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Www freetaxusa com 3. Www freetaxusa com   Abandonments Table of Contents You abandon property when you voluntarily and permanently give up possession and use of the property with the intention of ending your ownership but without passing it on to anyone else. Www freetaxusa com Whether an abandonment has occurred is determined in light of all the facts and circumstances. Www freetaxusa com You must both show an intention to abandon the property and affirmatively act to abandon the property. Www freetaxusa com A voluntary conveyance of the property in lieu of foreclosure is not an abandonment and is treated as the exchange of property to satisfy a debt. Www freetaxusa com For more information, see Sales and Exchanges in Publication 544. Www freetaxusa com The tax consequences of abandonment of property that secures a debt depend on whether you were personally liable for the debt (recourse debt) or were not personally liable for the debt (nonrecourse debt). Www freetaxusa com See Publication 544 if you abandoned property that did not secure debt. Www freetaxusa com This publication only discusses the tax consequences of abandoning property that secured a debt. Www freetaxusa com Abandonment of property securing recourse debt. Www freetaxusa com    In most cases, if you abandon property that secures debt for which you are personally liable (recourse debt), you do not have gain or loss until the later foreclosure is completed. Www freetaxusa com For details on figuring gain or loss on the foreclosure, see chapter 2. Www freetaxusa com Example 1—abandonment of personal-use property securing recourse debt. Www freetaxusa com In 2009, Anne purchased a home for $200,000. Www freetaxusa com She borrowed the entire purchase price, for which she was personally liable, and gave the bank a mortgage on the home. Www freetaxusa com In 2013, Anne lost her job and was unable to continue making her mortgage loan payments. Www freetaxusa com Because her mortgage loan balance was $185,000 and the FMV of her home was only $150,000, Anne decided to abandon her home by permanently moving out on August 1, 2013. Www freetaxusa com Because Anne was personally liable for the debt and the bank did not complete a foreclosure of the property in 2013, Anne has neither gain nor loss in tax year 2013 from abandoning the home. Www freetaxusa com If the bank sells the house at a foreclosure sale in 2014, Anne will have to figure her gain or nondeductible loss for tax year 2014 as discussed earlier in chapter 2. Www freetaxusa com Example 2—abandonment of business or investment property securing recourse debt. Www freetaxusa com In 2009, Sue purchased business property for $200,000. Www freetaxusa com She borrowed the entire purchase price, for which she was personally liable, and gave the lender a security interest in the property. Www freetaxusa com In 2013, Sue was unable to continue making her loan payments. Www freetaxusa com Because her loan balance was $185,000 and the FMV of the property was only $150,000, Sue abandoned the property on August 1, 2013. Www freetaxusa com Because Sue was personally liable for the debt and the lender did not complete a foreclosure of the property in 2013, Sue has neither gain nor loss in tax year 2013 from abandoning the property. Www freetaxusa com If the lender sells the property at a foreclosure sale in 2014, Sue will have to figure her gain or deductible loss for tax year 2014 as discussed earlier in chapter 2. Www freetaxusa com Abandonment of property securing nonrecourse debt. Www freetaxusa com    If you abandon property that secures debt for which you are not personally liable (nonrecourse debt), the abandonment is treated as a sale or exchange. Www freetaxusa com   The amount you realize on the abandonment of property that secured nonrecourse debt is the amount of the nonrecourse debt. Www freetaxusa com If the amount you realize is more than your adjusted basis, then you have a gain. Www freetaxusa com If your adjusted basis is more than the amount you realize, then you have a loss. Www freetaxusa com For more information on how to figure gain and loss, see Gain or Loss from Sales or Exchanges in Publication 544. Www freetaxusa com   Loss from abandonment of business or investment property is deductible as a loss. Www freetaxusa com The character of the loss depends on the character of the property. Www freetaxusa com The amount of deductible capital loss may be limited. Www freetaxusa com For more information, see Treatment of Capital Losses in Publication 544. Www freetaxusa com You cannot deduct any loss from abandonment of your home or other property held for personal use. Www freetaxusa com Example 1—abandonment of personal-use property securing nonrecourse debt. Www freetaxusa com In 2009, Timothy purchased a home for $200,000. Www freetaxusa com He borrowed the entire purchase price, for which he was not personally liable, and gave the bank a mortgage on the home. Www freetaxusa com In 2013, Timothy lost his job and was unable to continue making his mortgage loan payments. Www freetaxusa com Because his mortgage loan balance was $185,000 and the FMV of his home was only $150,000, Timothy decided to abandon his home by permanently moving out on August 1, 2013. Www freetaxusa com Because Timothy was not personally liable for the debt, the abandonment is treated as a sale or exchange of the home in tax year 2013. Www freetaxusa com Timothy's amount realized is $185,000 and his adjusted basis in the home is $200,000. Www freetaxusa com Timothy has a $15,000 nondeductible loss in tax year 2013. Www freetaxusa com (Had Timothy’s adjusted basis been less than the amount realized, Timothy would have had a gain that he would have to include in gross income. Www freetaxusa com ) The bank sells the house at a foreclosure sale in 2014. Www freetaxusa com Timothy has neither gain nor loss from the foreclosure sale. Www freetaxusa com Because he was not personally liable for the debt, he also has no cancellation of debt income. Www freetaxusa com Example 2—abandonment of business or investment property securing nonrecourse debt. Www freetaxusa com In 2009, Robert purchased business property for $200,000. Www freetaxusa com He borrowed the entire purchase price, for which he was not personally liable, and gave the lender a security interest in the property. Www freetaxusa com In 2013, Robert was unable to continue making his loan payments. Www freetaxusa com Because his loan balance was $185,000 and the FMV of the property was only $150,000, Robert decided to abandon the property on August 1, 2013. Www freetaxusa com Because Robert was not personally liable for the debt, the abandonment is treated as a sale or exchange of the property in tax year 2013. Www freetaxusa com Robert's amount realized is $185,000 and his adjusted basis in the property is $180,000 (as a result of $20,000 of depreciation deductions on the property). Www freetaxusa com Robert has a $5,000 gain in tax year 2013. Www freetaxusa com (Had Robert’s adjusted basis been greater than the amount realized, he would have had a deductible loss. Www freetaxusa com ) The lender sells the property at a foreclosure sale in 2014. Www freetaxusa com Robert has neither gain nor loss from the foreclosure sale. Www freetaxusa com Because he was not personally liable for the debt, he also has no cancellation of debt income. Www freetaxusa com Canceled debt. Www freetaxusa com    If the abandoned property secures a debt for which you are personally liable and the debt is canceled, you will realize ordinary income equal to the canceled debt. Www freetaxusa com This income is separate from any amount realized from abandonment of the property. Www freetaxusa com You must report this income on your return unless one of the exceptions or exclusions described in chapter 1 applies. Www freetaxusa com See chapter 1 for more details. Www freetaxusa com Forms 1099-A and 1099-C. Www freetaxusa com    In most cases, if you abandon real property (such as a home), intangible property, or tangible personal property held (wholly or partly) for use in a trade or business or for investment, that secures a loan and the lender knows the property has been abandoned, the lender should send you Form 1099-A showing information you need to figure your gain or loss from the abandonment. Www freetaxusa com Also, if your debt is canceled and the lender must file Form 1099-C, the lender can include the information about the abandonment on that form instead of on Form 1099-A. Www freetaxusa com The lender must file Form 1099-C and send you a copy if the amount of debt canceled is $600 or more and the lender is a financial institution, credit union, federal government agency, or any organization that has a significant trade or business of lending money. Www freetaxusa com For abandonments of property and debt cancellations occurring in 2013, these forms should be sent to you by January 31, 2014. Www freetaxusa com Prev  Up  Next   Home   More Online Publications
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Www freetaxusa com Publication 915 - Main Content Table of Contents Are Any of Your Benefits Taxable?Worksheet A. Www freetaxusa com Exemption from withholding. Www freetaxusa com How To Report Your Benefits How Much Is Taxable?Examples Lump-Sum ElectionExample Deductions Related to Your BenefitsRepayments More Than Gross Benefits Worksheets AppendixForm SSA-1099, Social Security Benefit Statement 2013 Form SSA-1042S, Social Security Benefit Statement 2013 (Nonresident Aliens) Form RRB-1099, Payments by the Railroad Retirement Board 2013 Form RRB-1042S, Payments by the Railroad Retirement Board 2013 (Nonresident Aliens) How To Get Tax HelpLow Income Taxpayer Clinics Are Any of Your Benefits Taxable? To find out whether any of your benefits shown on Forms SSA-1099 and RRB-1099 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. Www freetaxusa com When making this comparison, do not reduce your other income by any exclusions for: Interest from qualified U. Www freetaxusa com S. Www freetaxusa com 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. Www freetaxusa com Children's benefits. Www freetaxusa com   The rules in this publication apply to benefits received by children. Www freetaxusa com See Who is taxed , later. Www freetaxusa com The SSA issues Form SSA-1099 and Form SSA-1042S. Www freetaxusa com The RRB issues Form RRB-1099 and Form RRB-1042S. Www freetaxusa com These forms (tax statements) report the amounts paid and repaid, and taxes withheld for a tax year. Www freetaxusa com You may receive more than one of these forms for the same tax year. Www freetaxusa com See the Appendix at the end of this publication for more information. Www freetaxusa com Each original Form RRB-1099 or Form RRB-1042S is valid unless it has been corrected. Www freetaxusa com The RRB will issue a corrected Form RRB-1099 or Form RRB-1042S if there is an error in the original. Www freetaxusa com A corrected Form RRB-1099 or Form RRB-1042S is indicated as “CORRECTED” and replaces the corresponding original Form RRB-1099 or Form RRB-1042S. Www freetaxusa com You must use the latest corrected Form RRB-1099 or Form RRB-1042S you received and any original Form RRB-1099 or Form RRB-1042S that the RRB has not corrected when you determine what amounts to report on your tax return. Www freetaxusa com Figuring total income. Www freetaxusa com   To figure the total of one-half of your benefits plus your other income, use Worksheet A, discussed later. Www freetaxusa com If the total is more than your base amount, part of your benefits may be taxable. Www freetaxusa com   If you are married and file a joint return for 2013, you and your spouse must combine your incomes and your benefits to figure whether any of your combined benefits are taxable. Www freetaxusa com 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. Www freetaxusa com If the only income you received during 2013 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. Www freetaxusa com If you have income in addition to your benefits, you may have to file a return even if none of your benefits are taxable. Www freetaxusa com Base amount. Www freetaxusa com   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 2013, $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 2013. Www freetaxusa com Worksheet A. Www freetaxusa com   You can use Worksheet A to figure the amount of income to compare with your base amount. Www freetaxusa com This is a quick way to check whether some of your benefits may be taxable. Www freetaxusa com     Worksheet A. Www freetaxusa com A Quick Way To Check if Your Benefits May Be Taxable Keep for your records A. Www freetaxusa com Enter the amount from box 5 of all your Forms SSA-1099 and RRB-1099. Www freetaxusa com Include the full amount of any lump-sum benefit payments received in 2013, for 2013 and earlier years. Www freetaxusa com (If you received more than one form, combine the amounts from box 5 and enter the total. Www freetaxusa com ) A. Www freetaxusa com   Note. Www freetaxusa com If the amount on line A is zero or less, stop here; none of your benefits are taxable this year. Www freetaxusa com B. Www freetaxusa com Enter one-half of the amount on line A B. Www freetaxusa com   C. Www freetaxusa com Enter your taxable pensions, wages, interest, dividends, and other taxable income C. Www freetaxusa com   D. Www freetaxusa com Enter any tax-exempt interest income (such as interest on municipal bonds) plus any exclusions from income (listed earlier) D. Www freetaxusa com   E. Www freetaxusa com Add lines B, C, and D E. Www freetaxusa com   Note. Www freetaxusa com Compare the amount on line E to your base amount for your filing status. Www freetaxusa com 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. Www freetaxusa com If the amount on line E is more than your base amount, some of your benefits may be taxable. Www freetaxusa com You need to complete Worksheet 1, shown later. Www freetaxusa com If none of your benefits are taxable, but you otherwise must file a tax return, see Benefits not taxable , later, under How To Report Your Benefits . Www freetaxusa com   Example. Www freetaxusa com You and your spouse (both over 65) are filing a joint return for 2013 and you both received social security benefits during the year. Www freetaxusa com In January 2014, you received a Form SSA-1099 showing net benefits of $7,500 in box 5. Www freetaxusa com Your spouse received a Form SSA-1099 showing net benefits of $3,500 in box 5. Www freetaxusa com You also received a taxable pension of $22,800 and interest income of $500. Www freetaxusa com You did not have any tax-exempt interest income. Www freetaxusa com Your benefits are not taxable for 2013 because your income, as figured in Worksheet A below, is not more than your base amount ($32,000) for married filing jointly. Www freetaxusa com   Even though none of your benefits are taxable, you must file a return for 2013 because your taxable gross income ($23,300) exceeds the minimum filing requirement amount for your filing status. Www freetaxusa com     Filled-in Worksheet A. Www freetaxusa com A Quick Way To Check if Your Benefits May Be Taxable Keep for your records A. Www freetaxusa com Enter the amount from box 5 of all your Forms SSA-1099 and RRB-1099. Www freetaxusa com Include the full amount of any lump-sum benefit payments received in 2013, for 2013 and earlier years. Www freetaxusa com (If you received more than one form, combine the amounts from box 5 and enter the total. Www freetaxusa com ) A. Www freetaxusa com $11,000 Note. Www freetaxusa com If the amount on line A is zero or less, stop here; none of your benefits are taxable this year. Www freetaxusa com B. Www freetaxusa com Enter one-half of the amount on line A B. Www freetaxusa com 5,500 C. Www freetaxusa com Enter your taxable pensions, wages, interest, dividends, and other taxable income C. Www freetaxusa com 23,300 D. Www freetaxusa com Enter any tax-exempt interest income (such as interest on municipal bonds) plus any exclusions from income (listed earlier) D. Www freetaxusa com -0- E. Www freetaxusa com Add lines B, C, and D E. Www freetaxusa com $28,800 Note. Www freetaxusa com Compare the amount on line E to your base amount for your filing status. Www freetaxusa com 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. Www freetaxusa com If the amount on line E is more than your base amount, some of your benefits may be taxable. Www freetaxusa com You need to complete Worksheet 1, shown later. Www freetaxusa com If none of your benefits are taxable, but you otherwise must file a tax return, see Benefits not taxable , later, under How To Report Your Benefits . Www freetaxusa com   Who is taxed. Www freetaxusa com   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. Www freetaxusa com 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. Www freetaxusa com 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. Www freetaxusa com Repayment of benefits. Www freetaxusa com   Any repayment of benefits you made during 2013 must be subtracted from the gross benefits you received in 2013. Www freetaxusa com It does not matter whether the repayment was for a benefit you received in 2013 or in an earlier year. Www freetaxusa com If you repaid more than the gross benefits you received in 2013, see Repayments More Than Gross Benefits , later. Www freetaxusa com   Your gross benefits are shown in box 3 of Form SSA-1099 or Form RRB-1099. Www freetaxusa com Your repayments are shown in box 4. Www freetaxusa com The amount in box 5 shows your net benefits for 2013 (box 3 minus box 4). Www freetaxusa com Use the amount in box 5 to figure whether any of your benefits are taxable. Www freetaxusa com Example. Www freetaxusa com In 2012, you received $3,000 in social security benefits, and in 2013 you received $2,700. Www freetaxusa com In March 2013, SSA notified you that you should have received only $2,500 in benefits in 2012. Www freetaxusa com During 2013, you repaid $500 to SSA. Www freetaxusa com The Form SSA-1099 you received for 2013 shows $2,700 in box 3 (gross amount) and $500 in box 4 (repayment). Www freetaxusa com The amount in box 5 shows your net benefits of $2,200 ($2,700 minus $500). Www freetaxusa com Tax withholding and estimated tax. Www freetaxusa com   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. Www freetaxusa com If you choose to do this, you must complete a Form W-4V, Voluntary Withholding Statement. Www freetaxusa com   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. Www freetaxusa com For details, see Publication 505, Tax Withholding and Estimated Tax, or the instructions for Form 1040-ES, Estimated Tax for Individuals. Www freetaxusa com U. Www freetaxusa com S. Www freetaxusa com citizens residing abroad. Www freetaxusa com   U. Www freetaxusa com S. Www freetaxusa com citizens who are residents of the following countries are exempt from U. Www freetaxusa com S. Www freetaxusa com tax on their benefits. Www freetaxusa com Canada. Www freetaxusa com Egypt. Www freetaxusa com Germany. Www freetaxusa com Ireland. Www freetaxusa com Israel. Www freetaxusa com Italy. Www freetaxusa com (You must also be a citizen of Italy for the exemption to apply. Www freetaxusa com ) Romania. Www freetaxusa com United Kingdom. Www freetaxusa com   The SSA will not withhold U. Www freetaxusa com S. Www freetaxusa com tax from your benefits if you are a U. Www freetaxusa com S. Www freetaxusa com citizen. Www freetaxusa com   The RRB will withhold U. Www freetaxusa com S. Www freetaxusa com tax from your benefits unless you file Form RRB-1001, Nonresident Questionnaire, with the RRB to provide citizenship and residency information. Www freetaxusa com 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. Www freetaxusa com Contact the RRB to get this form. Www freetaxusa com Lawful permanent residents. Www freetaxusa com   For U. Www freetaxusa com S. Www freetaxusa com 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. Www freetaxusa com Social security benefits paid to a green card holder are not subject to 30% withholding. Www freetaxusa com 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. Www freetaxusa com SSA will refund taxes erroneously withheld if the refund can be processed during the same calendar year in which the tax was withheld. Www freetaxusa com 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. Www freetaxusa com 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. Www freetaxusa com S. Www freetaxusa com lawful permanent resident and my green card has been neither revoked nor administratively or judicially determined to have been abandoned. Www freetaxusa com I am filing a U. Www freetaxusa com S. Www freetaxusa com income tax return for the tax year as a resident alien reporting all of my worldwide income. Www freetaxusa com I have not claimed benefits for the tax year under an income tax treaty as a nonresident alien. Www freetaxusa com ” Nonresident aliens. Www freetaxusa com   A nonresident alien is an individual who is not a citizen or resident of the United States. Www freetaxusa com If you are a nonresident alien, the rules discussed in this publication do not apply to you. Www freetaxusa com Instead, 85% of your benefits are taxed at a 30% rate, unless exempt (or subject to a lower rate) by treaty. Www freetaxusa com You will receive a Form SSA-1042S or Form RRB-1042S showing the amount of your benefits. Www freetaxusa com These forms will also show the tax rate and the amount of tax withheld from your benefits. Www freetaxusa com   Under tax treaties with the following countries, residents of these countries are exempt from U. Www freetaxusa com S. Www freetaxusa com tax on their benefits. Www freetaxusa com Canada. Www freetaxusa com Egypt. Www freetaxusa com Germany. Www freetaxusa com Ireland. Www freetaxusa com Israel. Www freetaxusa com Italy. Www freetaxusa com Japan. Www freetaxusa com Romania. Www freetaxusa com United Kingdom. Www freetaxusa com   Under a treaty with India, benefits paid to individuals who are both residents and nationals of India are exempt from U. Www freetaxusa com S. Www freetaxusa com tax if the benefits are for services performed for the United States, its subdivisions, or local government authorities. Www freetaxusa com   If you are a resident of Switzerland, your total benefit amount will be taxed at a 15% rate. Www freetaxusa com   For more information on whether you are a nonresident alien, see Publication 519, U. Www freetaxusa com S. Www freetaxusa com Tax Guide for Aliens. Www freetaxusa com Exemption from withholding. Www freetaxusa com   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. Www freetaxusa com S. Www freetaxusa com tax from your benefits. Www freetaxusa com   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. Www freetaxusa com Contact the RRB to get this form. Www freetaxusa com Canadian or German social security benefits paid to U. Www freetaxusa com S. Www freetaxusa com residents. Www freetaxusa com   Under income tax treaties with Canada and Germany, social security benefits paid by those countries to U. Www freetaxusa com S. Www freetaxusa com residents are treated for U. Www freetaxusa com S. Www freetaxusa com income tax purposes as if they were paid under the social security legislation of the United States. Www freetaxusa com If you receive social security benefits from Canada or Germany, include them on line 1 of Worksheet 1, shown later. Www freetaxusa com How To Report Your Benefits If part of your benefits are taxable, you must use Form 1040 or Form 1040A. Www freetaxusa com You cannot use Form 1040EZ. Www freetaxusa com Reporting on Form 1040. Www freetaxusa com   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. Www freetaxusa com If you are married filing separately and you lived apart from your spouse for all of 2013, also enter “D” to the right of the word “benefits” on line 20a. Www freetaxusa com Reporting on Form 1040A. Www freetaxusa com   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. Www freetaxusa com If you are married filing separately and you lived apart from your spouse for all of 2013, also enter “D” to the right of the word “benefits” on line 14a. Www freetaxusa com Benefits not taxable. Www freetaxusa com   If you are filing Form 1040EZ, do not report any benefits on your tax return. Www freetaxusa com 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. Www freetaxusa com Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. Www freetaxusa com If you are married filing separately and you lived apart from your spouse for all of 2013, also enter “D” to the right of the word “benefits” on Form 1040, line 20a, or Form 1040A, line 14a. Www freetaxusa com 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. Www freetaxusa com Generally, the higher that total amount, the greater the taxable part of your benefits. Www freetaxusa com Maximum taxable part. Www freetaxusa com   Generally, up to 50% of your benefits will be taxable. Www freetaxusa com However, up to 85% of your benefits can be taxable if either of the following situations applies to you. Www freetaxusa com 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). Www freetaxusa com You are married filing separately and lived with your spouse at any time during 2013. Www freetaxusa com Which worksheet to use. Www freetaxusa com   A worksheet you can use to figure your taxable benefits is in the instructions for your Form 1040 or 1040A. Www freetaxusa com You can use either that worksheet or Worksheet 1 in this publication, unless any of the following situations applies to you. Www freetaxusa com You contributed to a traditional individual retirement arrangement (IRA) and you or your spouse is covered by a retirement plan at work. Www freetaxusa com 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. Www freetaxusa com Situation (1) does not apply and you take an exclusion for interest from qualified U. Www freetaxusa com S. Www freetaxusa com 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. Www freetaxusa com In this situation, you must use Worksheet 1 in this publication to figure your taxable benefits. Www freetaxusa com You received a lump-sum payment for an earlier year. Www freetaxusa com In this situation, also complete Worksheet 2 or 3 and Worksheet 4 in this publication. Www freetaxusa com See Lump-Sum Election , later. Www freetaxusa com Examples A few examples you can use as a guide to figure the taxable part of your benefits follow. Www freetaxusa com Filled-in Worksheet 1. Www freetaxusa com Figuring Your Taxable Benefits Before you begin: If you are married filing separately and you lived apart from your spouse for all of 2013, enter “D” to the right of the word “benefits” on Form 1040, line 20a, or Form 1040A, line 14a. Www freetaxusa com Do not use this worksheet if you repaid benefits in 2013 and your total repayments (box 4 of Forms SSA-1099 and RRB-1099) were more than your gross benefits for 2013 (box 3 of Forms SSA-1099 and RRB-1099). Www freetaxusa com None of your benefits are taxable for 2013. Www freetaxusa com For more information, see Repayments More Than Gross Benefits . Www freetaxusa com If you are filing Form 8815, Exclusion of Interest From Series EE and I U. Www freetaxusa com S. Www freetaxusa com Savings Bonds Issued After 1989, do not include the amount from line 8a of Form 1040 or Form 1040A on line 3 of this worksheet. Www freetaxusa com Instead, include the amount from Schedule B (Form 1040A or 1040), line 2. Www freetaxusa com 1. Www freetaxusa com Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099. Www freetaxusa com Also enter this amount on Form 1040, line 20a, or Form 1040A, line 14a 1. Www freetaxusa com $5,980         2. Www freetaxusa com Enter one-half of line 1 2. Www freetaxusa com 2,990     3. Www freetaxusa com Combine 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. Www freetaxusa com 28,990     4. Www freetaxusa com Enter the amount, if any, from Form 1040 or 1040A, line 8b 4. Www freetaxusa com -0-     5. Www freetaxusa com Enter the total of any exclusions/adjustments for: Adoption benefits (Form 8839, line 28), 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 5. Www freetaxusa com -0-     6. Www freetaxusa com Combine lines 2, 3, 4, and 5 6. Www freetaxusa com 31,980     7. Www freetaxusa com 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. Www freetaxusa com  Form 1040A filers: Enter the amounts from Form 1040A, lines 16 and 17 7. Www freetaxusa com -0-     8. Www freetaxusa com Is the amount on line 7 less than the amount on line 6?             No. Www freetaxusa com None of your social security benefits are taxable. Www freetaxusa com Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. Www freetaxusa com             Yes. Www freetaxusa com Subtract line 7 from line 6 8. Www freetaxusa com 31,980     9. Www freetaxusa com 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 2013, enter $25,000 9. Www freetaxusa com 25,000       Note. Www freetaxusa com If you are married filing separately and you lived with your spouse at any time in 2013, skip lines 9 through 16; multiply line 8 by 85% (. Www freetaxusa com 85) and enter the result on line 17. Www freetaxusa com Then go to line 18. Www freetaxusa com         10. Www freetaxusa com Is the amount on line 9 less than the amount on line 8?             No. Www freetaxusa com None of your benefits are taxable. Www freetaxusa com Enter -0- on Form 1040, line 20b, or on Form 1040A, line 14b. Www freetaxusa com If you are married filing separately and you lived apart from your spouse for all of 2013, be sure you entered “D” to the right of the word “benefits” on Form 1040, line 20a, or on Form 1040A, line 14a. Www freetaxusa com             Yes. Www freetaxusa com Subtract line 9 from line 8 10. Www freetaxusa com 6,980     11. Www freetaxusa com 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 2013 11. Www freetaxusa com 9,000     12. Www freetaxusa com Subtract line 11 from line 10. Www freetaxusa com If zero or less, enter -0- 12. Www freetaxusa com -0-     13. Www freetaxusa com Enter the smaller of line 10 or line 11 13. Www freetaxusa com 6,980     14. Www freetaxusa com Enter one-half of line 13 14. Www freetaxusa com 3,490     15. Www freetaxusa com Enter the smaller of line 2 or line 14 15. Www freetaxusa com 2,990     16. Www freetaxusa com Multiply line 12 by 85% (. Www freetaxusa com 85). Www freetaxusa com If line 12 is zero, enter -0- 16. Www freetaxusa com -0-     17. Www freetaxusa com Add lines 15 and 16 17. Www freetaxusa com 2,990     18. Www freetaxusa com Multiply line 1 by 85% (. Www freetaxusa com 85) 18. Www freetaxusa com 5,083     19. Www freetaxusa com Taxable benefits. Www freetaxusa com Enter the smaller of line 17 or line 18. Www freetaxusa com Also enter this amount on Form 1040, line 20b, or Form 1040A, line 14b 19. Www freetaxusa com $2,990       If you received a lump-sum payment in 2013 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. Www freetaxusa com         Example 1. Www freetaxusa com George White is single and files Form 1040 for 2013. Www freetaxusa com 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. Www freetaxusa com He received a Form SSA-1099 in January 2014 that shows his net social security benefits of $5,980 in box 5. Www freetaxusa com   To figure his taxable benefits, George completes Worksheet 1, shown below. Www freetaxusa com On line 20a of his Form 1040, George enters his net benefits of $5,980. Www freetaxusa com On line 20b, he enters his taxable benefits of $2,990. Www freetaxusa com Example 2. Www freetaxusa com Ray and Alice Hopkins file a joint return on Form 1040A for 2013. Www freetaxusa com Ray is retired and received a fully taxable pension of $15,500. Www freetaxusa com He also received social security benefits and his Form SSA-1099 for 2013 shows net benefits of $5,600 in box 5. Www freetaxusa com Alice worked during the year and had wages of $14,000. Www freetaxusa com She made a deductible payment to her IRA account of $1,000. Www freetaxusa com Ray and Alice have two savings accounts with a total of $250 in taxable interest income. Www freetaxusa com They complete Worksheet 1, entering $29,750 ($15,500 + $14,000 + $250) on line 3. Www freetaxusa com They find none of Ray's social security benefits are taxable. Www freetaxusa com On Form 1040A, they enter $5,600 on line 14a and -0- on line 14b. Www freetaxusa com Filled-in Worksheet 1. Www freetaxusa com Figuring Your Taxable Benefits Before you begin: If you are married filing separately and you lived apart from your spouse for all of 2013, enter “D” to the right of the word “benefits” on Form 1040, line 20a, or Form 1040A, line 14a. Www freetaxusa com Do not use this worksheet if you repaid benefits in 2013 and your total repayments (box 4 of Forms SSA-1099 and RRB-1099) were more than your gross benefits for 2013 (box 3 of Forms SSA-1099 and RRB-1099). Www freetaxusa com None of your benefits are taxable for 2013. Www freetaxusa com For more information, see Repayments More Than Gross Benefits . Www freetaxusa com If you are filing Form 8815, Exclusion of Interest From Series EE and I U. Www freetaxusa com S. Www freetaxusa com Savings Bonds Issued After 1989, do not include the amount from line 8a of Form 1040 or Form 1040A on line 3 of this worksheet. Www freetaxusa com Instead, include the amount from Schedule B (Form 1040A or 1040), line 2. Www freetaxusa com 1. Www freetaxusa com Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099. Www freetaxusa com Also enter this amount on Form 1040, line 20a, or Form 1040A, line 14a 1. Www freetaxusa com $5,600         2. Www freetaxusa com Enter one-half of line 1 2. Www freetaxusa com 2,800     3. Www freetaxusa com Combine 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. Www freetaxusa com 29,750     4. Www freetaxusa com Enter the amount, if any, from Form 1040 or 1040A, line 8b 4. Www freetaxusa com -0-     5. Www freetaxusa com Enter the total of any exclusions/adjustments for: Adoption benefits (Form 8839, line 28), 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 5. Www freetaxusa com -0-     6. Www freetaxusa com Combine lines 2, 3, 4, and 5 6. Www freetaxusa com 32,550     7. Www freetaxusa com 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. Www freetaxusa com  Form 1040A filers: Enter the amounts from Form 1040A, lines 16 and 17 7. Www freetaxusa com 1,000     8. Www freetaxusa com Is the amount on line 7 less than the amount on line 6?             No. Www freetaxusa com None of your social security benefits are taxable. Www freetaxusa com Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. Www freetaxusa com             Yes. Www freetaxusa com Subtract line 7 from line 6 8. Www freetaxusa com 31,550     9. Www freetaxusa com 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 2013, enter $25,000 9. Www freetaxusa com 32,000       Note. Www freetaxusa com If you are married filing separately and you lived with your spouse at any time in 2013, skip lines 9 through 16; multiply line 8 by 85% (. Www freetaxusa com 85) and enter the result on line 17. Www freetaxusa com Then go to line 18. Www freetaxusa com         10. Www freetaxusa com Is the amount on line 9 less than the amount on line 8?             No. Www freetaxusa com None of your benefits are taxable. Www freetaxusa com Enter -0- on Form 1040, line 20b, or on Form 1040A, line 14b. Www freetaxusa com If you are married filing separately and you lived apart from your spouse for all of 2013, be sure you entered “D” to the right of the word “benefits” on Form 1040, line 20a, or on Form 1040A, line 14a. Www freetaxusa com             Yes. Www freetaxusa com Subtract line 9 from line 8 10. Www freetaxusa com       11. Www freetaxusa com 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 2013 11. Www freetaxusa com       12. Www freetaxusa com Subtract line 11 from line 10. Www freetaxusa com If zero or less, enter -0- 12. Www freetaxusa com       13. Www freetaxusa com Enter the smaller of line 10 or line 11 13. Www freetaxusa com       14. Www freetaxusa com Enter one-half of line 13 14. Www freetaxusa com       15. Www freetaxusa com Enter the smaller of line 2 or line 14 15. Www freetaxusa com       16. Www freetaxusa com Multiply line 12 by 85% (. Www freetaxusa com 85). Www freetaxusa com If line 12 is zero, enter -0- 16. Www freetaxusa com       17. Www freetaxusa com Add lines 15 and 16 17. Www freetaxusa com       18. Www freetaxusa com Multiply line 1 by 85% (. Www freetaxusa com 85) 18. Www freetaxusa com       19. Www freetaxusa com Taxable benefits. Www freetaxusa com Enter the smaller of line 17 or line 18. Www freetaxusa com Also enter this amount on Form 1040, line 20b, or Form 1040A, line 14b 19. Www freetaxusa com         If you received a lump-sum payment in 2013 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. Www freetaxusa com         Example 3. Www freetaxusa com Joe and Betty Johnson file a joint return on Form 1040 for 2013. Www freetaxusa com Joe is a retired railroad worker and in 2013 received the social security equivalent benefit (SSEB) portion of tier 1 railroad retirement benefits. Www freetaxusa com Joe's Form RRB-1099 shows $10,000 in box 5. Www freetaxusa com Betty is a retired government worker and received a fully taxable pension of $38,000. Www freetaxusa com They had $2,300 in taxable interest income plus interest of $200 on a qualified U. Www freetaxusa com S. Www freetaxusa com savings bond. Www freetaxusa com The savings bond interest qualified for the exclusion. Www freetaxusa com They figure their taxable benefits by completing Worksheet 1 below. Www freetaxusa com Because they have qualified U. Www freetaxusa com S. Www freetaxusa com 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. Www freetaxusa com On line 3 of the worksheet, they enter $40,500 ($38,000 + $2,500). Www freetaxusa com 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. Www freetaxusa com (See Maximum taxable part under How Much Is Taxable earlier. Www freetaxusa com ) Joe and Betty enter $10,000 on Form 1040, line 20a, and $6,275 on Form 1040, line 20b. Www freetaxusa com Filled-in Worksheet 1. Www freetaxusa com Figuring Your Taxable Benefits Before you begin: If you are married filing separately and you lived apart from your spouse for all of 2013, enter “D” to the right of the word “benefits” on Form 1040, line 20a, or Form 1040A, line 14a. Www freetaxusa com Do not use this worksheet if you repaid benefits in 2013 and your total repayments (box 4 of Forms SSA-1099 and RRB-1099) were more than your gross benefits for 2013 (box 3 of Forms SSA-1099 and RRB-1099). Www freetaxusa com None of your benefits are taxable for 2013. Www freetaxusa com For more information, see Repayments More Than Gross Benefits . Www freetaxusa com If you are filing Form 8815, Exclusion of Interest From Series EE and I U. Www freetaxusa com S. Www freetaxusa com Savings Bonds Issued After 1989, do not include the amount from line 8a of Form 1040 or Form 1040A on line 3 of this worksheet. Www freetaxusa com Instead, include the amount from Schedule B (Form 1040A or 1040), line 2. Www freetaxusa com 1. Www freetaxusa com Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099. Www freetaxusa com Also enter this amount on Form 1040, line 20a, or Form 1040A, line 14a 1. Www freetaxusa com $10,000         2. Www freetaxusa com Enter one-half of line 1 2. Www freetaxusa com 5,000     3. Www freetaxusa com Combine 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. Www freetaxusa com 40,500     4. Www freetaxusa com Enter the amount, if any, from Form 1040 or 1040A, line 8b 4. Www freetaxusa com -0-     5. Www freetaxusa com Enter the total of any exclusions/adjustments for: Adoption benefits (Form 8839, line 28), 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 5. Www freetaxusa com -0-     6. Www freetaxusa com Combine lines 2, 3, 4, and 5 6. Www freetaxusa com 45,500     7. Www freetaxusa com 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. Www freetaxusa com  Form 1040A filers: Enter the amounts from Form 1040A, lines 16 and 17 7. Www freetaxusa com -0-     8. Www freetaxusa com Is the amount on line 7 less than the amount on line 6?             No. Www freetaxusa com None of your social security benefits are taxable. Www freetaxusa com Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. Www freetaxusa com             Yes. Www freetaxusa com Subtract line 7 from line 6 8. Www freetaxusa com 45,500     9. Www freetaxusa com 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 2013, enter $25,000 9. Www freetaxusa com 32,000       Note. Www freetaxusa com If you are married filing separately and you lived with your spouse at any time in 2013, skip lines 9 through 16; multiply line 8 by 85% (. Www freetaxusa com 85) and enter the result on line 17. Www freetaxusa com Then go to line 18. Www freetaxusa com         10. Www freetaxusa com Is the amount on line 9 less than the amount on line 8?             No. Www freetaxusa com None of your benefits are taxable. Www freetaxusa com Enter -0- on Form 1040, line 20b, or on Form 1040A, line 14b. Www freetaxusa com If you are married filing separately and you lived apart from your spouse for all of 2013, be sure you entered “D” to the right of the word “benefits” on Form 1040, line 20a, or on Form 1040A, line 14a. Www freetaxusa com             Yes. Www freetaxusa com Subtract line 9 from line 8 10. Www freetaxusa com 13,500     11. Www freetaxusa com 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 2013 11. Www freetaxusa com 12,000     12. Www freetaxusa com Subtract line 11 from line 10. Www freetaxusa com If zero or less, enter -0- 12. Www freetaxusa com 1,500     13. Www freetaxusa com Enter the smaller of line 10 or line 11 13. Www freetaxusa com 12,000     14. Www freetaxusa com Enter one-half of line 13 14. Www freetaxusa com 6,000     15. Www freetaxusa com Enter the smaller of line 2 or line 14 15. Www freetaxusa com 5,000     16. Www freetaxusa com Multiply line 12 by 85% (. Www freetaxusa com 85). Www freetaxusa com If line 12 is zero, enter -0- 16. Www freetaxusa com 1,275     17. Www freetaxusa com Add lines 15 and 16 17. Www freetaxusa com 6,275     18. Www freetaxusa com Multiply line 1 by 85% (. Www freetaxusa com 85) 18. Www freetaxusa com 8,500     19. Www freetaxusa com Taxable benefits. Www freetaxusa com Enter the smaller of line 17 or line 18. Www freetaxusa com Also enter this amount on Form 1040, line 20b, or Form 1040A, line 14b 19. Www freetaxusa com $6,275       If you received a lump-sum payment in 2013 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. Www freetaxusa com         Filled-in Worksheet 1. Www freetaxusa com Figuring Your Taxable Benefits Before you begin: If you are married filing separately and you lived apart from your spouse for all of 2013, enter “D” to the right of the word “benefits” on Form 1040, line 20a, or Form 1040A, line 14a. Www freetaxusa com Do not use this worksheet if you repaid benefits in 2013 and your total repayments (box 4 of Forms SSA-1099 and RRB-1099) were more than your gross benefits for 2013 (box 3 of Forms SSA-1099 and RRB-1099). Www freetaxusa com None of your benefits are taxable for 2013. Www freetaxusa com For more information, see Repayments More Than Gross Benefits . Www freetaxusa com If you are filing Form 8815, Exclusion of Interest From Series EE and I U. Www freetaxusa com S. Www freetaxusa com Savings Bonds Issued After 1989, do not include the amount from line 8a of Form 1040 or Form 1040A on line 3 of this worksheet. Www freetaxusa com Instead, include the amount from Schedule B (Form 1040A or 1040), line 2. Www freetaxusa com 1. Www freetaxusa com Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099. Www freetaxusa com Also enter this amount on Form 1040, line 20a, or Form 1040A, line 14a 1. Www freetaxusa com $4,000         2. Www freetaxusa com Enter one-half of line 1 2. Www freetaxusa com 2,000     3. Www freetaxusa com Combine 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. Www freetaxusa com 8,000     4. Www freetaxusa com Enter the amount, if any, from Form 1040 or 1040A, line 8b 4. Www freetaxusa com -0-     5. Www freetaxusa com Enter the total of any exclusions/adjustments for: Adoption benefits (Form 8839, line 28), 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 5. Www freetaxusa com -0-     6. Www freetaxusa com Combine lines 2, 3, 4, and 5 6. Www freetaxusa com 10,000     7. Www freetaxusa com 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. Www freetaxusa com  Form 1040A filers: Enter the amounts from Form 1040A, lines 16 and 17 7. Www freetaxusa com -0-     8. Www freetaxusa com Is the amount on line 7 less than the amount on line 6?             No. Www freetaxusa com None of your social security benefits are taxable. Www freetaxusa com Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. Www freetaxusa com             Yes. Www freetaxusa com Subtract line 7 from line 6 8. Www freetaxusa com 10,000     9. Www freetaxusa com 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 2013, enter $25,000 9. Www freetaxusa com         Note. Www freetaxusa com If you are married filing separately and you lived with your spouse at any time in 2013, skip lines 9 through 16; multiply line 8 by 85% (. Www freetaxusa com 85) and enter the result on line 17. Www freetaxusa com Then go to line 18. Www freetaxusa com         10. Www freetaxusa com Is the amount on line 9 less than the amount on line 8?             No. Www freetaxusa com None of your benefits are taxable. Www freetaxusa com Enter -0- on Form 1040, line 20b, or on Form 1040A, line 14b. Www freetaxusa com If you are married filing separately and you lived apart from your spouse for all of 2013, be sure you entered “D” to the right of the word “benefits” on Form 1040, line 20a, or on Form 1040A, line 14a. Www freetaxusa com             Yes. Www freetaxusa com Subtract line 9 from line 8 10. Www freetaxusa com       11. Www freetaxusa com 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 2013 11. Www freetaxusa com       12. Www freetaxusa com Subtract line 11 from line 10. Www freetaxusa com If zero or less, enter -0- 12. Www freetaxusa com       13. Www freetaxusa com Enter the smaller of line 10 or line 11 13. Www freetaxusa com       14. Www freetaxusa com Enter one-half of line 13 14. Www freetaxusa com       15. Www freetaxusa com Enter the smaller of line 2 or line 14 15. Www freetaxusa com       16. Www freetaxusa com Multiply line 12 by 85% (. Www freetaxusa com 85). Www freetaxusa com If line 12 is zero, enter -0- 16. Www freetaxusa com       17. Www freetaxusa com Add lines 15 and 16 17. Www freetaxusa com 8,500     18. Www freetaxusa com Multiply line 1 by 85% (. Www freetaxusa com 85) 18. Www freetaxusa com 3,400     19. Www freetaxusa com Taxable benefits. Www freetaxusa com Enter the smaller of line 17 or line 18. Www freetaxusa com Also enter this amount on Form 1040, line 20b, or Form 1040A, line 14b 19. Www freetaxusa com $3,400       If you received a lump-sum payment in 2013 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. Www freetaxusa com         Example 4. Www freetaxusa com Bill and Eileen Jones are married and live together, but file separate Form 1040 returns for 2013. Www freetaxusa com Bill earned $8,000 during 2013. Www freetaxusa com The only other income he had for the year was $4,000 net social security benefits (box 5 of his Form SSA-1099). Www freetaxusa com Bill figures his taxable benefits by completing Worksheet 1 below. Www freetaxusa com He must include 85% of his social security benefits in his taxable income because he is married filing separately and lived with his spouse during 2013. Www freetaxusa com See How Much Is Taxable earlier. Www freetaxusa com Bill enters $4,000 on his Form 1040, line 20a, and $3,400 on Form 1040, line 20b. Www freetaxusa com Lump-Sum Election You must include the taxable part of a lump-sum (retroactive) payment of benefits received in 2013 in your 2013 income, even if the payment includes benefits for an earlier year. Www freetaxusa com 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. Www freetaxusa com No part of the lump-sum death benefit is subject to tax. Www freetaxusa com Generally, you use your 2013 income to figure the taxable part of the total benefits received in 2013. Www freetaxusa com 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. Www freetaxusa com You can elect this method if it lowers your taxable benefits. Www freetaxusa com Under the lump-sum election method, you refigure the taxable part of all your benefits for the earlier year (including the lump-sum payment) using that year's income. Www freetaxusa com Then you subtract any taxable benefits for that year that you previously reported. Www freetaxusa com The remainder is the taxable part of the lump-sum payment. Www freetaxusa com Add it to the taxable part of your benefits for 2013 (figured without the lump-sum payment for the earlier year). Www freetaxusa com Because the earlier year's taxable benefits are included in your 2013 income, no adjustment is made to the earlier year's return. Www freetaxusa com Do not file an amended return for the earlier year. Www freetaxusa com Will the lump-sum election method lower your taxable benefits?   To find out, take the following steps. Www freetaxusa com Complete Worksheet 1 in this publication. Www freetaxusa com Complete Worksheet 2 and Worksheet 3 as appropriate. Www freetaxusa com Use Worksheet 2 if your lump-sum payment was for a year after 1993. Www freetaxusa com Use Worksheet 3 if it was for 1993 or an earlier year. Www freetaxusa com Complete a separate Worksheet 2 or Worksheet 3 for each earlier year for which you received the lump-sum payment. Www freetaxusa com Complete Worksheet 4. Www freetaxusa com Compare the taxable benefits on line 19 of Worksheet 1 with the taxable benefits on line 21 of Worksheet 4. Www freetaxusa com If the taxable benefits on Worksheet 4 are lower than the taxable benefits on Worksheet 1, you can elect to report the lower amount on your return. Www freetaxusa com Making the election. Www freetaxusa com   If you elect to report your taxable benefits under the lump-sum election method, follow the instructions at the bottom of Worksheet 4. Www freetaxusa com Do not attach the completed worksheets to your return. Www freetaxusa com Keep them with your records. Www freetaxusa com    Once you elect this method of figuring the taxable part of a lump-sum payment, you can revoke your election only with the consent of the IRS. Www freetaxusa com Lump-sum payment reported on Form SSA-1099 or RRB-1099. Www freetaxusa com   If you received a lump-sum payment in 2013 that includes benefits for one or more earlier years after 1983, it will be included in box 3 of either Form SSA-1099 or Form RRB-1099. Www freetaxusa com That part of any lump-sum payment for years before 1984 is not taxed and will not be shown on the form. Www freetaxusa com The form will also show the year (or years) the payment is for. Www freetaxusa com However, Form RRB-1099 will not show a breakdown by year (or years) of any lump-sum payment for years before 2011. Www freetaxusa com You must contact the RRB for a breakdown by year for any amount shown in box 9. Www freetaxusa com Example Jane Jackson is single. Www freetaxusa com In 2012 she applied for social security disability benefits but was told she was ineligible. Www freetaxusa com She appealed the decision and won. Www freetaxusa com In 2013, she received a lump-sum payment of $6,000, of which $2,000 was for 2012 and $4,000 was for 2013. Www freetaxusa com Jane also received $5,000 in social security benefits in 2013, so her total benefits in 2013 were $11,000. Www freetaxusa com Jane's other income for 2012 and 2013 is as follows. Www freetaxusa com   Income 2012 2013     Wages $20,000 $ 3,500     Interest income 2,000 2,500     Dividend income 1,000 1,500     Fully taxable pension   18,000     Total $23,000 $25,500   To see if the lump-sum election method results in lower taxable benefits, she completes Worksheets 1, 2, and 4 from this publication. Www freetaxusa com She does not need to complete Worksheet 3 because her lump-sum payment was for years after 1993. Www freetaxusa com Jane completes Worksheet 1 to find the amount of her taxable benefits for 2013 under the regular method. Www freetaxusa com She completes Worksheet 2 to find the taxable part of the lump-sum payment for 2012 under the lump-sum election method. Www freetaxusa com She completes Worksheet 4 to decide if the lump-sum election method will lower her taxable benefits. Www freetaxusa com After completing the worksheets, Jane compares the amounts from Worksheet 4, line 21, and Worksheet 1, line 19. Www freetaxusa com Because the amount on Worksheet 4 is smaller, she chooses to use the lump-sum election method. Www freetaxusa com To do this, she prints “LSE” to the left of Form 1040, line 20a. Www freetaxusa com She then enters $11,000 on Form 1040, line 20a, and her taxable benefits of $2,500 on line 20b. Www freetaxusa com Jane's filled-in worksheets (1, 2, and 4) follow. Www freetaxusa com Jane Jackson's Filled-in Worksheet 1. Www freetaxusa com Figuring Your Taxable Benefits Before you begin: If you are married filing separately and you lived apart from your spouse for all of 2013, enter “D” to the right of the word “benefits” on Form 1040, line 20a, or Form 1040A, line 14a. Www freetaxusa com Do not use this worksheet if you repaid benefits in 2013 and your total repayments (box 4 of Forms SSA-1099 and RRB-1099) were more than your gross benefits for 2013 (box 3 of Forms SSA-1099 and RRB-1099). Www freetaxusa com None of your benefits are taxable for 2013. Www freetaxusa com For more information, see Repayments More Than Gross Benefits . Www freetaxusa com If you are filing Form 8815, Exclusion of Interest From Series EE and I U. Www freetaxusa com S. Www freetaxusa com Savings Bonds Issued After 1989, do not include the amount from line 8a of Form 1040 or Form 1040A on line 3 of this worksheet. Www freetaxusa com Instead, include the amount from Schedule B (Form 1040A or 1040), line 2. Www freetaxusa com 1. Www freetaxusa com Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099. Www freetaxusa com Also enter this amount on Form 1040, line 20a, or Form 1040A, line 14a 1. Www freetaxusa com $11,000         2. Www freetaxusa com Enter one-half of line 1 2. Www freetaxusa com 5,500     3. Www freetaxusa com Combine 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. Www freetaxusa com 25,500     4. Www freetaxusa com Enter the amount, if any, from Form 1040 or 1040A, line 8b 4. Www freetaxusa com -0-     5. Www freetaxusa com Enter the total of any exclusions/adjustments for: Adoption benefits (Form 8839, line 28), 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 5. Www freetaxusa com -0-     6. Www freetaxusa com Combine lines 2, 3, 4, and 5 6. Www freetaxusa com 31,000     7. Www freetaxusa com 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. Www freetaxusa com  Form 1040A filers: Enter the amounts from Form 1040A, lines 16 and 17 7. Www freetaxusa com -0-     8. Www freetaxusa com Is the amount on line 7 less than the amount on line 6?             No. Www freetaxusa com None of your social security benefits are taxable. Www freetaxusa com Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. Www freetaxusa com             Yes. Www freetaxusa com Subtract line 7 from line 6 8. Www freetaxusa com 31,000     9. Www freetaxusa com 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 2013, enter $25,000 9. Www freetaxusa com 25,000       Note. Www freetaxusa com If you are married filing separately and you lived with your spouse at any time in 2013, skip lines 9 through 16; multiply line 8 by 85% (. Www freetaxusa com 85) and enter the result on line 17. Www freetaxusa com Then go to line 18. Www freetaxusa com         10. Www freetaxusa com Is the amount on line 9 less than the amount on line 8?             No. Www freetaxusa com None of your benefits are taxable. Www freetaxusa com Enter -0- on Form 1040, line 20b, or on Form 1040A, line 14b. Www freetaxusa com If you are married filing separately and you lived apart from your spouse for all of 2013, be sure you entered “D” to the right of the word “benefits” on Form 1040, line 20a, or on Form 1040A, line 14a. Www freetaxusa com             Yes. Www freetaxusa com Subtract line 9 from line 8 10. Www freetaxusa com 6,000     11. Www freetaxusa com 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 2013 11. Www freetaxusa com 9,000     12. Www freetaxusa com Subtract line 11 from line 10. Www freetaxusa com If zero or less, enter -0- 12. Www freetaxusa com -0-     13. Www freetaxusa com Enter the smaller of line 10 or line 11 13. Www freetaxusa com 6,000     14. Www freetaxusa com Enter one-half of line 13 14. Www freetaxusa com 3,000     15. Www freetaxusa com Enter the smaller of line 2 or line 14 15. Www freetaxusa com 3,000     16. Www freetaxusa com Multiply line 12 by 85% (. Www freetaxusa com 85). Www freetaxusa com If line 12 is zero, enter -0- 16. Www freetaxusa com -0-     17. Www freetaxusa com Add lines 15 and 16 17. Www freetaxusa com 3,000     18. Www freetaxusa com Multiply line 1 by 85% (. Www freetaxusa com 85) 18. Www freetaxusa com 9,350     19. Www freetaxusa com Taxable benefits. Www freetaxusa com Enter the smaller of line 17 or line 18. Www freetaxusa com Also enter this amount on Form 1040, line 20b, or Form 1040A, line 14b 19. Www freetaxusa com $3,000       If you received a lump-sum payment in 2013 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. Www freetaxusa com         Jane Jackson's Filled-in Worksheet 2. Www freetaxusa com Figure Your Additional Taxable Benefits (From a Lump-Sum Payment for a Year After 1993)     Enter earlier year 2012 1. Www freetaxusa com 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. Www freetaxusa com $2,000           Note. Www freetaxusa com If line 1 is zero or less, skip lines 2 through 20 and enter -0- on line 21. Www freetaxusa com Otherwise, go on to line 2. Www freetaxusa com             2. Www freetaxusa com Enter one-half of line 1 2. Www freetaxusa com 1,000   3. Www freetaxusa com Enter your adjusted gross income for the earlier year 3. Www freetaxusa com 23,000   4. Www freetaxusa com Enter the total of any exclusions/adjustments you claimed in the earlier year for: Adoption benefits (Form 8839) Qualified U. Www freetaxusa com S. Www freetaxusa com 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) Domestic production activities (for 2005 through 2012) (Form 1040, 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. Www freetaxusa com -0-   5. Www freetaxusa com Enter any tax-exempt interest received in the earlier year 5. Www freetaxusa com -0-   6. Www freetaxusa com Add lines 2 through 5 6. Www freetaxusa com 24,000   7. Www freetaxusa com Enter your taxable benefits for the earlier year that you previously reported 7. Www freetaxusa com -0-   8. Www freetaxusa com Subtract line 7 from line 6 8. Www freetaxusa com 24,000   9. Www freetaxusa com If, for the earlier year, you were:     Married filing jointly, enter $32,000 Single, head of household, qualifying widow(er), married filing separately and you lived apart from your spouse for all of the earlier year, enter $25,000 9. Www freetaxusa com 25,000     Note. Www freetaxusa com If you were married filing separately and you lived with your spouse at any time during the earlier year, skip lines 9 through 16; multiply line 8 by 85% (. Www freetaxusa com 85) and enter the result on line 17. Www freetaxusa com Then go to line 18. Www freetaxusa com         10. Www freetaxusa com Is the amount on line 8 more than the amount on line 9?       No. Www freetaxusa com Skip lines 10 through 20 and enter -0- on line 21. Www freetaxusa com       Yes. Www freetaxusa com Subtract line 9 from line 8 10. Www freetaxusa com     11. Www freetaxusa com Enter $12,000 if married filing jointly for the earlier year; $9,000 if single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of the earlier year 11. Www freetaxusa com     12. Www freetaxusa com Subtract line 11 from line 10. Www freetaxusa com If zero or less, enter -0- 12. Www freetaxusa com     13. Www freetaxusa com Enter the smaller of line 10 or line 11 13. Www freetaxusa com     14. Www freetaxusa com Enter one-half of line 13 14. Www freetaxusa com     15. Www freetaxusa com Enter the smaller of line 2 or line 14 15. Www freetaxusa com     16. Www freetaxusa com Multiply line 12 by 85% (. Www freetaxusa com 85). Www freetaxusa com If line 12 is zero, enter -0- 16. Www freetaxusa com     17. Www freetaxusa com Add lines 15 and 16 17. Www freetaxusa com     18. Www freetaxusa com Multiply line 1 by 85% (. Www freetaxusa com 85) 18. Www freetaxusa com     19. Www freetaxusa com Refigured taxable benefits. Www freetaxusa com Enter the smaller of line 17 or line 18 19. Www freetaxusa com     20. Www freetaxusa com Enter your taxable benefits for the earlier year (or as refigured due to a previous lump-sum payment for the year) 20. Www freetaxusa com     21. Www freetaxusa com Additional taxable benefits. Www freetaxusa com Subtract line 20 from line 19. Www freetaxusa com Also enter this amount on Worksheet 4, line 20 21. Www freetaxusa com -0-     Do not file an amended return for this earlier year. Www freetaxusa com Complete a separate Worksheet 2 or Worksheet 3 for each earlier year for which you received a lump-sum payment in 2013. Www freetaxusa com   Jane Jackson's Filled-in Worksheet 4. Www freetaxusa com Figure Your Taxable Benefits Under the Lump-Sum Election Method (Use With Worksheet 2 or 3)     Complete Worksheet 1 and Worksheets 2 and 3 as appropriate before completing this worksheet. Www freetaxusa com 1. Www freetaxusa com Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099 for 2013, minus the lump-sum payment for years before 2013 1. Www freetaxusa com $9,000         Note. Www freetaxusa com If line 1 is zero or less, skip lines 2 through 18, enter -0- on line 19 and go to line 20. Www freetaxusa com Otherwise, go on to line 2. Www freetaxusa com           2. Www freetaxusa com Enter one-half of line 1 2. Www freetaxusa com 4,500   3. Www freetaxusa com Enter the amount from Worksheet 1, line 3 3. Www freetaxusa com 25,500   4. Www freetaxusa com Enter the amount from Worksheet 1, line 4 4. Www freetaxusa com -0-   5. Www freetaxusa com Enter the amount from Worksheet 1, line 5 5. Www freetaxusa com -0-   6. Www freetaxusa com Combine lines 2, 3, 4, and 5 6. Www freetaxusa com 30,000   7. Www freetaxusa com Enter the amount from Worksheet 1, line 7 7. Www freetaxusa com -0-   8. Www freetaxusa com Subtract line 7 from line 6 8. Www freetaxusa com 30,000   9. Www freetaxusa com Enter the amount from Worksheet 1, line 9. Www freetaxusa com But if you are married filing separately and lived with your spouse at any time during 2013, skip lines 9 through 16; multiply line 8 by 85% (. Www freetaxusa com 85) and enter the result on line 17. Www freetaxusa com Then, go to line 18 9. Www freetaxusa com 25,000   10. Www freetaxusa com Is the amount on line 8 more than the amount on line 9? No. Www freetaxusa com Skip lines 10 through 18, enter -0- on line 19, and go to line 20. Www freetaxusa com  Yes. Www freetaxusa com Subtract line 9 from line 8 10. Www freetaxusa com 5,000   11. Www freetaxusa com Enter the amount from Worksheet 1, line 11 11. Www freetaxusa com 9,000   12. Www freetaxusa com Subtract line 11 from line 10. Www freetaxusa com If zero or less, enter -0- 12. Www freetaxusa com -0-   13. Www freetaxusa com Enter the smaller of line 10 or line 11 13. Www freetaxusa com 5,000   14. Www freetaxusa com Enter one-half of line 13 14. Www freetaxusa com 2,500   15. Www freetaxusa com Enter the smaller of line 2 or line 14 15. Www freetaxusa com 2,500   16. Www freetaxusa com Multiply line 12 by 85% (. Www freetaxusa com 85). Www freetaxusa com If line 12 is zero, enter -0- 16. Www freetaxusa com -0-   17. Www freetaxusa com Add lines 15 and 16 17. Www freetaxusa com 2,500   18. Www freetaxusa com Multiply line 1 by 85% (. Www freetaxusa com 85) 18. Www freetaxusa com 7,650   19. Www freetaxusa com Enter the smaller of line 17 or line 18 19. Www freetaxusa com 2,500   20. Www freetaxusa com Enter the total of the amounts from Worksheet 2, line 21, and Worksheet 3, line 14, for all earlier years for which the lump-sum payment was received 20. Www freetaxusa com -0-   21. Www freetaxusa com Taxable benefits under lump-sum election method. Www freetaxusa com Add lines 19 and 20 21. Www freetaxusa com $2,500   Next. Www freetaxusa com Is line 21 above smaller than Worksheet 1, line 19? No. Www freetaxusa com Do not use this method to figure your taxable benefits. Www freetaxusa com Follow the instructions on Worksheet 1 to report your benefits. Www freetaxusa com  Yes. Www freetaxusa com You can elect to report your taxable benefits under this method. Www freetaxusa com To elect this method:     Enter “LSE” to the left of Form 1040, line 20a, or Form 1040A, line 14a. Www freetaxusa com If line 21 above is zero, follow the instructions in line 10 for “No” on Worksheet 1. Www freetaxusa com Otherwise: Enter the amount from Worksheet 1, line 1, on Form 1040, line 20a, or on Form 1040A, line 14a. Www freetaxusa com Enter the amount from line 21 above on Form 1040, line 20b, or on Form 1040A, line 14b. Www freetaxusa com If you are married filing separately and you lived apart from your spouse for all of 2013, enter “D” to the right of the word “benefits” on Form 1040, line 20a, or Form 1040A, line 14a. Www freetaxusa com   Deductions Related to Your Benefits You may be entitled to deduct certain amounts related to the benefits you receive. Www freetaxusa com Disability payments. Www freetaxusa com   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. Www freetaxusa com 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. Www freetaxusa com If the amount you repay is more than $3,000, you may be able to claim a tax credit instead. Www freetaxusa com 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. Www freetaxusa com Legal expenses. Www freetaxusa com   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. Www freetaxusa com   Legal expenses for collecting the taxable part of your benefits are deductible as a miscellaneous itemized deduction on Schedule A (Form 1040), line 23. Www freetaxusa com 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. Www freetaxusa com 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. Www freetaxusa com Do not use Worksheet 1 in this case. Www freetaxusa com 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. Www freetaxusa com If you have any questions about this negative figure, contact your local SSA office or your local RRB field office. Www freetaxusa com Joint return. Www freetaxusa com   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. Www freetaxusa com You do this to get your net benefits when figuring if your combined benefits are taxable. Www freetaxusa com Example. Www freetaxusa com John and Mary file a joint return for 2013. Www freetaxusa com John received Form SSA-1099 showing $3,000 in box 5. Www freetaxusa com Mary also received Form SSA-1099 and the amount in box 5 was ($500). Www freetaxusa com 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. Www freetaxusa com Repayment of benefits received in an earlier year. Www freetaxusa com   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. Www freetaxusa com Deduction $3,000 or less. Www freetaxusa com   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. Www freetaxusa com Claim it on Schedule A (Form 1040), line 23. Www freetaxusa com Deduction more than $3,000. Www freetaxusa com   If this deduction is more than $3,000, you should figure your tax two ways: Figure your tax for 2013 with the itemized deduction included on Schedule A, line 28. Www freetaxusa com Figure your tax for 2013 in the following steps: Figure the tax without the itemized deduction included on Schedule A, line 28. Www freetaxusa com 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. Www freetaxusa com Then refigure the tax for that year. Www freetaxusa com Subtract the total of the refigured tax amounts in (b) from the total of your actual tax amounts. Www freetaxusa com Subtract the result in (c) from the result in (a). Www freetaxusa com   Compare the tax figured in methods (1) and (2). Www freetaxusa com Your tax for 2013 is the smaller of the two amounts. Www freetaxusa com If method (1) results in less tax, take the itemized deduction on Schedule A (Form 1040), line 28. Www freetaxusa com If method (2) results in less tax, claim a credit for the amount from step 2(c) above on Form 1040, line 71. Www freetaxusa com Check box d and enter “I. Www freetaxusa com R. Www freetaxusa com C. Www freetaxusa com 1341” in the space next to that box. Www freetaxusa com If both methods produce the same tax, deduct the repayment on Schedule A (Form 1040), line 28. Www freetaxusa com Worksheets Blank Worksheets 1 through 4 are provided in this section: Worksheet 1, Figuring Your Taxable Benefits; Worksheet 2, Figure Your Additional Taxable Benefits (From a Lump-Sum Payment for a Year After 1993); Worksheet 3, Figure Your Additional Taxable Benefits (From a Lump-Sum Payment for a Year Before 1994); Worksheet 4, Figure Your Taxable Benefits Under the Lump-Sum Election Method (Use With Worksheet 2 or 3). Www freetaxusa com Worksheet 1. Www freetaxusa com Figuring Your Taxable Benefits Before you begin: If you are married filing separately and you lived apart from your spouse for all of 2013, enter “D” to the right of the word “benefits” on Form 1040, line 20a, or Form 1040A, line 14a. Www freetaxusa com Do not use this worksheet if you repaid benefits in 2013 and your total repayments (box 4 of Forms SSA-1099 and RRB-1099) were more than your gross benefits for 2013 (box 3 of Forms SSA-1099 and RRB-1099). Www freetaxusa com None of your benefits are taxable for 2013. Www freetaxusa com For more information, see Repayments More Than Gross Benefits . Www freetaxusa com If you are filing Form 8815, Exclusion of Interest From Series EE and I U. Www freetaxusa com S. Www freetaxusa com Savings Bonds Issued After 1989, do not include the amount from line 8a of Form 1040 or Form 1040A on line 3 of this worksheet. Www freetaxusa com Instead, include the amount from Schedule B (Form 1040A or 1040), line 2. Www freetaxusa com 1. Www freetaxusa com Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099. Www freetaxusa com Also enter this amount on Form 1040, line 20a, or Form 1040A, line 14a 1. Www freetaxusa com           2. Www freetaxusa com Enter one-half of line 1 2. Www freetaxusa com       3. Www freetaxusa com Combine 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. Www freetaxusa com       4. Www freetaxusa com Enter the amount, if any, from Form 1040 or 1040A, line 8b 4. Www freetaxusa com       5. Www freetaxusa com Enter the total of any exclusions/adjustments for: Adoption benefits (Form 8839, line 28), 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 5. Www freetaxusa com       6. Www freetaxusa com Combine lines 2, 3, 4, and 5 6. Www freetaxusa com       7. Www freetaxusa com 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. Www freetaxusa com  Form 1040A filers: Enter the amounts from Form 1040A, lines 16 and 17 7. Www freetaxusa com       8. Www freetaxusa com Is the amount on line 7 less than the amount on line 6?             No. Www freetaxusa com None of your social security benefits are taxable. Www freetaxusa com Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. Www freetaxusa com             Yes. Www freetaxusa com Subtract line 7 from line 6 8. Www freetaxusa com       9. Www freetaxusa com 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 2013, enter $25,000 9. Www freetaxusa com         Note. Www freetaxusa com If you are married filing separately and you lived with your spouse at any time in 2013, skip lines 9 through 16; multiply line 8 by 85% (. Www freetaxusa com 85) and enter the result on line 17. Www freetaxusa com Then go to line 18. Www freetaxusa com         10. Www freetaxusa com Is the amount on line 9 less than the amount on line 8?             No. Www freetaxusa com None of your benefits are taxable. Www freetaxusa com Enter -0- on Form 1040, line 20b, or on Form 1040A, line 14b. Www freetaxusa com If you are married filing separately and you lived apart from your spouse for all of 2013, be sure you entered “D” to the right of the word “benefits” on Form 1040, line 20a, or on Form 1040A, line 14a. Www freetaxusa com             Yes. Www freetaxusa com Subtract line 9 from line 8 10. Www freetaxusa com       11. Www freetaxusa com 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 2013 11. Www freetaxusa com       12. Www freetaxusa com Subtract line 11 from line 10. Www freetaxusa com If zero or less, enter -0- 12. Www freetaxusa com       13. Www freetaxusa com Enter the smaller of line 10 or line 11 13. Www freetaxusa com       14. Www freetaxusa com Enter one-half of line 13 14. Www freetaxusa com       15. Www freetaxusa com Enter the smaller of line 2 or line 14 15. Www freetaxusa com       16. Www freetaxusa com Multiply line 12 by 85% (. Www freetaxusa com 85). Www freetaxusa com If line 12 is zero, enter -0- 16. Www freetaxusa com       17. Www freetaxusa com Add lines 15 and 16 17. Www freetaxusa com       18. Www freetaxusa com Multiply line 1 by 85% (. Www freetaxusa com 85) 18. Www freetaxusa com       19. Www freetaxusa com Taxable benefits. Www freetaxusa com Enter the smaller of line 17 or line 18. Www freetaxusa com Also enter this amount on Form 1040, line 20b, or Form 1040A, line 14b 19. Www freetaxusa com         If you received a lump-sum payment in 2013 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. Www freetaxusa com         Worksheet 2. Www freetaxusa com Figure Your Additional Taxable Benefits (From a Lump-Sum Payment for a Year After 1993)     Enter earlier year 1. Www freetaxusa com 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. Www freetaxusa com             Note. Www freetaxusa com If line 1 is zero or less, skip lines 2 through 20 and enter -0- on line 21. Www freetaxusa com Otherwise, go on to line 2. Www freetaxusa com             2. Www freetaxusa com Enter one-half of line 1 2. Www freetaxusa com     3. Www freetaxusa com Enter your adjusted gross income for the earlier year 3. Www freetaxusa com     4. Www freetaxusa com Enter the total of any exclusions/adjustments you claimed in the earlier year for: Adoption benefits (Form 8839) Qualified U. Www freetaxusa com S. Www freetaxusa com 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) Domestic production activities (for 2005 through 2012) (Form 1040, 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. Www freetaxusa com     5. Www freetaxusa com Enter any tax-exempt interest received in the earlier year 5. Www freetaxusa com     6. Www freetaxusa com Add lines 2 through 5 6. Www freetaxusa com     7. Www freetaxusa com Enter your taxable benefits for the earlier year that you previously reported 7. Www freetaxusa com     8. Www freetaxusa com Subtract line 7 from line 6 8. Www freetaxusa com     9. Www freetaxusa com If, for the earlier year, you were:     Married filing jointly, enter $32,000 Single, head of household, qualifying widow(er), married filing separately and you lived apart from your spouse for all of the earlier year, enter $25,000 9. Www freetaxusa com       Note. Www freetaxusa com If you were married filing separately and you lived with your spouse at any time during the earlier year, skip lines 9 through 16; multiply line 8 by 85% (. Www freetaxusa com 85) and enter the result on line 17. Www freetaxusa com Then go to line 18. Www freetaxusa com         10. Www freetaxusa com Is the amount on line 8 more than the amount on line 9?       No. Www freetaxusa com Skip lines 10 through 20 and enter -0- on line 21. Www freetaxusa com       Yes. Www freetaxusa com Subtract line 9 from line 8 10. Www freetaxusa com     11. Www freetaxusa com Enter $12,000 if married filing jointly for the earlier year; $9,000 if single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of the earlier year 11. Www freetaxusa com     12. Www freetaxusa com Subtract line 11 from line 10. Www freetaxusa com If zero or less, enter -0- 12. Www freetaxusa com     13. Www freetaxusa com Enter the smaller of line 10 or line 11 13. Www freetaxusa com     14. Www freetaxusa com Enter one-half of line 13 14. Www freetaxusa com     15. Www freetaxusa com Enter the smaller of line 2 or line 14 15. Www freetaxusa com     16. Www freetaxusa com Multiply line 12 by 85% (. Www freetaxusa com 85). Www freetaxusa com If line 12 is zero, enter -0- 16. Www freetaxusa com     17. Www freetaxusa com Add lines 15 and 16 17. Www freetaxusa com     18. Www freetaxusa com Multiply line 1 by 85% (. Www freetaxusa com 85) 18. Www freetaxusa com     19. Www freetaxusa com Refigured taxable benefits. Www freetaxusa com Enter the smaller of line 17 or line 18 19. Www freetaxusa com     20. Www freetaxusa com Enter your taxable benefits for the earlier year (or as refigured due to a previous lump-sum payment for the year) 20. Www freetaxusa com     21. Www freetaxusa com Additional taxable benefits. Www freetaxusa com Subtract line 20 from line 19. Www freetaxusa com Also enter this amount on Worksheet 4, line 20 21. Www freetaxusa com       Do not file an amended return for this earlier year. Www freetaxusa com Complete a separate Worksheet 2 or Worksheet 3 for each earlier year for which you received a lump-sum payment in 2013. Www freetaxusa com   Worksheet 3. Www freetaxusa com Figure Your Additional Taxable Benefits (From a Lump-Sum Payment for a Year Before 1994) Enter earlier year 1. Www freetaxusa com 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. Www freetaxusa com           Note. Www freetaxusa com If line 1 is zero or less, skip lines 2 through 13 and enter -0- on line 14. Www freetaxusa com Otherwise, go on to line 2. Www freetaxusa com           2. Www freetaxusa com Enter one-half of line 1 2. Www freetaxusa com     3. Www freetaxusa com Enter your adjusted gross income for the earlier year 3. Www freetaxusa com     4. Www freetaxusa com Enter the total of any exclusions/adjustments you claimed in the earlier year for: Qualified U. Www freetaxusa com S. Www freetaxusa com 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. Www freetaxusa com     5. Www freetaxusa com Enter any tax-exempt interest received in the earlier year 5. Www freetaxusa com     6. Www freetaxusa com Add lines 2 through 5 6. Www freetaxusa com     7. Www freetaxusa com Enter your taxable benefits for the earlier year that you previously reported 7. Www freetaxusa com     8. Www freetaxusa com Subtract line 7 from line 6 8. Www freetaxusa com     9. Www freetaxusa com 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 earlier year) 9. Www freetaxusa com     10. Www freetaxusa com Is the amount on line 8 more than the amount on line 9? No. Www freetaxusa com Skip lines 10 through 13 and enter -0- on line 14. Www freetaxusa com  Yes. Www freetaxusa com Subtract line 9 from line 8. Www freetaxusa com 10. Www freetaxusa com     11. Www freetaxusa com Enter one-half of line 10 11. Www freetaxusa com     12. Www freetaxusa com Refigured taxable benefits. Www freetaxusa com Enter the smaller of line 2 or line 11 12. Www freetaxusa com     13. Www freetaxusa com Enter your taxable benefits for the earlier year (or as refigured due to a previous