Publication 915 (2007), Social Security and Equivalent Railroad Retirement Benefits

IRS Resources

Publication 915 - Main Contents

Table of Contents

Are Any of Your Benefits Taxable?

To find out whether any of your benefits may be 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 by bona fide residents of American Samoa or Puerto Rico.

The SSA issues Form SSA-1099 and Form SSA-1042S. The RRB issues Form RRB-1099 and Form RRB-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 Worksheet A, discussed later. 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 2007, 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 2007 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 2007,
$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 2007.

Worksheet A. You can use Worksheet A 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.

Worksheet A. A Quick Way To Check if 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 2007, for 2007 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, shown later.

Example.

You and your spouse (both over 65) are filing a joint return for 2007 and you both received social security benefits during the year. In January 2008, 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 $20,000 and interest income of $500. You did not have any tax-exempt interest income. Your benefits are not taxable for 2007 because your income, as figured in Worksheet A on the next page, 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 2007 because your taxable gross income ($20,500) exceeds the minimum filing requirement amount for your filing status.

Filled-in Worksheet A. A Quick Way To Check if 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 2007, for 2007 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.	20,500
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.	$26,000
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 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 2007 must be subtracted from the gross benefits you received in 2007. It does not matter whether the repayment was for a benefit you received in 2007 or in an earlier year. If you repaid more than the gross benefits you received in 2007, 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 2007 (box 3 minus box 4). Use the amount in box 5 to figure whether any of your benefits are taxable.

Example.

In 2006, you received $3,000 in social security benefits, and in 2007 you received $2,700. In March 2007, SSA notified you that you should have received only $2,500 in benefits in 2006. During 2007, you repaid $500 to SSA. The Form SSA-1099 you received for 2007 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 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 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.
United Kingdom.

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 file Form RRB-1001, Nonresident Questionnaire, with the RRB to provide citizenship and residency information. If you do not file Form RRB-1001, the RRB will consider you a nonresident alien and withhold tax from your railroad retirement benefits at a 30% rate. Contact the RRB to get this form.

Lawful permanent residents. For U.S. income tax purposes, lawful permanent residents (green card holders) are considered resident aliens until their lawful permanent resident status under the immigration laws is either taken away or is administratively or judicially determined to have been abandoned. Social security benefits paid to a green card holder are not subject to 30% withholding. If you are a green card holder and tax was withheld in error on your social security benefits because you have a foreign address, the withholding tax is refundable by the Social Security Administration (SSA) or the IRS. SSA will refund taxes erroneously withheld if the refund can be processed during the same calendar year in which the tax was withheld. If SSA cannot refund the taxes withheld, you must file a Form 1040 or 1040A with the Internal Revenue Service Center, Austin, TX 73301 to determine if you are entitled to a refund. You must also attach the following information to your Form 1040 or 1040A:

A copy of the Form SSA-1042S, Social Security Benefit Statement,
A copy of the “green card,” and
A signed declaration that includes the following statements:

“The SSA should not have withheld federal income tax from my social security benefits because I am a U.S. lawful permanent resident and my green card has been neither revoked nor administratively or judicially determined to have been abandoned. I am filing a U.S. income tax return for the tax year as a resident alien reporting all of my worldwide income. I have not claimed benefits for the tax year under an income tax treaty as a nonresident alien.”

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.
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, your total benefit amount will be taxed at a 15% rate.

For more information on whether you are a nonresident alien, 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 with the RRB. Contact the RRB to get this form.

Canadian or German social security benefits paid to U.S. residents. Under income tax treaties with Canada and Germany, social security benefits paid by those countries to U.S. residents are treated for U.S. income tax purposes as if they were paid under the social security legislation of the United States. If you receive social security benefits from Canada or Germany, include them on line 1 of Worksheet 1, shown later.

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 2007, 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 2007, also enter “D” to the right of the word “benefits” on line 14a.

Benefits not taxable. If you are filing Form 1040EZ, do not report any benefits on your tax return. If you are filing Form 1040 or Form 1040A, report your net benefits (the amount in box 5 of your Form SSA-1099 or Form RRB-1099) on Form 1040, line 20a, or Form 1040A, line 14a. Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. If you are married filing separately and you lived apart from your spouse for all of 2007, also enter “D” to the right of the word “benefits” on Form 1040, line 20a, or Form 1040A, line 14a.

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 2007.

Which worksheet to use. A worksheet to figure your taxable benefits is in the instructions for your Form 1040 or 1040A. You can use either that worksheet or Worksheet 1 in this publication, 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 this publication 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 this publication. See Lump-Sum Election, later.

Examples

The following pages contain 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 2007. In addition to receiving social security payments, he received a fully taxable pension of $18,600, wages from a part-time job of $9,400, and taxable interest income of $990, for a total of $28,990. He received a Form SSA-1099 in January 2008 that shows his net social security benefits of $5,980 in box 5.
To figure his taxable benefits, George completes Worksheet 1, shown below. 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.

