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This chapter explains the federal income tax rules for social security benefits and equivalent tier 1 railroad retirement benefits. It explains the following topics.

• How to figure whether your benefits are taxable.
• How to use the social security benefits worksheet (with examples).
• How to report your taxable benefits.
• How to treat repayments that are more than the benefits you received during the year.

Social security benefits include monthly retirement, 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 2017, you should have received a Form SSA-1099, Social Security Benefit Statement, or Form RRB-1099, Payments by the Railroad Retirement Board. 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 the Forms SSA-1099 and Forms RRB-1099 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 Pub. 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.

my Social Security account. Social Security beneficiaries may quickly and easily obtain various information from the SSA’s website with a my Social Security account to:

• Keep track of your earnings and verify them every year,
• Get an estimate of your future benefits if you are still working,
• Get a letter with proof of your benefits if you currently receive them,
• Change your address,
• Start or change your direct deposit,
• Get a replacement Medicare card, and
• Get a replacement Form SSA-1099 for the tax season.

For more information and to set up an account, go to www.ssa.gov/myaccount.

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.
• Supplemental annuity benefits.

For information on these benefits, see Pub. 575, Pension and Annuity Income.

This chapter does not cover the tax rules for social security benefits reported on Form SSA-1042S, Social Security Benefit Statement, or Form RRB-1042S, Statement for Nonresident Alien Recipients of: Payments by the Railroad Retirement Board. For information about these benefits, see Pub. 519, U.S. Tax Guide for Aliens, and Pub. 915, Social Security and Equivalent Railroad Retirement Benefits.

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

• 505    Tax Withholding and Estimated Tax
• 575    Pension and Annuity Income
• 590-A     Contributions to Individual Retirement Arrangements (IRAs)
• 915    Social Security and Equivalent Railroad Retirement Benefits

Forms (and Instructions)

• 1040-ES    Estimated Tax for Individuals
• SSA-1099    Social Security Benefit Statement
• RRB-1099    Payments by the Railroad Retirement Board
• 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:

1. One-half of your benefits, plus
2. All your other income, including tax-exempt interest.

Exclusions. 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.

Children’s benefits. The rules in this chapter apply to benefits received by children. See Who is taxed, later.

Figuring total income. To figure the total of one-half of your benefits plus your other income, use Worksheet 11-1 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 2017, 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.

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 2017,
• $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 2017.

Worksheet 11-1. You can use Worksheet 11-1 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.

Example. You and your spouse (both over 65) are filing a joint return for 2017 and you both received social security benefits during the year. In January 2018, 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 $22,800 and interest income of $500. You did not have any tax-exempt interest income. Your benefits are not taxable for 2017 because your income, as figured in Worksheet 11-1, 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 2017 because your taxable gross income ($23,300) exceeds the minimum filing requirement amount for your filing status.

Who is taxed. Benefits are included in the taxable income (to the extent they are taxable) of the person who has the legal right to receive the benefits. 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 2017 must be subtracted from the gross benefits you received in 2017. It does not matter whether the repayment was for a benefit you received in 2017 or in an earlier year. If you repaid more than the gross benefits you received in 2017, 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 2017 (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.

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, see Pub. 505 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 total amount from box 5 of all your Forms SSA-1099 and Forms 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 2017, also enter “D” to the right of the word “benefits” on line 20a.

Reporting on Form 1040A. Report your net benefits (the total amount from box 5 of all your Forms SSA-1099 and Forms 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 2017, 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 total amount from box 5 of all your Forms SSA-1099 and Forms 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 2017, also enter “D” to the right of the word “benefits” on Form 1040, line 20a, or Form 1040A, line 14a.

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 2017. He received the following income in 2017:

George also received social security benefits during 2017. The Form SSA-1099 he received in January 2018 shows $5,980 in box 5. To figure his taxable benefits, George completes the worksheet shown here.

The amount on line 19 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 2017. Ray is retired and received a fully taxable pension of $15,500. He also received social security benefits, and his Form SSA-1099 for 2017 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 and is not covered by a retirement plan at work. Ray and Alice have two savings accounts with a total of $250 in taxable interest income. They complete Worksheet 1, entering $29,750 ($15,500 + $14,000 + $250) on line 3. They find none of Ray’s social security benefits are taxable. On Form 1040A, they enter $5,600 on line 14a and -0- on line 14b.

Example 3. Joe and Betty Johnson file a joint return on Form 1040 for 2017. Joe is a retired railroad worker and in 2017 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 taxable interest income plus interest of $200 on a qualified U.S. savings bond. The savings bond interest qualified for the exclusion. They figure their taxable benefits by completing Worksheet 1. Because they have qualified U.S. savings bond interest, they follow the note at the beginning of the worksheet and use the amount from line 2 of their Schedule B (Form 1040A or 1040) on line 3 of the worksheet instead of the amount from line 8a of their Form 1040. On line 3 of the worksheet, they enter $40,500 ($38,000 + $2,500).

More than 50% of Joe’s net benefits are taxable because the income on line 8 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 23.

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. Do not use a worksheet in this case. 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 2017. 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 23.

Deduction more than $3,000. If this deduction is more than $3,000, you should figure your tax two ways:

1. Figure your tax for 2017 with the itemized deduction included on Schedule A, line 28.
2. Figure your tax for 2017 in the following steps.
   1. Figure the tax without the itemized deduction included on Schedule A, line 28.
   2. 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.
   3. Subtract the total of the refigured tax amounts in (b) from the total of your actual tax amounts.
   4. Subtract the result in (c) from the result in (a).

Compare the tax figured in methods (1) and (2). Your tax for 2017 is the smaller of the two amounts. If method (1) results in less tax, take the itemized deduction on Schedule A (Form 1040), line 28. If method (2) results in less tax, claim a credit for the amount from step 2(c) above on Form 1040, line 71. Check box d and enter “I.R.C. 1341” in the space next to that box. If both methods produce the same tax, deduct the repayment on Schedule A (Form 1040), line 28.