Previous Page: Publication 915 - Social Security and Equivalent Railroad Retirement Benefits - Lump-Sum Election Next Page: Publication 915 - Social Security and Equivalent Railroad Retirement Benefits - Appendix Use   to find additional instances of index items.

Taxmap/pubs/p915-004.htm#TXMP57f8e78a Deductions Related to Your Benefits

Deductions Related to Your Benefits

You may be entitled to deduct certain amounts related to the benefits you receive.

Taxmap/pubs/p915-004.htm#TXMP3767f040 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 Repayment of benefits received in an earlier year in the section Repayments More Than Gross Benefits, later.

Taxmap/pubs/p915-004.htm#TXMP6fd5d95c 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.

Taxmap/pubs/p915-004.htm#TXMP7bae474f Repayments More Than Gross Benefits

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.

Taxmap/pubs/p915-004.htm#TXMP53227540 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.

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Example.

John and Mary file a joint return for 2004. 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.

Taxmap/pubs/p915-004.htm#TXMP0c7cf973 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.

Taxmap/pubs/p915-004.htm#TXMP4c37dbe7 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.

Taxmap/pubs/p915-004.htm#TXMP19fcf521 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 2004 with the itemized deduction included on Schedule A, line 27.
2. Figure your tax for 2003 in the following steps:
   1. Figure the tax without the itemized deduction included on Schedule A, line 27.
   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 2004 is the smaller of the two amounts. If method (1) results in less tax, take the itemized deduction on Schedule A (Form 1040), line 27. If method (2) results in less tax, claim a credit for the amount from step 2(c) above on line 69 of Form 1040 and write "I.R.C. 1341" in the margin to the left of line 69. If both methods produce the same tax, deduct the repayment on Schedule A (Form 1040), line 27.

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Worksheet 1. Figuring Your Taxable Benefits   Keep for your records Before you begin: Is your filing status Married filing separately?                             No.  Go to line 1 below.                       Yes. Did you live apart from your spouse all year?                            No.  Go to line 1 below.                        Yes. Do the following if you file:                             Form 1040:    Enter D to the right of the word benefits on line 20a, then go to line 1 below.                             Form 1040A: Enter D to the right of the word benefits on line 14a, then go to line 1 below.  1. Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099  1.                        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.                  3. Enter the total of the amounts from: Form 1040: Lines 7, 8a, 8b, 9a, 10-14, 15b, 16b, 17-19, and 21 Form 1040A: Lines 7, 8a, 8b, 9a, 10, 11b, 12b, and 13  3.                  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) Adoption benefits (Form 8839, line 30)  4.                  5. Add lines 2, 3, and 4  5.                  6. Form 1040 filers: Enter the amount from Form 1040, line 35, minus any amounts on Form 1040, lines 26 and 27. Form 1040A filers: Enter the amount from Form 1040A, line 20, minus any amounts on Form 1040A, lines 18 and 19  6.                  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  7.                  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 2004, enter $25,000  8.                      Note: If you are married filing separately and you lived with your spouse at any time in 2004, 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 2004, enter -0- on Form 1040, line 20b, or on Form 1040A, line 14b.                      Yes.  Subtract line 8 from line 7  9.                 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 2004 10.                 11. Subtract line 10 from line 9. If zero or less, enter -0-. 11.                 12. Enter the smaller of line 9 or line 10 12.                 13. Enter one-half of line 12 13.                 14. Enter the smaller of line 2 or line 13 14.                 15. Multiply line 11 by 85% (.85). If line 11 is zero, enter -0- 15.                 16. Add lines 14 and 15 16.                 17. Multiply line 1 by 85% (.85) 17.                 18. Taxable benefits. Enter the smaller of line 16 or line 17 18.                      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.                 Note: If you received a lump-sum payment in this year that was for an earlier year, also complete Worksheet 2 or 3 and Worksheet 4 to see whether you can report a lower taxable benefit.

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Worksheet 2. Figure Your Additional Taxable Benefits (From a Lump-Sum Payment for a Year After 1993) Enter earlier year                  Keep for your records  1. Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099 for the earlier year, plus the lump-sum payment for the earlier year received after that year  1.                           Note: If line 1 is zero or less, skip lines 2 through 20 and enter -0- on line 21. Otherwise, go on to line 2.                 2. Enter one-half of line 1  2.                  3. Enter the adjusted gross income reported on your return for the earlier year  3.                  4. Enter the total of any exclusions/adjustments you claimed in the earlier year for: Adoption benefits (Form 8839) Qualified U.S. savings bond interest (Form 8815) Student loan interest (Form 1040, page 1, or Form 1040A, page 1) Tuition and fees (Form 1040, page 1, or Form 1040A, page 1) Foreign earned income or housing (Form 2555 or Form 2555-EZ) Certain income of bona fide residents of American Samoa (Form 4563) or Puerto Rico  4.                  5. Enter any tax-exempt interest received in the earlier year  5.                  6. Add lines 2, 3, 4, and 5  6.                  7. Enter taxable benefits reported on your return for the earlier year  7.                  8. Subtract line 7 from line 6  8.                  9. If for the earlier year you were:        Married filing jointly, enter $32,000 Single, head of household, qualifying widow(er), married filing separately and lived apart from your spouse for all of the earlier year, enter $25,000 Married filing separately and lived with your spouse at any time during the earlier year, enter -0-  9.                 10. Is the amount on line 8 more than the amount on line 9?                  No.  Skip lines 10-20 and enter -0- on line 21.                  Yes. Subtract line 9 from line 8 10.                 11. Enter $9,000 ($12,000 if married filing jointly for the earlier year; $0 if married filing separately for the earlier year and you lived with your spouse at any time during the year) 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.                 15. Enter the smaller of line 2 or line 14 15.                 16. Multiply line 12 by 85% (.85). If line 12 is zero, enter -0- 16.                 17. Add lines 15 and 16 17.                 18. Multiply line 1 by 85% (.85) 18.                 19. Refigured taxable benefits. Enter the smaller of line 17 or line 18 19.                 20. Enter taxable benefits reported on your return for the earlier year (or as refigured due to a previous lump-sum payment for the year) 20.                 21. Additional taxable benefits. Subtract line 20 from line 19. Also enter this amount on line 19 of Worksheet 4 21.                      Note: Do not file an amended return for this earlier year. Complete a separate Worksheet 2 or Worksheet 3 for each earlier year for which you received a lump-sum payment in 2004.

