1998 in your 1998 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 1998 income to figure the taxable part of
the total benefits received in 1998. 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 1998 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 1998
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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