Filled-in Worksheet 1. Figuring Your Taxable BenefitsKeep for your records

Before you begin: If you are married filing separately and you lived apart from your spouse for all of 2007, enter “D” to the right of the word “benefits” on Form 1040, line 20a, or Form 1040A, line 14a. Do not use this worksheet if you repaid benefits in 2007 and your total repayments (box 4 of Forms SSA-1099 and RRB-1099) were more than your gross benefits for 2007 (box 3 of Forms SSA-1099 and RRB-1099). None of your benefits are taxable for 2007. For more information, see Repayments More Than Gross Benefits.
1.	Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099. Also enter this amount on Form 1040, line 20a, or Form 1040A, line 14a				1.	$5,980
2.	Enter one-half of line 1						2.	2,990
3.	Enter the total of the amounts from: Form 1040: Lines 7, 8a, 9a, 10 through 14, 15b, 16b, 17 through 19, and 21 Form 1040A: Lines 7, 8a, 9a, 10, 11b, 12b, and 13						3.	28,990
4.	Enter the amount, if any, from Form 1040 or 1040A, line 8b						4.	-0-
5.	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 45 and 50, 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) Adoption benefits (Form 8839, line 30)						5.	-0-
6.	Add lines 2, 3, 4, and 5						6.	31,980
7.	Form 1040 filers: Enter the amounts from Form 1040, lines 23 through 32, and any write-in adjustments you entered on the dotted line next to line 36. Form 1040A filers: Enter the amounts from Form 1040A, lines 16 and 17						7.	-0-
8.	Is the amount on line 7 less than the amount on line 6?
		No.		None of your social security benefits are taxable. Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b.
		Yes.	Subtract line 7 from line 6				8.	31,980
9.	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 2007, enter $25,000						9.	25,000
	Note. If you are married filing separately and you lived with your spouse at any time in 2007, skip lines 9 through 16; multiply line 8 by 85% (.85) and enter the result on line 17. Then go to line 18.
10.	Is the amount on line 9 less than the amount on line 8?
		No.		None of your benefits are taxable. Enter -0- on Form 1040, line 20b, or on Form 1040A, line 14b. If you are married filing separately and you lived apart from your spouse for all of 2007, be sure you entered “D” to the right of the word “benefits” on Form 1040, line 20a, or on Form 1040A, line 14a.
		Yes.	Subtract line 9 from line 8				10.	6,980
11.	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 2007						11.	9,000
12.	Subtract line 11 from line 10. If zero or less, enter -0-.						12.	-0-
13.	Enter the smaller of line 10 or line 11						13.	6,980
14.	Enter one-half of line 13						14.	3,490
15.	Enter the smaller of line 2 or line 14						15.	2,990
16.	Multiply line 12 by 85% (.85). If line 12 is zero, enter -0-						16.	-0-
17.	Add lines 15 and 16						17.	2,990
18.	Multiply line 1 by 85% (.85)						18.	5,083
19.	Taxable benefits. Enter the smaller of line 17 or line 18. Also enter this amount on Form 1040, line 20b, or Form 1040A, line 14b						19.	$2,990
				If you received a lump-sum payment in 2007 that was for an earlier year, also complete Worksheet 2 or 3 and Worksheet 4 to see if you can report a lower taxable benefit.

Example 2.

Ray and Alice Hopkins file a joint return on Form 1040A for 2007. Ray is retired and received a fully taxable pension of $15,500. He also received social security benefits and his Form SSA-1099 for 2007 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 taxable interest income. They complete Worksheet 1 (below) and find that none of Ray's benefits are taxable. On line 3 of the worksheet, they enter $29,750 ($15,500 + $14,000 + $250). On Form 1040A, they enter $5,600 on line 14a and -0- on line 14b.

Filled-in Worksheet 1. Figuring Your Taxable BenefitsKeep for your records

Before you begin: If you are married filing separately and you lived apart from your spouse for all of 2007, enter “D” to the right of the word “benefits” on Form 1040, line 20a, or Form 1040A, line 14a. Do not use this worksheet if you repaid benefits in 2007 and your total repayments (box 4 of Forms SSA-1099 and RRB-1099) were more than your gross benefits for 2007 (box 3 of Forms SSA-1099 and RRB-1099). None of your benefits are taxable for 2007. For more information, see Repayments More Than Gross Benefits.
1.	Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099. Also enter this amount on Form 1040, line 20a, or Form 1040A, line 14a				1.	$5,600
2.	Enter one-half of line 1						2.	2,800
3.	Enter the total of the amounts from: Form 1040: Lines 7, 8a, 9a, 10 through 14, 15b, 16b, 17 through 19, and 21 Form 1040A: Lines 7, 8a, 9a, 10, 11b, 12b, and 13						3.	29,750
4.	Enter the amount, if any, from Form 1040 or 1040A, line 8b						4.	-0-
5.	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 45 and 50, 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) Adoption benefits (Form 8839, line 30)						5.	-0-
6.	Add lines 2, 3, 4, and 5						6.	32,550
7.	Form 1040 filers: Enter the amounts from Form 1040, lines 23 through 32, and any write-in adjustments you entered on the dotted line next to line 36. Form 1040A filers: Enter the amounts from Form 1040A, lines 16 and 17						7.	1,000
8.	Is the amount on line 7 less than the amount on line 6?
		No.		None of your social security benefits are taxable. Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b.
		Yes.	Subtract line 7 from line 6				8.	31,550
9.	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 2007, enter $25,000						9.	32,000
	Note. If you are married filing separately and you lived with your spouse at any time in 2007, skip lines 9 through 16; multiply line 8 by 85% (.85) and enter the result on line 17. Then go to line 18.
10.	Is the amount on line 9 less than the amount on line 8?
		No.		None of your benefits are taxable. Enter -0- on Form 1040, line 20b, or on Form 1040A, line 14b. If you are married filing separately and you lived apart from your spouse for all of 2007, be sure you entered “D” to the right of the word “benefits” on Form 1040, line 20a, or on Form 1040A, line 14a.
		Yes.	Subtract line 9 from line 8				10.
11.	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 2007						11.
12.	Subtract line 11 from line 10. If zero or less, enter -0-.						12.
13.	Enter the smaller of line 10 or line 11						13.
14.	Enter one-half of line 13						14.