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Worksheet 3. Figure Your Additional Taxable Benefits (From a Lump-Sum Payment for a Year Before 1994) Enter earlier year                  Keep for your records  1. Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099 for the earlier year, plus the lump-sum payment for the earlier year received after that year  1.                      Note: If line 1 is zero or less, skip lines 2 through 13 and enter -0- on line 14. Otherwise, go on to line 2.            2. Enter one-half of line 1  2.           3. Enter the adjusted gross income reported on your return for the earlier year  3.           4. Enter the total of any exclusions/adjustments you claimed in the earlier year for: Qualified U.S. savings bond interest (Form 8815) Foreign earned income or housing (Form 2555 or Form 2555-EZ) Certain income of bona fide residents of American Samoa (Form 4563) or Puerto Rico  4.           5. Enter any tax-exempt interest received in the earlier year  5.           6. Add lines 2, 3, 4, and 5  6.           7. Enter taxable benefits reported on your return for the earlier year  7.           8. Subtract line 7 from line 6  8.           9. Enter $25,000 ($32,000 if married filing jointly for the earlier year; $0 if married filing separately for the earlier year and you lived with your spouse at any time during the year)  9.          10. Is line 8 more than line 9?   No.  Skip lines 10-13 and enter -0- on line 14.   Yes. Subtract line 9 from line 8. 10.          11. Enter one-half of line 10 11.          12. Refigured taxable benefits. Enter the smaller of line 2 or line 11 12.          13. Enter taxable benefits reported on your return for the earlier year (or as refigured due to a previous lump-sum payment for the year) 13.          14. Additional taxable benefits. Subtract line 13 from line 12. Also enter this amount on line 19 of Worksheet 4 14.               Note: Do not file an amended return for this earlier year. Complete a separate Worksheet 2 or Worksheet 3 for each earlier year for which you received a lump-sum payment in 2004.

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Worksheet 4. Figure Your Taxable Benefits Under the Lump-Sum Election Method (Use With Worksheet 2 or 3)                       Keep for your records Complete Worksheet 1 and Worksheets 2 and 3 as appropriate before completing this worksheet.  1. Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099 for 2004, minus the lump-sum payment for years before 2004  1.                         Note: If line 1 is zero or less, enter zero on lines 2 and 11 and skip lines 3 through 10. Otherwise, go on to line 2.            2. Enter one-half of line 1  2.           3. Enter the amount from line 3 of Worksheet 1  3.           4. Enter the amount from line 4 of Worksheet 1  4.           5. Add lines 2, 3, and 4  5.           6. Enter the amount from line 6 of Worksheet 1  6.           7. Subtract line 6 from line 5  7.           8. Enter the amount from line 8 of Worksheet 1. (Enter -0- if you are married filing separately and lived with your spouse at any time during 2004.)  8.           9. Is line 7 more than line 8?   No.  Skip lines 9-17 and enter -0- on line 18.   Yes. Subtract line 8 from line 7  9.          10. Enter the amount from line 10 of Worksheet 1. (Enter -0- if you are married filing separately and lived with your spouse at any time during 2004.) 10.          11. Subtract line 10 from line 9. If zero or less, enter -0- 11.          12. Enter the smaller of line 9 or line 10 12.          13. Enter one-half of line 12 13.          14. Enter the smaller of line 2 or line 13 14.          15. Multiply line 11 by 85% (.85). If line 11 is zero, enter -0- 15.          16. Add lines 14 and 15 16.          17. Multiply line 1 by 85% (.85) 17.          18. Enter the smaller of line 16 or line 17 18.          19. Enter the total of the amounts from line 21 of Worksheet 2 and line 14 of Worksheet 3 for all earlier years for which the lump-sum payment was received 19.          20. Taxable benefits under lump-sum election method. Add lines 18 and 19 20.          Next: Is line 20 above smaller than line 18 of Worksheet 1?   No. You cannot use this method to figure your taxable benefits. Follow the instructions on Worksheet 1 to report your benefits.   Yes. You can elect to report your taxable benefits under this method. To elect this method:     Make the following entries on your return: On Form 1040, enter LSE to the left of line 20a. On Form 1040A, enter LSE to the left of line 14a. Enter the amount from line 1 of Worksheet 1 on Form 1040, line 20a, or on Form 1040A, line 14a. If you are married filing separately and you lived apart from your spouse for all of 2004, also make the entries described at the top of Worksheet 1. If line 20 above is zero, follow the instructions in line 9 for No on Worksheet 1. Otherwise, enter the amount from line 20 above on Form 1040, line 20b, or on 1040A, line 14b.

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ssa 1099  

Previous Page:  Publication 915 - Social Security and Equivalent Railroad Retirement Benefits - Lump-Sum Election Next Page:  Publication 915 - Social Security and Equivalent Railroad Retirement Benefits - Appendix Use     to find additional instances of index items.