Publication 554 - Older Americans' Tax Guide - 2002 Page 12
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29get Publication 505, Tax Withholding and Estimated Tax,
special worksheets in Appendix B of Publication 590
or the instructions for Form 1040 – ES, Estimated Tax for
to figure both your IRA deduction and your taxable
Individuals.
benefits.
2) Situation (1) does not apply and you take an exclu-
How To Report Your Benefits
sion for interest from qualified U.S. savings bonds
(Form 8815), for adoption benefits (Form 8839), for
If part of your benefits is taxable, you must use Form 1040
foreign earned income or housing (Form 2555 or
or Form 1040A. You cannot use Form 1040EZ.
Form 2555 – EZ), or for income earned in American
Samoa (Form 4563) or Puerto Rico by bona fide
Reporting on Form 1040. Report your net benefits (the
residents. In this situation, you must use Worksheet
amount in box 5 of your Form SSA – 1099 or Form
1 in Publication 915 to figure your taxable benefits.
RRB –1099) on line 20a and the taxable part on line 20b. If
you are married filing separately and you lived apart from
3) You received a lump-sum payment for an earlier
your spouse for all of 2002, also enter “D” to the right of the
year. In this situation, also complete Worksheet 2 or
word benefits on line 20a.
3 and Worksheet 4 in Publication 915.
Reporting on Form 1040A. Report your net benefits (the
amount in box 5 of your Form SSA – 1099 or Form
Lump-Sum Election
RRB –1099) on line 14a and the taxable part on line 14b. If
you are married filing separately and you lived apart from
You must include the taxable part of a lump-sum (retroac-
your spouse for all of 2002, enter “D” to the right of the word
tive) payment of benefits received in 2002 in your 2002
benefits on line 14a.
income, even if the payment includes benefits for an earlier
Benefits not taxable. If none of your benefits are taxable,
year.
do not report any of them on your tax return. However, if
This type of lump-sum benefit payment should
you are married filing separately and you lived apart from
TIP
not be confused with the lump-sum death benefit
your spouse for all of 2002, make the following entries. On
that both the SSA and RRB pay to many of their
Form 1040, enter “D” to the right of the word benefits on
beneficiaries. No part of the lump-sum death benefit is
line 20a and “– 0– ” on line 20b. On Form 1040A, enter “D”
subject to tax.
to the right of the word benefits on line 14a and “–0– ” on
line 14b.
Generally, you use your 2002 income to figure the
taxable part of the total benefits received in 2002. How-
ever, you may be able to figure the taxable part of a
How Much Is Taxable?
lump-sum payment for an earlier year separately, using
your income for the earlier year. You can elect this method
If part of your benefits is taxable, how much is taxable
if it lowers your taxable benefits. See Publication 915 for
depends on the total amount of your benefits and other
more information.
income. Generally, the higher that total amount, the
greater the taxable part of your benefits.
Repayments More
Maximum taxable part. The taxable part of your benefits
Than Gross Benefits
usually cannot be more than 50%. However, up to 85% of
your benefits can be taxable if either of the following
In some situations, your Form SSA – 1099 or Form
situations applies to you.
RRB –1099 will show that the total benefits you repaid (box
•
The total of one-half of your benefits and all your
4) are more than the gross benefits (box 3) you received. If
other income is more than $34,000 ($44,000 if you
this occurred, your net benefits in box 5 will be a negative
are married filing jointly).
figure (a figure in parentheses) and none of your benefits
•
will be taxable. If you receive more than one form, a
You are married filing separately and lived with
negative figure in box 5 of one form is used to offset a
your spouse at any time during 2002.
positive figure in box 5 of another form for that same year.
If you have any questions about this negative figure,
Which worksheet to use. A worksheet to figure your
contact your local Social Security Administration office or
taxable benefits is in the instructions for your Form 1040 or
your local U.S. Railroad Retirement Board field office.
1040A. You can use either that worksheet or Worksheet 1
Joint return. If you and your spouse file a joint return, and
in Publication 915, Social Security and Equivalent Railroad
your Form SSA –1099 or RRB –1099 has a negative figure
Retirement Benefits, unless any of the following situations
in box 5 but your spouse’s does not, subtract the amount in
applies to you.
box 5 of your form from the amount in box 5 of your
1) You contributed to a traditional individual retirement
spouse’s form. You do this to get your net benefits when
arrangement (IRA) and your IRA deduction is limited
figuring if your combined benefits are taxable.
because you or your spouse is covered by a retire-
ment plan at work. In this situation, you must use the
Page 12
Chapter 2 Taxable and Nontaxable Income
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