US Internal Revenue Service: p915

8/14/2019 US Internal Revenue Service: p915

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ContentsDepartment of the TreasuryInternal Revenue Service

Reminder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Publication 915Are Any of Your Benefits Taxable? . . . . . . . . . . . . 2

Cat. No. 15320P

How To Report Your Benefits . . . . . . . . . . . . . . . . 5

How Much Is Taxable? . . . . . . . . . . . . . . . . . . . . . . 5

Social Security Lump-Sum Election . . . . . . . . . . . . . . . . . . . . . . . . 10Deductions Related to Your Benefits . . . . . . . . . . 14andWorksheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Equivalent Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19How To Get Tax Help . . . . . . . . . . . . . . . . . . . . . . . 26RailroadIndex . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

RetirementReminder

Benefits Photographs of missing children. The Internal Reve-nue Service is a proud partner with the National Center for

For use in preparing Missing and Exploited Children. Photographs of missingchildren selected by the Center may appear in this publica-tion on pages that would otherwise be blank. You can help2006 Returnsbring these children home by looking at the photographsand calling 1-800-THE-LOST (1-800-843-5678) if you rec-ognize a child.

IntroductionThis publication explains the federal income tax rules forsocial security benefits and equivalent tier 1 railroad retire-ment benefits. It is prepared through the joint efforts of theInternal Revenue Service, the Social Security Administra-tion (SSA), and the U.S. Railroad Retirement Board (RRB).

Social security benefits include monthly survivor anddisability benefits. They do not include supplemental se-curity income (SSI) payments, which are not taxable.

Equivalent tier 1 railroad retirement benefits are the partof tier 1 benefits that a railroad employee or beneficiarywould have been entitled to receive under the social secur-ity system. They are commonly called the social securityequivalent benefit (SSEB) portion of tier 1 benefits.

If you received these benefits during 2006, you shouldhave received a Form SSA-1099, Social Security BenefitStatement, or Form RRB-1099, Payments by the RailroadRetirement Board, (Form SSA-1042S, Social SecurityBenefit Statement, or Form RRB-1042S, Statement forNonresident Alien Recipients of: Payments by the RailroadRetirement Board, if you are a nonresident alien) showing

Get forms and other information the amount.faster and easier by:

Note. When the term benefits is used in this publica-Internet www.irs.gov tion, it applies to both social security benefits and the

SSEB portion of tier 1 railroad retirement benefits.


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What is covered in this publication. This publicationcovers the following topics: National Distribution Center

P.O. Box 8903 Whether any of your benefits are taxable,

Bloomington, IL 617028903 How much is taxable,

How to report taxable benefits, Tax questions. If you have a tax question, visitwww.irs.govor call 1-800-829-1040. We cannot answer

How to treat lump-sum benefit payments, andtax questions sent to either of the above addresses.

Deductions related to your benefits, including a de-

duction or credit you can claim if your repayments Useful Itemsare more than your gross benefits. You may want to see:The Appendixat the end of this publication explains items

Publicationshown on your Form SSA-1099, SSA-1042S, RRB-1099,or RRB-1042S. 505 Tax Withholding and Estimated Tax

575 Pension and Annuity IncomeWhat is not covered in this publication. This publica-tion does not cover the tax rules for the following railroad 590 Individual Retirement Arrangements (IRAs)retirement benefits:

Forms (and Instructions) Non-social security equivalent benefit (NSSEB) por-tion of tier 1 benefits, 1040-ES Estimated Tax for Individuals

Tier 2 benefits, SSA-1099 Social Security Benefit Statement

Vested dual benefits, and SSA-1042S Social Security Benefit Statement

Supplemental annuity benefits. RRB-1099 Payments by the Railroad RetirementBoardFor information on these taxable pension benefits, see

Publication 575, Pension and Annuity Income. RRB-1042S Statement for Nonresident AlienRecipients of: Payments by the RailroadThis publication also does not cover the tax rules forRetirement Boardforeign social security benefits. These benefits are taxable

as annuities, unless they are exempt from U.S. tax or W-4V Voluntary Withholding Requesttreated as a U.S. social security benefit under a tax treaty. See How To Get Tax Helpnear the end of this publica-

tion for information about getting these publications andforms.Comments and suggestions. We welcome your com-

ments about this publication and your suggestions for

future editions.You can write to us at the following address: Are Any of Your

Benefits Taxable?Internal Revenue ServiceIndividual Forms and Publications Branch To find out whether any of your benefits may be taxable,SE:W:CAR:MP:T:I compare the base amount (explained later) for your filing1111 Constitution Ave. NW, IR-6406 status with the total of:Washington, DC 20224

1. One-half of your benefits, plus

2. All your other income, including tax-exempt interest.We respond to many letters by telephone. Therefore, itwould be helpful if you would include your daytime phone When making this comparison, do not reduce your othernumber, including the area code, in your correspondence. income by any exclusions for:

You can email us at *[email protected]. (The asterisk Interest from qualified U.S. savings bonds,

must be included in the address.) Please put Publications Employer-provided adoption benefits,Comment on the subject line. Although we cannot re-

spond individually to each email, we do appreciate your Foreign earned income or foreign housing, or

feedback and will consider your comments as we revise Income earned by bona fide residents of Americanour tax products.

Samoa or Puerto Rico.Ordering forms and publications. Visit

www.irs.gov/formspubs to download forms and publica-tions, call 1-800-829-3676, or write to the address belowand receive a response within 10 business days after yourrequest is received.

Page 2 Publication 915 (2006)


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The SSA issues Form SSA-1099 and FormA. Enter the amount from box 5of all your Forms

SSA-1042S. The RRB issues Form RRB-1099SSA-1099 and RRB-1099. Include the full amount

and Form RRB-1042S. These forms (tax state- of any lump-sum benefit payments received in

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2006, for 2006 and earlier years. (If you receivedments) report the amounts paid and repaid, and taxesmore than one form, combine the amounts fromwithheld for a tax year. You may receive more than one ofbox 5 and enter the total.) . . . . . . . . . . . . . . . . A.

these forms for the same tax year. You should add the Note. If the amount on line A is zero or less, stop here;none of your benefits are taxable this year.amounts shown on all forms you receive from the SSAB. Enter one-half of the amount on line A . . . . . . . . B.and/or RRB for the same tax year to determine the totalC. Enter your taxable pensions, wages, interest,amounts paid and repaid, and taxes withheld for that tax

dividends, and other taxable income . . . . . . . . . C.year. See Appendix, at the end of this publication for more

D. Enter any tax-exempt interest income (such asinformation.interest on municipal bonds) plus any exclusionsfrom income (listed earlier) . . . . . . . . . . . . . . . D.Each original Form RRB-1099 is valid unless it has been

E. Add lines B, C, and D . . . . . . . . . . . . . . . . . . . E.corrected. The RRB will issue a corrected Form RRB-1099

if there is an error in the original. A corrected Form Note. Compare the amount on line E to your base amount for your filing status. Ifthe amount on line E equals or is less than the base amount for your filing status,RRB-1099 is indicated as CORRECTED and replacesnone of your benefits are taxable this year. If the amount on line E is more than

the corresponding original Form RRB-1099. You must use your base amount, some of your benefits may be taxable. You need to completeWorksheet 1, shown later.the latest corrected Form RRB-1099 you received and any

original Form RRB-1099 that the RRB has not corrected

when you determine what amounts to report on your tax

return. Example. You and your spouse (both over 65) are filinga joint return for 2006 and you both received social securitybenefits during the year. In January 2007, you received a

Figuring total income. To figure the total of one-half of Form SSA-1099 showing net benefits of $7,500 in box 5.your benefits plus your other income, use the worksheet Your spouse received a Form SSA-1099 showing netlater in this discussion. If the total is more than your base benefits of $3,500 in box 5. You also received a taxableamount, part of your benefits may be taxable. pension of $19,000 and interest income of $500. You did

not have any tax-exempt interest income. Your benefitsIf you are married and file a joint return for 2006, you andare not taxable for 2006 because your income, as figuredyour spouse must combine your incomes and your benefitsin the following worksheet, is not more than your baseto figure whether any of your combined benefits are tax-amount ($32,000) for married filing jointly.able. Even if your spouse did not receive any benefits, you

Even though none of your benefits are taxable, youmust add your spouses income to yours to figure whethermust file a return for 2006 because your taxable gross

any of your benefits are taxable.income ($19,500) exceeds the minimum filing requirement

If the only income you received during 2006 was amount for your filing status.your social security or the SSEB portion of tier 1

railroad retirement benefits, your benefits gener-

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ally are not taxable and you probably do not have to file aA. Enter the amount from box 5of all your Forms

return. If you have income in addition to your benefits, you SSA-1099 and RRB-1099. Include the full amountof any lump-sum benefit payments received inmay have to file a return even if none of your benefits are2006, for 2006 and earlier years. (If you receivedtaxable.more than one form, combine the amounts frombox 5 and enter the total.) . . . . . . . . . . . . . . . . A. $11,000

Note. If the amount on line A is zero or less, stop here;none of your benefits are taxable this year.Base amount. Your base amount is:

B. Enter one-half of the amount on line A . . . . . . . . B. 5,500 $25,000 if you are single, head of household, or

C. Enter your taxable pensions, wages, interest,qualifying widow(er),dividends, and other taxable income . . . . . . . . . C. 19,500

$25,000 if you are married filing separately and lived D. Enter any tax-exempt interest income (such asapart from your spouse for all of 2006, interest on municipal bonds) plus any exclusions

from income (listed earlier) . . . . . . . . . . . . . . . D. 0 $32,000 if you are married filing jointly, or

E. Add lines B, C, and D . . . . . . . . . . . . . . . . . . . E. $25,000

$-0- if you are married filing separately and lived with Note. Compare the amount on line E to your base amount for your filing status. Ifthe amount on line E equals or is less than the base amount for your filing status,your spouse at any time during 2006.none of your benefits are taxable this year. If the amount on line E is more thanyour base amount, some of your benefits may be taxable. You need to completeWorksheet 1, shown later.Worksheet.

You can use the following worksheet to figure theamount of income to compare with your base Who is taxed. The person who has the legal right toamount. This is a quick way to check whether receive the benefits must determine whether the benefits

some of your benefits may be taxable. are taxable. For example, if you and your child receivebenefits, but the check for your child is made out in your

Publication 915 (2006) Page 3


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name, you must use only your part of the benefits to see your railroad retirement benefits at a 30% rate. Contact thewhether any benefits are taxable to you. One-half of the RRB to get this form.part that belongs to your child must be added to yourchilds other income to see whether any of those benefits Lawful permanent residents. For U.S. income tax pur-are taxable to your child. poses, lawful permanent residents (green card holders)

are considered resident aliens until their lawful permanentRepayment of benefits. Any repayment of benefits you

resident status under the immigration laws is either takenmade during 2006 must be subtracted from the gross

away or is administratively or judicially determined to havebenefits you received in 2006. It does not matter whether

been abandoned. Social security benefits paid to a greenthe repayment was for a benefit you received in 2006 or in

card holder are not subject to 30% withholding. If you are a

an earlier year. If you repaid more than the gross benefits green card holder and tax was withheld in error on youryou received in 2006, see Repayments More Than Grosssocial security benefits because you have a foreign ad-

Benefits, later.dress, the withholding tax is refundable by the Social

Your gross benefits are shown in box 3 of FormSecurity Administration (SSA) or the IRS. SSA will refund

SSA-1099 or Form RRB-1099. Your repayments aretaxes erroneously withheld if the refund can be processed

shown in box 4. The amount in box 5 shows your netduring the same calendar year in which the tax was with-

benefits for 2006 (box 3 minus box 4). Use the amount inheld. If SSA cannot refund the taxes withheld, you must file

box 5 to figure whether any of your benefits are taxable.a Form 1040 or 1040A with the Internal Revenue ServiceCenter, Austin, TX 73301 to determine if you are entitled to

Example. In 2005, you received $3,000 in social secur-a refund. You must also attach the following information to

ity benefits, and in 2006 you received $2,700. In Marchyour Form 1040 or 1040A:

2006, SSA notified you that you should have received only A copy of the Form SSA-1042S, Social Security$2,500 in benefits in 2005. During 2006, you repaid $500

Benefit Statement,to SSA. The Form SSA-1099 you received for 2006 shows$2,700 in box 3 (gross amount) and $500 in box 4 (repay-

A copy of the green card, andment). The amount in box 5 shows your net benefits of

A signed declaration that includes the following$2,200 ($2,700 minus $500).statements:

Tax withholding and estimated tax. You can choose tohave federal income tax withheld from your social security The SSA should not have withheld federal income taxbenefits and/or the SSEB portion of your tier 1 railroad from my social security benefits because I am a U.S. lawfulretirement benefits. If you choose to do this, you must permanent resident and my green card has been neithercomplete a Form W-4V. You can choose withholding at revoked nor administratively or judicially determined to7%, 10%, 15%, or 25% of your total benefit payment. have been abandoned. I am filing a U.S. income tax return

If you do not choose to have income tax withheld, you for the tax year as a resident alien reporting all of mymay have to request additional withholding from other worldwide income. I have not claimed benefits for the taxincome or pay estimated tax during the year. For details, year under an income tax treaty as a nonresident alien.

get Publication 505 or the instructions for Form 1040-ES.Nonresident aliens. A nonresident alien is an individualU.S. citizens residing abroad. U.S. citizens who residewho is not a citizen or resident of the United States. If youin the following countries are exempt from U.S. tax on theirare a nonresident alien, the rules discussed in this publica-benefits.tion do not apply to you. Instead, 85% of your benefits are

Canada. taxed at a 30% rate, unless exempt (or subject to a lowerrate) by treaty. You will receive a Form SSA-1042S or Egypt.Form RRB-1042S showing the amount of your benefits.

Germany. These forms will also show the tax rate and the amount oftax withheld from your benefits. Ireland.

Under tax treaties with the following countries, residents Israel.

of these countries are exempt from U.S. tax on their bene- Italy. (You must also be a citizen of Italy for the fits.

exemption to apply.) Canada. Romania.

Egypt. United Kingdom.

Germany.

The SSA will not withhold U.S. tax from your benefits if Ireland.you are a U.S. citizen.

Israel.The RRB will withhold U.S. tax from your benefits un-

Italy.less you file Form RRB-1001, Nonresident Questionnaire,with the RRB to provide citizenship and residency informa-

Japan.tion. If you do not file Form RRB-1001, the RRB will

Romania.consider you a nonresident alien and withhold tax from



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United Kingdom. from your spouse for all of 2006, also enter D to the rightof the word benefits on Form 1040, line 20a, or Form

Under a treaty with India, benefits paid to individuals 1040A, line 14a.who are both residents and nationals of India are exemptfrom U.S. tax if the benefits are for services performed forthe United States, its subdivisions, or local government How Much Is Taxable?authorities.

If you are a resident of Switzerland, your total benefitIf part of your benefits are taxable, how much is taxable

amount will be taxed at a 15% rate.depends on the total amount of your benefits and other

For more information on whether you are a nonresident

income. Generally, the higher that total amount, thealien, get Publication 519, U.S. Tax Guide for Aliens. greater the taxable part of your benefits.Exemption from withholding. If your social security

benefits are exempt from tax because you are a resident of Maximum taxable part. Generally, up to 50% of yourone of the treaty countries listed, the SSA will not withhold benefits will be taxable. However, up to 85% of your bene-U.S. tax from your benefits. fits can be taxable if either of the following situations

If your railroad retirement benefits are exempt from tax applies to you.because you are a resident of one of the treaty countries

The total of one-half of your benefits and all yourlisted, you can claim an exemption from withholding by

other income is more than $34,000 ($44,000 if youfiling Form RRB-1001 with the RRB. Contact the RRB to

are married filing jointly).get this form.

You are married filing separately and lived with yourCanadian or German social security benefits paid to

spouse at any time during 2006.U.S. residents. Under income tax treaties with Canada

and Germany, social security benefits paid by those coun-tries to U.S. residents are treated for U.S. income tax Which worksheet to use. A worksheet to figure yourpurposes as if they were paid under the social security taxable benefits is in the instructions for your Form 1040 orlegislation of the United States. If you receive social secur- 1040A. You can use either that worksheet or Worksheet 1ity benefits from Canada or Germany, include them on line in this publication, unless any of the following situations1 of Worksheet 1, shown later. applies to you.

1. You contributed to a traditional individual retirementarrangement (IRA) and you or your spouse is cov-How To Report Your Benefitsered by a retirement plan at work. In this situationyou must use the special worksheets in Appendix BIf part of your benefits are taxable, you must use Formof Publication 590 to figure both your IRA deduction1040 or Form 1040A. You cannot use Form 1040EZ.and your taxable benefits.

Reporting on Form 1040. Report your net benefits (the

2. Situation (1) does not apply and you take an exclu-amount in box 5 of your Form SSA-1099 or Formsion for interest from qualified U.S. savings bondsRRB-1099) on line 20a and the taxable part on line 20b. If(Form 8815), for adoption benefits (Form 8839), foryou are married filing separately and you lived apart fromforeign earned income or housing (Form 2555 oryour spouse for all of 2006, also enter D to the right of theForm 2555-EZ), or for income earned in Americanword benefits on line 20a.Samoa (Form 4563) or Puerto Rico by bona fide

Reporting on Form 1040A. Report your net benefits (the residents. In this situation, you must use Worksheetamount in box 5 of your Form SSA-1099 or Form 1 in this publication to figure your taxable benefits.RRB-1099) on line 14a and the taxable part on line 14b. If

3. You received a lump-sum payment for an earlieryou are married filing separately and you lived apart fromyear. In this situation, also complete Worksheet 2 oryour spouse for all of 2006, also enter D to the right of the3 and Worksheet 4 in this publication. Seeword benefits on line 14a.Lump-Sum Election, later.

Benefits not taxable. If you are filing Form 1040EZ, do

not report any benefits on your tax return. If you are filingForm 1040 or Form 1040A, report your net benefits (the Examplesamount in box 5 of your Form SSA-1099 or Form

The following pages contain a few examples you can useRRB-1099) on Form 1040, line 20a, or Form 1040A, lineas a guide to figure the taxable part of your benefits.14a. Enter -0- on Form 1040, line 20b, or Form 1040A, line

14b. If you are married filing separately and you lived apart



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Example 1.George White is single and files Form 1040 for 2006. In addition to receiving social security payments, he received a fullytaxable 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. He received a Form SSA-1099 in January 2007 that shows his net social security benefits of $5,980 in box 5.To figure his taxable benefits, George completes Worksheet 1, shown below. On line 20a of his Form 1040, Georgeenters his net benefits of $5,980. On line 20b, he enters his taxable benefits of $2,990.

Filled-in Worksheet 1. Figuring Your Taxable Benefits Keep for your records

Before you begin:

If you are married filing separately and you lived apart from your spouse for all of 2006, enter Dto the right of the word benefits on Form 1040, line 20a, or Form 1040A, line 14a.

Do not use this worksheet if you repaid benefits in 2006 and your total repayments (box 4 ofForms SSA-1099 and RRB-1099) were more than your gross benefits (box 3 of Forms SSA-1099and RRB-1099). None of your benefits are taxable for 2006. For more information, seeRepayments More Than Gross Benefits.

1. Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099. Also enter thisamount on Form 1040, line 20a, or Form 1040A, line 14a . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1. $5,980

2. Enter one-half of line 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2. 2,9903. Enter the total of the amounts from:

Form 1040:Lines 7, 8a, 8b, 9a, 10 through 14, 15b, 16b, 17 through 19, and 21Form 1040A:Lines 7, 8a, 8b, 9a, 10, 11b, 12b, and 13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3. 28,990

4. Form 1040 filers:Enter the total of any exclusions/adjustments for:

Qualified U.S. savings bond interest (Form 8815, line 14)

Adoption benefits (Form 8839, line 30) Foreign earned income or housing (Form 2555, lines 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

Form 1040A filers:Enter the total of any exclusions for:

Qualified U.S. savings bond interest (Form 8815, line 14) Adoption benefits (Form 8839, line 30) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4. -0-

5. Add lines 2, 3, and 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5. 31,9806. Form 1040 filers:Enter the amount from Form 1040, line 36, minus any amounts on Form 1040, lines 33 and 35.

Form 1040A filers:Enter the amount from Form 1040A, line 20, minus any amount on Form 1040A, line 18 . . . . . 6. -0-7. Is the amount on line 6 less than the amount on line 5?

No. None of your social security benefits are taxable. Enter -0- on Form 1040, line 20b, or FormSTOP1040A, line 14b.

Yes. Subtract line 6 from line 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7. 31,9808. 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 yourspouse for all of 2006, enter $25,000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8. 25,000

Note. If you are married filing separately and you lived with your spouse at any time in 2006, skip lines 8 through15; multiply line 7 by 85% (.85) and enter the result on line 16. Then go to line 17.

9. Is the amount on line 8 less than the amount on line 7?No. None of your benefits are taxable. Enter -0- on Form 1040, line 20b, or on Form 1040A, lineSTOP

14b. If you are married filing separately and you lived apart from your spouse for all of 2006,be sure you entered D to the right of the word benefits on Form 1040, line 20a, or on Form1040A, line 14a.

Yes. Subtract line 8 from line 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9. 6,98010. 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 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10. 9,00011. Subtract line 10 from line 9. If zero or less, enter -0-. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11. -0-12. Enter the smaller of line 9 or line 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12. 6,98013. Enter one-half of line 12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13. 3,490

14. Enter the smaller of line 2 or line 13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14. 2,99015. Multiply line 11 by 85% (.85). If line 11 is zero, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15. -0-16. Add lines 14 and 15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16. 2,99017. Multiply line 1 by 85% (.85) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17. 5,08318. Taxable benefits. Enter the smaller of line 16 or line 17. Also enter this amount on Form 1040, line 20b, or Form

1040A, line 14b . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18. $2,990If you received a lump-sum payment in 2006 that was for an earlier year, also completeWorksheet 2 or 3 and Worksheet 4 to see if you can report a lower taxable benefit.TIP



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Example 2.Ray and Alice Hopkins file a joint return on Form 1040A for 2006. Ray is retired and received a fully taxable pension of$15,500. He also received social security benefits and his Form SSA-1099 for 2006 shows net benefits of $5,600 in box5. Alice worked during the year and had wages of $14,000. She made a deductible payment to her IRA account of$1,000. Ray and Alice have two savings accounts with a total of $250 in interest income. They complete Worksheet 1(below) and find that none of Rays benefits are taxable. On line 3 of the worksheet, they enter $29,750 ($15,500 +$14,000 + $250). On Form 1040A, they enter $5,600 on line 14a and -0- on line 14b.


Before you begin:

If you are married filing separately and you lived apart from your spouse for all of 2006, enterD to the right of the word benefits on Form 1040, line 20a, or Form 1040A, line 14a.

Do not use this worksheet if you repaid benefits in 2006 and your total repayments (box 4 ofForms SSA-1099 and RRB-1099) were more than your gross benefits (box 3 of FormsSSA-1099 and RRB-1099). None of your benefits are taxable for 2006. For more information,see Repayments More Than Gross Benefits.

1. Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099. Also enterthis amount on Form 1040, line 20a, or Form 1040A, line 14a . . . . . . . . . . . . . . . . . . . . . . . 1. $5,600

2. Enter one-half of line 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2. 2,8003. Enter the total of the amounts from:



Qualified U.S. savings bond interest (Form 8815, line 14) Adoption benefits (Form 8839, line 30) 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 RicoForm 1040A filers:Enter the total of any exclusions for:



Form 1040A filers:Enter the amount from Form 1040A, line 20, minus any amount on Form 1040A, line 18 . . . . . 6. 1,0007. Is the amount on line 6 less than the amount on line 5?




Single, head of household, qualifying widow(er), or married filing separately and you lived apart from yourspouse for all of 2006, enter $25,000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8. 32,000

Note. If you are married filing separately and you lived with your spouse at any time in 2006, skip lines 8 through 15;multiply line 7 by 85% (.85) and enter the result on line 16. Then go to line 17.

9. Is the amount on line 8 less than the amount on line 7?No. None of your benefits are taxable. Enter -0- on Form 1040, line 20b, or on Form 1040A, line 14b.STOP

If you are married filing separately and you lived apart from your spouse for all of 2006, be sureyou entered D to the right of the word benefits on Form 1040, line 20a, or on Form 1040A, line14a.

Yes. Subtract line 8 from line 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.10. Enter $12,000 if married filing jointly; $9,000 if single, head of household, qualifying widow(er), or married filing

separately and you lived apart from your spouse for all of 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.11. Subtract line 10 from line 9. If zero or less, enter -0-. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.12. Enter the smaller of line 9 or line 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.13. Enter one-half of line 12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.

14. Enter the smaller of line 2 or line 13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.15. Multiply line 11 by 85% (.85). If line 11 is zero, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.16. Add lines 14 and 15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.17. Multiply line 1 by 85% (.85) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.18. Taxable benefits. Enter the smaller of line 16 or line 17. Also enter this amount on Form 1040, line 20b, or Form

1040A, line 14b . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.If you received a lump-sum payment in 2006 that was for an earlier year, also completeWorksheet 2 or 3 and Worksheet 4 to see if you can report a lower taxable benefit.TIP



8/28

Example 3.Joe and Betty Johnson file a joint return on Form 1040 for 2006. Joe is a retired railroad worker and in 2006 received the socialsecurity equivalent benefit (SSEB) portion of tier 1 railroad retirement benefits. Joes Form RRB-1099 shows $10,000 in box 5.Betty is a retired government worker and received a fully taxable pension of $38,000. They had $2,300 in interest income plusinterest of $200 on a qualified U.S. savings bond. The savings bond interest qualified for the exclusion. They figure their taxablebenefits by completing Worksheet 1 below. On line 3 of the worksheet, they enter $40,300 ($38,000 + $2,300). More than 50%of Joes net benefits are taxable because the income on line 7 of the worksheet ($45,500) is more than $44,000. (See Maximumtaxable partunder How Much Is Taxableearlier.) Joe and Betty enter $10,000 on Form 1040, line 20a, and $6,275 on Form1040, line 20b.


Before you begin:

If you are married filing separately and you lived apart from your spouse for all of 2006, enter D tothe right of the word benefits on Form 1040, line 20a, or Form 1040A, line 14a.

Do not use this worksheet if you repaid benefits in 2006 and your total repayments (box 4 of FormsSSA-1099 and RRB-1099) were more than your gross benefits (box 3 of Forms SSA-1099 andRRB-1099). None of your benefits are taxable for 2006. For more information, see RepaymentsMore Than Gross Benefits.

1. Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099. Also enter thisamount on Form 1040, line 20a, or Form 1040A, line 14a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1. $10,000



4. Form 1040 filers:Enter the total of any exclusions/adjustments for: Qualified U.S. savings bond interest (Form 8815, line 14)

Adoption benefits (Form 8839, line 30)

Foreign earned income or housing (Form 2555, lines 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


Qualified U.S. savings bond interest (Form 8815, line 14) Adoption benefits (Form 8839, line 30) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4. 200




Yes. Subtract line 6 from line 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7. 45,500

8. If you are:


Single, head of household, qualifying widow(er), or married filing separately and you lived apart from yourspouse for all of 2006, enter $25,000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8. 32,000

Note. If you are married filing separately and you lived with your spouse at any time in 2006, skip lines 8 through15; multiply line 7 by 85% (.85) and enter the result on line 16. Then go to line 17.


14b. If you are married filing separately and you lived apart from your spouse for all of 2006, besure you entered D to the right of the word benefits on Form 1040, line 20a, or on Form1040A, line 14a.

Yes. Subtract line 8 from line 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9. 13,50010. 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 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10. 12,00011. Subtract line 10 from line 9. If zero or less, enter -0-. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11. 1,500

12. Enter the smaller of line 9 or line 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12. 12,00013. Enter one-half of line 12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13. 6,00014. Enter the smaller of line 2 or line 13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14. 5,00015. Multiply line 11 by 85% (.85). If line 11 is zero, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15. 1,27516. Add lines 14 and 15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16. 6,27517. Multiply line 1 by 85% (.85) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17. 8,50018. Taxable benefits. Enter the smaller of line 16 or line 17. Also enter this amount on Form 1040, line 20b, or Form

1040A, line 14b . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18. $6,275If you received a lump-sum payment in 2006 that was for an earlier year, also completeWorksheet 2 or 3 and Worksheet 4 to see if you can report a lower taxable benefit.TIP



9/28

Example 4.Bill and Eileen Jones are married and live together, but file separate Form 1040 returns for 2006. Bill earned $8,000during 2006. The only other income he had for the year was $4,000 net social security benefits (box 5 of his FormSSA-1099). Bill figures his taxable benefits by completing Worksheet 1 below. He must include 85% of his social securitybenefits in his taxable income because he is married filing separately and lived with his spouse during 2006. See HowMuch Is Taxableearlier. Bill enters $4,000 on his Form 1040, line 20a, and $3,400 on Form 1040, line 20b.


Before you begin:

If you are married filing separately and you lived apart from your spouse for all of 2006, enter D to

the right of the word benefits on Form 1040, line 20a, or Form 1040A, line 14a. Do not use this worksheet if you repaid benefits in 2006 and your total repayments (box 4 of Forms

SSA-1099 and RRB-1099) were more than your gross benefits (box 3 of Forms SSA-1099 andRRB-1099). None of your benefits are taxable for 2006. For more information, see RepaymentsMore Than Gross Benefits.

1. Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099. Also enter thisamount on Form 1040, line 20a, or Form 1040A, line 14a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1. $4,000




Qualified U.S. savings bond interest (Form 8815, line 14) Adoption benefits (Form 8839, line 30) 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







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 2006, enter $25,000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.Note. If you are married filing separately and you lived with your spouse at any time in 2006, skip lines 8 through 15;multiply line 7 by 85% (.85) and enter the result on line 16. Then go to line 17.

9. Is the amount on line 8 less than the amount on line 7?No. None of your benefits are taxable. Enter -0- on Form 1040, line 20b, or on Form 1040A, line 14b.STOP

If you are married filing separately and you lived apart from your spouse for all of 2006, be sureyou entered D to the right of the word benefits on Form 1040, line 20a, or on Form 1040A,line 14a.

Yes. Subtract line 8 from line 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.10. Enter $12,000 if married filing jointly; $9,000 if single, head of household, qualifying widow(er), or married filing

separately and you lived apart from your spouse for all of 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.11. Subtract line 10 from line 9. If zero or less, enter -0-. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.12. Enter the smaller of line 9 or line 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.13. Enter one-half of line 12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.14. Enter the smaller of line 2 or line 13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.

15. Multiply line 11 by 85% (.85). If line 11 is zero, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.16. Add lines 14 and 15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16. 8,50017. Multiply line 1 by 85% (.85) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17. 3,40018. Taxable benefits. Enter the smaller of line 16 or line 17. Also enter this amount on Form 1040, line 20b, or Form

1040A, line 14b . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18. $3,400If you received a lump-sum payment in 2006 that was for an earlier year, also completeWorksheet 2 or 3 and Worksheet 4 to see if you can report a lower taxable benefit.TIP



10/28

the completed worksheets to your return. Keep them withyour records.Lump-Sum Election

Once you elect this method of figuring the taxableYou must include the taxable part of a lump-sum (retroac- part of a lump-sum payment, you can revoke yourtive) payment of benefits received in 2006 in your 2006 election only with the consent of the IRS.CAUTION

!income, even if the payment includes benefits for an earlieryear.

Lump-sum payment reported on Form SSA-1099 orThis type of lump-sum benefit payment should RRB-1099. If you received a lump-sum payment in 2006not be confused with the lump-sum death benefit that includes benefits for one or more earlier years after

that both the SSA and RRB pay to many of their 1983, it will be included in box 3 of either Form SSA-1099

TIP

beneficiaries. No part of the lump-sum death benefit is or Form RRB-1099. That part of any lump-sum paymentsubject to tax. for years before 1984 is not taxed and will not be shown on

the form. The form will also show the year (or years) theGenerally, you use your 2006 income to figure thepayment is for. However, Form RRB-1099 will not show ataxable part of the total benefits received in 2006. How-breakdown by year (or years) of any lump-sum paymentever, you may be able to figure the taxable part of afor years before 2004. You must contact the RRB for alump-sum payment for an earlier year separately, usingbreakdown by year for any amount shown in box 9.your income for the earlier year. You can elect this method

if it lowers your taxable benefits.Under the lump-sum election method, you refigure the Example

taxable part of all your benefits for the earlier year (includ-ing the lump-sum payment) using that years income. Then Jane Jackson is single. In 2005 she applied for socialyou subtract any taxable benefits for that year that you security disability benefits but was told she was ineligible.

previously reported. The remainder is the taxable part of She appealed the decision and won. In 2006, she receivedthe lump-sum payment. Add it to the taxable part of your a lump-sum payment of $6,000, of which $2,000 was forbenefits for 2006 (figured without the lump-sum payment 2005 and $4,000 was for 2006. Jane also received $5,000for the earlier year). in social security benefits in 2006, so her total benefits in

2006 were $11,000. Janes other income for 2005 andBecause the earlier years taxable benefits are2006 is as follows.included in your 2006 income, no adjustment is

made to the earlier years return. Do not file an Income 2005 2006CAUTION!

amended return for the earlier year.Wages $20,000 $ 3,500Interest income 2,000 2,500

Will the lump-sum election method lower your taxable Dividend income 1,000 1,500benefits? To find out, take the following steps. Fully taxable pension 18,000

Total $23,000 $25,500

1. Complete Worksheet 1 in this publication.To see if the lump-sum election method results in lower

taxable benefits, she completes Worksheets 1, 2, and 42. Complete Worksheet 2 and Worksheet 3 as appro- from this publication. She does not need to completepriate. Use Worksheet 2 if your lump-sum paymentWorksheet 3 because her lump-sum payment was forwas for a year after 1993. Use Worksheet 3 if it wasyears after 1993.for 1993 or an earlier year. Complete a separate

Jane completes Worksheet 1 to find the amount of herWorksheet 2 or Worksheet 3 for each earlier year fortaxable benefits for 2006 under the regular method. Shewhich you received the lump-sum payment.completes Worksheet 2 to find the taxable part of the

3. Complete Worksheet 4.lump-sum payment for 2005 under the lump-sum electionmethod. She completes Worksheet 4 to decide if the4. Compare the taxable benefits on line 18 of Work-lump-sum election method will lower her taxable benefits.sheet 1 with the taxable benefits on line 20 of Work-

After completing the worksheets, Jane compares thesheet 4.amounts from Worksheet 4, line 20, and Worksheet 1, line

If the taxable benefits on Worksheet 4 are lower than the18. Because the amount on Worksheet 4 is smaller, she

taxable benefits on Worksheet 1, you can elect to reportchooses to use the lump-sum election method. To do this,

the lower amount on your return. she prints LSE to the left of Form 1040, line 20a. She thenMaking the election. If you elect to report your taxable enters $11,000 on Form 1040, line 20a, and her taxablebenefits under the lump-sum election method, follow the benefits of $2,500 on line 20b.instructions at the bottom of Worksheet 4. Do not attach Janes filled-in worksheets (1, 2, and 4) follow.



11/28

Example. Jane Jackson

Filled-in Worksheet 1. Figuring Your Taxable Benefits

Before you begin:


Do not use this worksheet if you repaid benefits in 2006 and your total repayments (box 4 of FormsSSA-1099 and RRB-1099) were more than your gross benefits (box 3 of Forms SSA-1099 and

RRB-1099). None of your benefits are taxable for 2006. For more information, see Repayments MoreThan Gross Benefits.

1. Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099. Also enter thisamount on Form 1040, line 20a, or Form 1040A, line 14a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1. $11,000




Qualified U.S. savings bond interest (Form 8815, line 14) Adoption benefits (Form 8839, line 30) 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





No. None of your social security benefits are taxable. Enter -0- on Form 1040, line 20b, orSTOPForm 1040A, line 14b.

Yes. Subtract line 6 from line 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7. 31,0008. If you are:


spouse for all of 2006, enter $25,000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8. 25,000Note. If you are married filing separately and you lived with your spouse at any time in 2006, skip lines 8 through15; multiply line 7 by 85% (.85) and enter the result on line 16. Then go to line 17.



Yes. Subtract line 8 from line 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9. 6,00010. 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 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10. 9,00011. Subtract line 10 from line 9. If zero or less, enter -0-. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11. -0-12. Enter the smaller of line 9 or line 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12. 6,00013. Enter one-half of line 12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13. 3,00014. Enter the smaller of line 2 or line 13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14. 3,00015. Multiply line 11 by 85% (.85). If line 11 is zero, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15. -0-16. Add lines 14 and 15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16. 3,00017. Multiply line 1 by 85% (.85) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17. 9,350

18. Taxable benefits. Enter the smaller of line 16 or line 17. Also enter this amount on Form 1040, line 20b, or Form1040A, line 14b . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18. $3,000If you received a lump-sum payment in 2006 that was for an earlier year, also completeWorksheet 2 or 3 and Worksheet 4 to see if you can report a lower taxable benefit.TIP



12/28

Example. Jane JacksonFilled-in Worksheet 2. Figure Your Additional Taxable Benefits

(From a Lump-Sum Payment for a Year After 1993)

Enter earlier year 2005

1. Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099 for the earlier year,plus the lump-sum payment for the earlier year received after that year . . . . . . . . . . . . . . . . . . . . . . . 1. $2,000Note. If line 1 is zero or less, skip lines 2 through 20 and enter -0- on line 21. Otherwise, go on to line 2.

2. Enter one-half of line 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2. 1,0003. Enter your adjusted gross income for the earlier year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3. 23,0004. Enter the total of any exclusions/adjustments you claimed in the earlier year for:

Adoption benefits (Form 8839) Qualified U.S. savings bond interest (Form 8815) Student loan interest (Form 1040, page 1, or Form 1040A, page 1) Tuition and fees (Form 1040, page 1, or Form 1040A, page 1) Domestic production activities (for 2005 only) (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. -0-

5. Enter any tax-exempt interest received in the earlier year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5. -0-6. Add lines 2 through 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6. 24,0007. Enter your taxable benefits for the earlier year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7. -0-8. Subtract line 7 from line 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8. 24,0009. If, for the earlier year, you were:

Married filing jointly, enter $32,000 Single, head of household, qualifying widow(er), married filing separately and lived apart from your spouse for all

of the earlier year, enter $25,000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9. 25,000Note. If you were married filing separately and you lived with your spouse at any time during the earlier year, skiplines 9 through 16; multiply line 8 by 85% (.85) and enter the result on line 17. Then go to line 18.

10. Is the amount on line 8 more than the amount on line 9?No. Skip lines 10 through 20 and enter -0- on line 21.Yes. Subtract line 9 from line 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10.

11. Enter $12,000 if married filing jointly for the earlier year; $9,000 if single, head of household, or married filingseparately and you lived apart from your spouse for all of the earlier year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11.

12. Subtract line 11 from line 10. If zero or less, enter -0-. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12.13. Enter the smaller of line 10 or line 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13.14. Enter one-half of line 13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14.15. Enter the smaller of line 2 or line 14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15.16. Multiply line 12 by 85% (.85). If line 12 is zero, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16.17. Add lines 15 and 16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17.18. Multiply line 1 by 85% (.85) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18.19. Refigured taxable benefits. Enter the smaller of line 17 or line 18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19.20. Enter your taxable benefits for the earlier year (or as refigured due to a previous lump-sum payment for the year) . . .20.21. Additional taxable benefits. Subtract line 20 from line 19. Also enter this amount on Worksheet 4, line 19 . . . . . . . .21. -0-

Do not file an amended return for this earlier year. Complete a separate Worksheet 2 or Worksheet 3 for each earlieryear for which you received a lump-sum payment in 2006.

CAUTION

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Example. Jane Jackson

Filled-in Worksheet 4. 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.

1. Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099 for 2006,minus the lump-sum payment for years before 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1. $9,000Note. If line 1 is zero or less, skip lines 2 through 17, enter zero on line 18, and go to line 19.Otherwise, go on to line 2.

2. Enter one-half of line 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2. 4,5003. Enter the amount from Worksheet 1, line 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3. 25,5004. Enter the amount from Worksheet 1, line 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4. -0-5. Add lines 2, 3, and 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5. 30,0006. Enter the amount from Worksheet 1, line 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6. -0-7. Subtract line 6 from line 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7. 30,0008. Enter the amount from Worksheet 1, line 8. But if you are married filing separately and lived with your spouse at

any time during 2006, skip lines 8 through 15; multiply line 7 by 85% (.85) and enter the result on line16. Then goto line 17 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8. 25,000

9. Is the amount on line 7 more than the amount on line 8?

No. Skip lines 9 through 17 and enter -0- on line 18, and got to line 19.Yes. Subtract line 8 from line 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9. 5,000

10. Enter the amount from Worksheet 1, line 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10. 9,00011. Subtract line 10 from line 9. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11. -0-12. Enter the smaller of line 9 or line 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12. 5,00013. Enter one-half of line 12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13. 2,50014. Enter the smaller of line 2 or line 13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14. 2,50015. Multiply line 11 by 85% (.85). If line 11 is zero, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15. -0-16. Add lines 14 and 15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16. 2,50017. Multiply line 1 by 85% (.85) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17. 7,65018. Enter the smaller of line 16 or line 17 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18. 2,50019. 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19. -0-20. Taxable benefits under lump-sum election method. Add lines 18 and 19 . . . . . . . . . . . . . . . . . . . . . . . . . . 20. $2,500Next. Is line 20 above smaller than Worksheet 1, line 18?

No. Do not use this method to figure your taxable benefits. Follow the instructions on Worksheet 1 to report your benefits.Yes. You can elect to report your taxable benefits under this method. To elect this method:

1. Enter LSE to the left of Form 1040, line 20a, or Form 1040A, line 14a.

2. If line 20 above is zero, follow the instructions in line 9 for No on Worksheet 1. Otherwise:a. Enter the amount from Worksheet 1, line 1 on Form 1040, line 20a, or on Form 1040A, line 14a.b. Enter the amount from line 20 above on Form 1040, line 20b, or on 1040A, line 14b.

c. If you are married filing separately and you lived apart from your spouse for all of 2006, enter D to the right of theword benefits on Form 1040, line 20a, or Form 1040A, line 14a.



14/28

spouses form. You do this to get your net benefits whenfiguring if your combined benefits are taxable.Deductions Related to Your

Benefits Example. John and Mary file a joint return for 2006.John received Form SSA-1099 showing $3,000 in box 5.

You may be entitled to deduct certain amounts related to Mary also received Form SSA-1099 and the amount in boxthe benefits you receive. 5 was ($500). John and Mary will use $2,500 ($3,000

minus $500) as the amount of their net benefits whenDisability payments. You may have received disabilityfiguring if any of their combined benefits are taxable.payments from your employer or an insurance company

that you included as income on your tax return in an earlierRepayment of benefits received in an earlier year. Ifyear. If you received a lump-sum payment from SSA or the total amount shown in box 5 of all of your Forms

RRB, and you had to repay the employer or insurance SSA-1099 and RRB-1099 is a negative figure, you cancompany for the disability payments, you can take an take an itemized deduction for the part of this negativeitemized deduction for the part of the payments you in- figure that represents benefits you included in gross in-cluded in gross income in the earlier year. If the amount come in an earlier year.you repay is more than $3,000, you may be able to claim a

Deduction $3,000 or less. If this deduction is $3,000 ortax credit instead. Claim the deduction or credit in theless, it is subject to the 2%-of-adjusted-gross-income limitsame way explained under Repayment of benefits re-that applies to certain miscellaneous itemized deductions.ceived in an earlier yearin the section Repayments MoreClaim it on Schedule A (Form 1040), line 22.Than Gross Benefits, later.

Deduction more than $3,000. If this deduction isLegal expenses. You can usually deduct legal expensesmore than $3,000, you should figure your tax two ways:that you pay or incur to produce or collect taxable income

or in connection with the determination, collection, or re- 1. Figure your tax for 2006 with the itemized deductionfund of any tax. included on Schedule A, line 27.Legal expenses for collecting the taxable part of your 2. Figure your tax for 2006 in the following steps:

benefits are deductible as a miscellaneous itemized de-a. Figure the tax without the itemized deduction in-duction on Schedule A (Form 1040), line 22.

cluded on Schedule A, line 27.

b. For each year after 1983 for which part of theRepayments More Than Gross negative figure represents a repayment of bene-Benefits fits, refigure your taxable benefits as if your total

benefits for the year were reduced by that part ofIn some situations, your Form SSA-1099 or Form the negative figure. Then refigure the tax for thatRRB-1099 will show that the total benefits you repaid (box year.4) are more than the gross benefits (box 3) you received. If c. Subtract the total of the refigured tax amounts inthis occurred, your net benefits in box 5 will be a negative (b) from the total of your actual tax amounts.

figure (a figure in parentheses) and none of your benefits d. Subtract the result in (c) from the result in (a).will be taxable. Do not use Worksheet 1 in this case. If youreceive more than one form, a negative figure in box 5 of

Compare the tax figured in methods (1) and (2). Yourone form is used to offset a positive figure in box 5 of

tax for 2006 is the smaller of the two amounts. If method (1)another form for that same year.

results in less tax, take the itemized deduction on Sched-If you have any questions about this negative figure,

ule A (Form 1040), line 27. If method (2) results in less tax,contact your local SSA office or your local RRB field office.

claim a credit for the amount from step 2(c) above on FormJoint return. If you and your spouse file a joint return, and 1040, line 70, and write I.R.C. 1341 in the margin to theyour Form SSA-1099 or RRB-1099 has a negative figure in left of line 70. If both methods produce the same tax,box 5, but your spouses does not, subtract the amount in deduct the repayment on Schedule A (Form 1040), line 27.box 5 of your form from the amount in box 5 of your



15/28

Worksheet 1. Figuring Your Taxable Benefits

Before you begin:


Do not use this worksheet if you repaid benefits in 2006 and your total repayments (box 4 of FormsSSA-1099 and RRB-1099) were more than your gross benefits for 2006 (box 3 of Forms

SSA-1099 and RRB-1099). None of your benefits are taxable for 2006. For more information, seeRepayments More Than Gross Benefits.

1. Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099. Also enter thisamount on Form 1040, line 20a, or Form 1040A, line 14a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.

2. Enter one-half of line 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3. Enter the total of the amounts from:

Form 1040:Lines 7, 8a, 8b, 9a, 10 through 14, 15b, 16b, 17 through 19, and 21Form 1040A:Lines 7, 8a, 8b, 9a, 10, 11b, 12b, and 13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.


Qualified U.S. savings bond interest (Form 8815, line 14) Adoption benefits (Form 8839, line 30)

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 RicoForm 1040A filers:Enter the total of any exclusions for:

Qualified U.S. savings bond interest (Form 8815, line 14) Adoption benefits (Form 8839, line 30) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.

5. Add lines 2, 3, and 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.6. Form 1040 filers:Enter the amount from Form 1040, line 36, minus any amounts on Form 1040, lines 33 and 35.

Form 1040A filers:Enter the amount from Form 1040A, line 20, minus any amount on Form 1040A, line 18 . . . . 6.7. Is the amount on line 6 less than the amount on line 5?


Yes. Subtract line 6 from line 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.8. If you are:


spouse for all of 2006, enter $25,000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.Note. If you are married filing separately and you lived with your spouse at any time in 2006, skip lines 8 through15; multiply line 7 by 85% (.85) and enter the result on line 16. Then go to line 17.



Yes. Subtract line 8 from line 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.10. Enter $12,000 if married filing jointly; $9,000 if single, head of household, qualifying widow(er), or married filing

separately and you lived apart from your spouse for all of 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.11. Subtract line 10 from line 9. If zero or less, enter -0-. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.12. Enter the smaller of line 9 or line 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.13. Enter one-half of line 12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.14. Enter the smaller of line 2 or line 13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.15. Multiply line 11 by 85% (.85). If line 11 is zero, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.16. Add lines 14 and 15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.17. Multiply line 1 by 85% (.85) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.

18. Taxable benefits. Enter the smaller of line 16 or line 17. Also enter this amount on Form 1040, line 20b, or Form1040A, line 14b . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.If you received a lump-sum payment in 2006 that was for an earlier year, also completeWorksheet 2 or 3 and Worksheet 4 to see if you can report a lower taxable benefit.TIP



16/28

Worksheet 2. Figure Your Additional Taxable Benefits (From a Lump-Sum Payment for a Year After 1993)

Enter earlier year

1. Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099 for the earlier year,

plus the lump-sum payment for the earlier year received after that year . . . . . . . . . . . . . . . . . . . . . 1.Note. If line 1 is zero or less, skip lines 2 through 20 and enter -0- on line 21. Otherwise, go on toline 2.

2. Enter one-half of line 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3. Enter your adjusted gross income for the earlier year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4. Enter the total of any exclusions/adjustments you claimed in the earlier year for:

Adoption benefits (Form 8839)

Qualified U.S. savings bond interest (Form 8815) Student loan interest (Form 1040, page 1, or Form 1040A, page 1) Tuition and fees (Form 1040, page 1, or Form 1040A, page 1) Domestic production activities (for 2005 only) (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.

5. Enter any tax-exempt interest received in the earlier year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.

6. Add lines 2 through 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.7. Enter your taxable benefits for the earlier year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.8. Subtract line 7 from line 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.9. If, for the earlier year, you were:

Married filing jointly, enter $32,000 Single, head of household, qualifying widow(er), married filing separately and you lived apart from your

spouse for all of the earlier year, enter $25,000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.Note. If you were married filing separately and you lived with your spouse at any time during the earlier year, skiplines 9 through 16; multiply line 8 by 85% (.85) and enter the result on line 17. Then go to line 18.

10. Is the amount on line 8 more than the amount on line 9?No. Skip lines 10 through 20 and enter -0- on line 21.Yes. Subtract line 9 from line 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.

11. 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.

12. Subtract line 11 from line 10. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.

13. Enter the smaller of line 10 or line 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.14. Enter one-half of line 13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.15. Enter the smaller of line 2 or line 14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.16. Multiply line 12 by 85% (.85). If line 12 is zero, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.17. Add lines 15 and 16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.18. Multiply line 1 by 85% (.85) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.19. Refigured taxable benefits. Enter the smaller of line 17 or line 18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.20. Enter your taxable benefits for the earlier year (or as refigured due to a previous lump-sum payment for the year) 20.21. Additional taxable benefits. Subtract line 20 from line 19. Also enter this amount on Worksheet 4, line 19 . . . . . 21.

Do not file an amended return for this earlier year. Complete a separate Worksheet 2 or Worksheet 3 for eachearlier year for which you received a lump-sum payment in 2006.

CAUTION

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17/28

Worksheet 3. Figure Your Additional Taxable Benefits (From a Lump-Sum Payment for a Year Before 1994)

Enter earlier year

1. Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099 for the earlier year,plus the lump-sum payment for the earlier year received after that year . . . . . . . . . . . . . . . . . . . . . 1.Note. If line 1 is zero or less, skip lines 2 through 13 and enter -0- on line 14. Otherwise, go on to line2.

2. Enter one-half of line 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3. Enter your adjusted gross income for the earlier year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4. Enter the total of any exclusions/adjustments you claimed in the earlier year for:

Qualified U.S. savings bond interest (Form 8815) Foreign earned income or housing (Form 2555 or Form 2555-EZ)

Certain income of bona fide residents of American Samoa (Form 4563) or Puerto Rico . . . . . . . . . . . . . . . . . 4.5. