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2012 Form 1040

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2012 Form 1040

2012 form 1040 11. 2012 form 1040   Social Security and Equivalent Railroad Retirement Benefits Table of Contents Introduction Useful Items - You may want to see: Are Any of Your Benefits Taxable? How To Report Your BenefitsHow Much Is Taxable? Examples Deductions Related to Your BenefitsRepayments More Than Gross Benefits Introduction This chapter explains the federal income tax rules for social security benefits and equivalent tier 1 railroad retirement benefits. 2012 form 1040 It explains the following topics. 2012 form 1040 How to figure whether your benefits are taxable. 2012 form 1040 How to use the social security benefits worksheet (with examples). 2012 form 1040 How to report your taxable benefits. 2012 form 1040 How to treat repayments that are more than the benefits you received during the year. 2012 form 1040 Social security benefits include monthly retirement, survivor, and disability benefits. 2012 form 1040 They do not include supplemental security income (SSI) payments, which are not taxable. 2012 form 1040 Equivalent tier 1 railroad retirement benefits are the part of tier 1 benefits that a railroad employee or beneficiary would have been entitled to receive under the social security system. 2012 form 1040 They are commonly called the social security equivalent benefit (SSEB) portion of tier 1 benefits. 2012 form 1040 If you received these benefits during 2013, you should have received a Form SSA-1099, Social Security Benefit Statement, or Form RRB-1099, Payments by the Railroad Retirement Board. 2012 form 1040 These forms show the amounts received and repaid, and taxes withheld for the year. 2012 form 1040 You may receive more than one of these forms for the same year. 2012 form 1040 You should add the amounts shown on all the Forms SSA-1099 and Forms RRB-1099 you receive for the year to determine the total amounts received and repaid, and taxes withheld for that year. 2012 form 1040 See the Appendix at the end of Publication 915 for more information. 2012 form 1040 Note. 2012 form 1040 When the term “benefits” is used in this chapter, it applies to both social security benefits and the SSEB portion of tier 1 railroad retirement benefits. 2012 form 1040 What is not covered in this chapter. 2012 form 1040   This chapter does not cover the tax rules for the following railroad retirement benefits. 2012 form 1040 Non-social security equivalent benefit (NSSEB) portion of tier 1 benefits. 2012 form 1040 Tier 2 benefits. 2012 form 1040 Vested dual benefits. 2012 form 1040 Supplemental annuity benefits. 2012 form 1040 For information on these benefits, see Publication 575, Pension and Annuity Income. 2012 form 1040   This chapter does not cover the tax rules for social security benefits reported on Form SSA-1042S, Social Security Benefit Statement, or Form RRB-1042S, Statement for Nonresident Alien Recipients of: Payments by the Railroad Retirement Board. 2012 form 1040 For information about these benefits, see Publication 519, U. 2012 form 1040 S. 2012 form 1040 Tax Guide for Aliens, and Publication 915, Social Security and Equivalent Railroad Retirement Benefits. 2012 form 1040   This chapter also does not cover the tax rules for foreign social security benefits. 2012 form 1040 These benefits are taxable as annuities, unless they are exempt from U. 2012 form 1040 S. 2012 form 1040 tax or treated as a U. 2012 form 1040 S. 2012 form 1040 social security benefit under a tax treaty. 2012 form 1040 Useful Items - You may want to see: Publication 505 Tax Withholding and Estimated Tax 575 Pension and Annuity Income 590 Individual Retirement Arrangements (IRAs) 915 Social Security and Equivalent Railroad Retirement Benefits Forms (and Instructions) 1040-ES Estimated Tax for Individuals SSA-1099 Social Security Benefit Statement RRB-1099 Payments by the Railroad Retirement Board W-4V Voluntary Withholding Request Are Any of Your Benefits Taxable? To find out whether any of your benefits may be taxable, compare the base amount for your filing status with the total of: One-half of your benefits, plus All your other income, including tax-exempt interest. 2012 form 1040 When making this comparison, do not reduce your other income by any exclusions for: Interest from qualified U. 2012 form 1040 S. 2012 form 1040 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. 2012 form 1040 Children's benefits. 2012 form 1040   The rules in this chapter apply to benefits received by children. 2012 form 1040 See Who is taxed , later. 2012 form 1040 Figuring total income. 2012 form 1040   To figure the total of one-half of your benefits plus your other income, use Worksheet 11-1 later in this discussion. 2012 form 1040 If the total is more than your base amount, part of your benefits may be taxable. 2012 form 1040    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. 2012 form 1040 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. 2012 form 1040    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. 2012 form 1040 If you have income in addition to your benefits, you may have to file a return even if none of your benefits are taxable. 2012 form 1040 Base amount. 2012 form 1040   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. 2012 form 1040 Worksheet 11-1. 2012 form 1040   You can use Worksheet 11-1 to figure the amount of income to compare with your base amount. 2012 form 1040 This is a quick way to check whether some of your benefits may be taxable. 2012 form 1040 Worksheet 11-1. 2012 form 1040 A Quick Way To Check if Your Benefits May Be Taxable A. 2012 form 1040 Enter the amount from box 5 of all your Forms SSA-1099 and RRB-1099. 2012 form 1040 Include the full amount of any lump-sum benefit payments received in 2013, for 2013 and earlier years. 2012 form 1040 (If you received more than one form, combine the amounts from box 5 and enter the total. 2012 form 1040 ) A. 2012 form 1040   Note. 2012 form 1040 If the amount on line A is zero or less, stop here; none of your benefits are taxable this year. 2012 form 1040 B. 2012 form 1040 Enter one-half of the amount on line A B. 2012 form 1040   C. 2012 form 1040 Enter your taxable pensions, wages, interest, dividends, and other taxable income C. 2012 form 1040   D. 2012 form 1040 Enter any tax-exempt interest income (such as interest on municipal bonds) plus any exclusions from income (listed earlier) D. 2012 form 1040   E. 2012 form 1040 Add lines B, C, and D E. 2012 form 1040   Note. 2012 form 1040 Compare the amount on line E to your base amount for your filing status. 2012 form 1040 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. 2012 form 1040 If the amount on line E is more than your base amount, some of your benefits may be taxable. 2012 form 1040 You need to complete Worksheet 1 in Publication 915 (or the Social Security Benefits Worksheet in your tax form instructions). 2012 form 1040 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. 2012 form 1040 Example. 2012 form 1040 You and your spouse (both over 65) are filing a joint return for 2013 and you both received social security benefits during the year. 2012 form 1040 In January 2014, you received a Form SSA-1099 showing net benefits of $7,500 in box 5. 2012 form 1040 Your spouse received a Form SSA-1099 showing net benefits of $3,500 in box 5. 2012 form 1040 You also received a taxable pension of $22,800 and interest income of $500. 2012 form 1040 You did not have any tax-exempt interest income. 2012 form 1040 Your benefits are not taxable for 2013 because your income, as figured in Worksheet 11-1, is not more than your base amount ($32,000) for married filing jointly. 2012 form 1040 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. 2012 form 1040 Filled-in Worksheet 11-1. 2012 form 1040 A Quick Way To Check if Your Benefits May Be Taxable A. 2012 form 1040 Enter the amount from box 5 of all your Forms SSA-1099 and RRB-1099. 2012 form 1040 Include the full amount of any lump-sum benefit payments received in 2013, for 2013 and earlier years. 2012 form 1040 (If you received more than one form, combine the amounts from box 5 and enter the total. 2012 form 1040 ) A. 2012 form 1040 $11,000 Note. 2012 form 1040 If the amount on line A is zero or less, stop here; none of your benefits are taxable this year. 2012 form 1040 B. 2012 form 1040 Enter one-half of the amount on line A B. 2012 form 1040 5,500 C. 2012 form 1040 Enter your taxable pensions, wages, interest, dividends, and other taxable income C. 2012 form 1040 23,300 D. 2012 form 1040 Enter any tax-exempt interest income (such as interest on municipal bonds) plus any exclusions from income (listed earlier) D. 2012 form 1040 -0- E. 2012 form 1040 Add lines B, C, and D E. 2012 form 1040 $28,800 Note. 2012 form 1040 Compare the amount on line E to your base amount for your filing status. 2012 form 1040 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. 2012 form 1040 If the amount on line E is more than your base amount, some of your benefits may be taxable. 2012 form 1040 You need to complete Worksheet 1 in Publication 915 (or the Social Security Benefits Worksheet in your tax form instructions). 2012 form 1040 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. 2012 form 1040 Who is taxed. 2012 form 1040   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. 2012 form 1040 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. 2012 form 1040 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. 2012 form 1040 Repayment of benefits. 2012 form 1040   Any repayment of benefits you made during 2013 must be subtracted from the gross benefits you received in 2013. 2012 form 1040 It does not matter whether the repayment was for a benefit you received in 2013 or in an earlier year. 2012 form 1040 If you repaid more than the gross benefits you received in 2013, see Repayments More Than Gross Benefits , later. 2012 form 1040   Your gross benefits are shown in box 3 of Form SSA-1099 or RRB-1099. 2012 form 1040 Your repayments are shown in box 4. 2012 form 1040 The amount in box 5 shows your net benefits for 2013 (box 3 minus box 4). 2012 form 1040 Use the amount in box 5 to figure whether any of your benefits are taxable. 2012 form 1040 Tax withholding and estimated tax. 2012 form 1040   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. 2012 form 1040 If you choose to do this, you must complete a Form W-4V. 2012 form 1040   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. 2012 form 1040 For details, see Publication 505 or the instructions for Form 1040-ES. 2012 form 1040 How To Report Your Benefits If part of your benefits are taxable, you must use Form 1040 or Form 1040A. 2012 form 1040 You cannot use Form 1040EZ. 2012 form 1040 Reporting on Form 1040. 2012 form 1040   Report your net benefits (the total amount from box 5 of all your Forms SSA-1099 and Forms RRB-1099) on line 20a and the taxable part on line 20b. 2012 form 1040 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. 2012 form 1040 Reporting on Form 1040A. 2012 form 1040   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. 2012 form 1040 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. 2012 form 1040 Benefits not taxable. 2012 form 1040   If you are filing Form 1040EZ, do not report any benefits on your tax return. 2012 form 1040 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. 2012 form 1040 Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. 2012 form 1040 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. 2012 form 1040 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. 2012 form 1040 Generally, the higher that total amount, the greater the taxable part of your benefits. 2012 form 1040 Maximum taxable part. 2012 form 1040   Generally, up to 50% of your benefits will be taxable. 2012 form 1040 However, up to 85% of your benefits can be taxable if either of the following situations applies to you. 2012 form 1040 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). 2012 form 1040 You are married filing separately and lived with your spouse at any time during 2013. 2012 form 1040 Which worksheet to use. 2012 form 1040   A worksheet you can use to figure your taxable benefits is in the instructions for your Form 1040 or Form 1040A. 2012 form 1040 You can use either that worksheet or Worksheet 1 in Publication 915, unless any of the following situations applies to you. 2012 form 1040 You contributed to a traditional individual retirement arrangement (IRA) and you or your spouse is covered by a retirement plan at work. 2012 form 1040 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. 2012 form 1040 Situation (1) does not apply and you take an exclusion for interest from qualified U. 2012 form 1040 S. 2012 form 1040 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. 2012 form 1040 In this situation, you must use Worksheet 1 in Publication 915 to figure your taxable benefits. 2012 form 1040 You received a lump-sum payment for an earlier year. 2012 form 1040 In this situation, also complete Worksheet 2 or 3 and Worksheet 4 in Publication 915. 2012 form 1040 See Lump-sum election next. 2012 form 1040 Lump-sum election. 2012 form 1040   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. 2012 form 1040    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. 2012 form 1040 No part of the lump-sum death benefit is subject to tax. 2012 form 1040   Generally, you use your 2013 income to figure the taxable part of the total benefits received in 2013. 2012 form 1040 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. 2012 form 1040 You can elect this method if it lowers your taxable benefits. 2012 form 1040 Making the election. 2012 form 1040   If you received a lump-sum benefit payment in 2013 that includes benefits for one or more earlier years, follow the instructions in Publication 915 under Lump-Sum Election to see whether making the election will lower your taxable benefits. 2012 form 1040 That discussion also explains how to make the election. 2012 form 1040    Because the earlier year's taxable benefits are included in your 2013 income, no adjustment is made to the earlier year's return. 2012 form 1040 Do not file an amended return for the earlier year. 2012 form 1040 Examples The following are a few examples you can use as a guide to figure the taxable part of your benefits. 2012 form 1040 Example 1. 2012 form 1040 George White is single and files Form 1040 for 2013. 2012 form 1040 He received the following income in 2013: Fully taxable pension $18,600 Wages from part-time job 9,400 Taxable interest income 990 Total $28,990 George also received social security benefits during 2013. 2012 form 1040 The Form SSA-1099 he received in January 2014 shows $5,980 in box 5. 2012 form 1040 To figure his taxable benefits, George completes the worksheet shown here. 2012 form 1040 Filled-in Worksheet 1. 2012 form 1040 Figuring Your Taxable Benefits 1. 2012 form 1040 Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099. 2012 form 1040 Also enter this amount on Form 1040, line 20a, or Form 1040A, line 14a $5,980 2. 2012 form 1040 Enter one-half of line 1 2,990 3. 2012 form 1040 Combine the amounts from:     Form 1040: Lines 7, 8a, 9a, 10 through 14, 15b, 16b, 17 through 19, and 21. 2012 form 1040     Form 1040A: Lines 7, 8a, 9a, 10, 11b, 12b, and 13 28,990 4. 2012 form 1040 Enter the amount, if any, from Form 1040 or 1040A, line 8b -0-       5. 2012 form 1040 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 -0-       6. 2012 form 1040 Combine lines 2, 3, 4, and 5 31,980 7. 2012 form 1040 Form 1040 filers: Enter the amount from Form 1040, lines 23 through 32, and any write-in adjustments you entered on the dotted line next to line 36. 2012 form 1040     Form 1040A filers: Enter the amount from Form 1040A, lines 16 and 17 -0- 8. 2012 form 1040 Is the amount on line 7 less than the amount on line 6?     No. 2012 form 1040 None of your social security benefits are taxable. 2012 form 1040 Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. 2012 form 1040   Yes. 2012 form 1040 Subtract line 7 from line 6 31,980 9. 2012 form 1040 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 25,000   Note. 2012 form 1040 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% (. 2012 form 1040 85) and enter the result on line 17. 2012 form 1040 Then go to line 18. 2012 form 1040   10. 2012 form 1040 Is the amount on line 9 less than the amount on line 8?     No. 2012 form 1040 None of your benefits are taxable. 2012 form 1040 Enter -0- on Form 1040, line 20b, or on Form 1040A, line 14b. 2012 form 1040 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. 2012 form 1040     Yes. 2012 form 1040 Subtract line 9 from line 8 6,980 11. 2012 form 1040 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 9,000 12. 2012 form 1040 Subtract line 11 from line 10. 2012 form 1040 If zero or less, enter -0- -0- 13. 2012 form 1040 Enter the smaller of line 10 or line 11 6,980 14. 2012 form 1040 Enter one-half of line 13 3,490 15. 2012 form 1040 Enter the smaller of line 2 or line 14 2,990 16. 2012 form 1040 Multiply line 12 by 85% (. 2012 form 1040 85). 2012 form 1040 If line 12 is zero, enter -0- -0- 17. 2012 form 1040 Add lines 15 and 16 2,990 18. 2012 form 1040 Multiply line 1 by 85% (. 2012 form 1040 85) 5,083 19. 2012 form 1040 Taxable benefits. 2012 form 1040 Enter the smaller of line 17 or line 18. 2012 form 1040 Also enter this amount on Form 1040, line 20b, or Form 1040A, line 14b $2,990 The amount on line 19 of George's worksheet shows that $2,990 of his social security benefits is taxable. 2012 form 1040 On line 20a of his Form 1040, George enters his net benefits of $5,980. 2012 form 1040 On line 20b, he enters his taxable benefits of $2,990. 2012 form 1040 Example 2. 2012 form 1040 Ray and Alice Hopkins file a joint return on Form 1040A for 2013. 2012 form 1040 Ray is retired and received a fully taxable pension of $15,500. 2012 form 1040 He also received social security benefits, and his Form SSA-1099 for 2013 shows net benefits of $5,600 in box 5. 2012 form 1040 Alice worked during the year and had wages of $14,000. 2012 form 1040 She made a deductible payment to her IRA account of $1,000. 2012 form 1040 Ray and Alice have two savings accounts with a total of $250 in taxable interest income. 2012 form 1040 They complete Worksheet 1, entering $29,750 ($15,500 + $14,000 + $250) on line 3. 2012 form 1040 They find none of Ray's social security benefits are taxable. 2012 form 1040 On Form 1040A, they enter $5,600 on line 14a and -0- on line 14b. 2012 form 1040 Filled-in Worksheet 1. 2012 form 1040 Figuring Your Taxable Benefits 1. 2012 form 1040 Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099. 2012 form 1040 Also enter this amount on Form 1040, line 20a, or Form 1040A, line 14a $5,600 2. 2012 form 1040 Enter one-half of line 1 2,800 3. 2012 form 1040 Combine the amounts from:     Form 1040: Lines 7, 8a, 9a, 10 through 14, 15b, 16b, 17 through 19, and 21. 2012 form 1040     Form 1040A: Lines 7, 8a, 9a, 10, 11b, 12b, and 13 29,750 4. 2012 form 1040 Enter the amount, if any, from Form 1040 or 1040A, line 8b -0-       5. 2012 form 1040 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 -0-       6. 2012 form 1040 Combine lines 2, 3, 4, and 5 32,550 7. 2012 form 1040 Form 1040 filers: Enter the amount from Form 1040, lines 23 through 32, and any write-in adjustments you entered on the dotted line next to line 36. 2012 form 1040     Form 1040A filers: Enter the amount from Form 1040A, lines 16 and 17 1,000 8. 2012 form 1040 Is the amount on line 7 less than the amount on line 6?     No. 2012 form 1040 None of your social security benefits are taxable. 2012 form 1040 Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. 2012 form 1040   Yes. 2012 form 1040 Subtract line 7 from line 6 31,550 9. 2012 form 1040 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 32,000   Note. 2012 form 1040 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% (. 2012 form 1040 85) and enter the result on line 17. 2012 form 1040 Then go to line 18. 2012 form 1040   10. 2012 form 1040 Is the amount on line 9 less than the amount on line 8?     No. 2012 form 1040 None of your benefits are taxable. 2012 form 1040 Enter -0- on Form 1040, line 20b, or on Form 1040A, line 14b. 2012 form 1040 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. 2012 form 1040     Yes. 2012 form 1040 Subtract line 9 from line 8   11. 2012 form 1040 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   12. 2012 form 1040 Subtract line 11 from line 10. 2012 form 1040 If zero or less, enter -0-   13. 2012 form 1040 Enter the smaller of line 10 or line 11   14. 2012 form 1040 Enter one-half of line 13   15. 2012 form 1040 Enter the smaller of line 2 or line 14   16. 2012 form 1040 Multiply line 12 by 85% (. 2012 form 1040 85). 2012 form 1040 If line 12 is zero, enter -0-   17. 2012 form 1040 Add lines 15 and 16   18. 2012 form 1040 Multiply line 1 by 85% (. 2012 form 1040 85)   19. 2012 form 1040 Taxable benefits. 2012 form 1040 Enter the smaller of line 17 or line 18. 2012 form 1040 Also enter this amount on Form 1040, line 20b, or Form 1040A, line 14b   Example 3. 2012 form 1040 Joe and Betty Johnson file a joint return on Form 1040 for 2013. 2012 form 1040 Joe is a retired railroad worker and in 2013 received the social security equivalent benefit (SSEB) portion of tier 1 railroad retirement benefits. 2012 form 1040 Joe's Form RRB-1099 shows $10,000 in box 5. 2012 form 1040 Betty is a retired government worker and receives a fully taxable pension of $38,000. 2012 form 1040 They had $2,300 in taxable interest income plus interest of $200 on a qualified U. 2012 form 1040 S. 2012 form 1040 savings bond. 2012 form 1040 The savings bond interest qualified for the exclusion. 2012 form 1040 They figure their taxable benefits by completing Worksheet 1. 2012 form 1040 Because they have qualified U. 2012 form 1040 S. 2012 form 1040 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. 2012 form 1040 On line 3 of the worksheet, they enter $40,500 ($38,000 + $2,500). 2012 form 1040 Filled-in Worksheet 1. 2012 form 1040 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. 2012 form 1040 • 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). 2012 form 1040 None of your benefits are taxable for 2013. 2012 form 1040 For more information, see Repayments More Than Gross Benefits. 2012 form 1040 • If you are filing Form 8815, Exclusion of Interest From Series EE and I U. 2012 form 1040 S. 2012 form 1040 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. 2012 form 1040 Instead, include the amount from Schedule B (Form 1040A or 1040), line 2. 2012 form 1040 1. 2012 form 1040 Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099. 2012 form 1040 Also enter this amount on Form 1040, line 20a, or Form 1040A, line 14a $10,000 2. 2012 form 1040 Enter one-half of line 1 5,000 3. 2012 form 1040 Combine the amounts from:     Form 1040: Lines 7, 8a, 9a, 10 through 14, 15b, 16b, 17 through 19, and 21. 2012 form 1040     Form 1040A: Lines 7, 8a, 9a, 10, 11b, 12b, and 13 40,500 4. 2012 form 1040 Enter the amount, if any, from Form 1040 or 1040A, line 8b -0-       5. 2012 form 1040 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 -0-       6. 2012 form 1040 Combine lines 2, 3, 4, and 5 45,500 7. 2012 form 1040 Form 1040 filers: Enter the amount from Form 1040, lines 23 through 32, and any write-in adjustments you entered on the dotted line next to line 36. 2012 form 1040     Form 1040A filers: Enter the amount from Form 1040A, lines 16 and 17 -0- 8. 2012 form 1040 Is the amount on line 7 less than the amount on line 6?     No. 2012 form 1040 None of your social security benefits are taxable. 2012 form 1040 Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. 2012 form 1040   Yes. 2012 form 1040 Subtract line 7 from line 6 45,500 9. 2012 form 1040 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 32,000   Note. 2012 form 1040 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% (. 2012 form 1040 85) and enter the result on line 17. 2012 form 1040 Then go to line 18. 2012 form 1040   10. 2012 form 1040 Is the amount on line 9 less than the amount on line 8?     No. 2012 form 1040 None of your benefits are taxable. 2012 form 1040 Enter -0- on Form 1040, line 20b, or on Form 1040A, line 14b. 2012 form 1040 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. 2012 form 1040     Yes. 2012 form 1040 Subtract line 9 from line 8 13,500 11. 2012 form 1040 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 12,000 12. 2012 form 1040 Subtract line 11 from line 10. 2012 form 1040 If zero or less, enter -0- 1,500 13. 2012 form 1040 Enter the smaller of line 10 or line 11 12,000 14. 2012 form 1040 Enter one-half of line 13 6,000 15. 2012 form 1040 Enter the smaller of line 2 or line 14 5,000 16. 2012 form 1040 Multiply line 12 by 85% (. 2012 form 1040 85). 2012 form 1040 If line 12 is zero, enter -0- 1,275 17. 2012 form 1040 Add lines 15 and 16 6,275 18. 2012 form 1040 Multiply line 1 by 85% (. 2012 form 1040 85) 8,500 19. 2012 form 1040 Taxable benefits. 2012 form 1040 Enter the smaller of line 17 or line 18. 2012 form 1040 Also enter this amount on Form 1040, line 20b, or Form 1040A, line 14b $6,275 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. 2012 form 1040 Joe and Betty enter $10,000 on Form 1040, line 20a, and $6,275 on Form 1040, line 20b. 2012 form 1040 Deductions Related to Your Benefits You may be entitled to deduct certain amounts related to the benefits you receive. 2012 form 1040 Disability payments. 2012 form 1040   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. 2012 form 1040 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. 2012 form 1040 If the amount you repay is more than $3,000, you may be able to claim a tax credit instead. 2012 form 1040 Claim the deduction or credit in the same way explained under Repayments More Than Gross Benefits , later. 2012 form 1040 Legal expenses. 2012 form 1040   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. 2012 form 1040   Legal expenses for collecting the taxable part of your benefits are deductible as a miscellaneous itemized deduction on Schedule A (Form 1040), line 23. 2012 form 1040 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. 2012 form 1040 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. 2012 form 1040 Do not use a worksheet in this case. 2012 form 1040 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. 2012 form 1040 If you have any questions about this negative figure, contact your local SSA office or your local RRB field office. 2012 form 1040 Joint return. 2012 form 1040   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. 2012 form 1040 You do this to get your net benefits when figuring if your combined benefits are taxable. 2012 form 1040 Example. 2012 form 1040 John and Mary file a joint return for 2013. 2012 form 1040 John received Form SSA-1099 showing $3,000 in box 5. 2012 form 1040 Mary also received Form SSA-1099 and the amount in box 5 was ($500). 2012 form 1040 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. 2012 form 1040 Repayment of benefits received in an earlier year. 2012 form 1040   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. 2012 form 1040 Deduction $3,000 or less. 2012 form 1040   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. 2012 form 1040 Claim it on Schedule A (Form 1040), line 23. 2012 form 1040 Deduction more than $3,000. 2012 form 1040    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. 2012 form 1040 Figure your tax for 2013 in the following steps. 2012 form 1040 Figure the tax without the itemized deduction included on Schedule A, line 28. 2012 form 1040 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. 2012 form 1040 Then refigure the tax for that year. 2012 form 1040 Subtract the total of the refigured tax amounts in (b) from the total of your actual tax amounts. 2012 form 1040 Subtract the result in (c) from the result in (a). 2012 form 1040 Compare the tax figured in methods (1) and (2). 2012 form 1040 Your tax for 2013 is the smaller of the two amounts. 2012 form 1040 If method (1) results in less tax, take the itemized deduction on Schedule A (Form 1040), line 28. 2012 form 1040 If method (2) results in less tax, claim a credit for the amount from step 2(c) above on Form 1040, line 71. 2012 form 1040 Check box d and enter “I. 2012 form 1040 R. 2012 form 1040 C. 2012 form 1040 1341” in the space next to that box. 2012 form 1040 If both methods produce the same tax, deduct the repayment on Schedule A (Form 1040), line 28. 2012 form 1040 Prev  Up  Next   Home   More Online Publications
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Income from Abroad is Taxable

Many United States (U.S.) citizens and resident aliens receive income from foreign sources. There have been recent reports about the interest of the Internal Revenue Service (IRS) in taxpayers with accounts in Liechtenstein. The interest of the IRS, however, extends beyond accounts in Liechtenstein to accounts anywhere in the world. Consequently, the IRS reminds you to report your worldwide income on your U.S. tax return.

If you are a U.S. citizen or resident alien, you must report income from all sources within and outside of the U.S. This is true whether or not you receive a Form W-2 Wage and Tax Statement,  a Form 1099 (Information Return) or the foreign equivalents.    See Publication 525, Taxable and Nontaxable Income for more information.

Additionally, if you are a U.S. citizen or resident alien, the rules for filing income, estate and gift tax returns and for paying estimated tax are generally the same whether you are living in the U.S. or abroad.

Hiding Income Offshore

Not reporting income from foreign sources may be a crime.  The IRS and its international partners are pursuing those who hide income or assets offshore to evade taxes. Specially trained IRS examiners focus on aggressive international tax planning, including the abusive use of entities and structures established in foreign jurisdictions.  The goal is to ensure U.S. citizens and residents are accurately reporting their income and paying the correct tax. 

Foreign Financial Accounts

In addition to reporting your worldwide income, you must also report on your U.S. tax return whether you have any foreign bank or investment accounts.  The Bank Secrecy Act requires you to file a Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR), if:

  • You have financial interest in, signature authority, or other authority over one or more accounts in a foreign country, and
  • The aggregate value of all foreign financial accounts exceeds $10,000 at any time during the calendar year.

More information on foreign financial account reporting requirements is in News Release FS-2007-15, Foreign Financial Accounts Reporting Requirements and Publication 4261, Do You have a Foreign Financial Account?

Consequences for Evading Taxes on Foreign Source Income

You will face serious consequences if the IRS finds you have unreported income or undisclosed foreign financial accounts.  These consequences can include not only the additional taxes, but also substantial penalties, interest, fines and even imprisonment.

Reporting Promoters of Off-Shore Tax Avoidance Schemes

The IRS encourages you to report promoters of off-shore tax avoidance schemes.  Whistleblowers who provide allegations of fraud to the IRS may be eligible for a reward by filing Form 211, Application for Award for Original Information, and following the procedures outlined in Notice 2008-4, Claims Submitted to the IRS Whistleblower Office under Section 7623.

Page Last Reviewed or Updated: 29-Nov-2013

The 2012 Form 1040

2012 form 1040 Index A Assistance (see Tax help) F Free tax services, Free help with your tax return. 2012 form 1040 H Help (see Tax help) P Publications (see Tax help) T Tax help, How To Get Tax Help TTY/TDD information, How To Get Tax Help Prev  Up     Home   More Online Publications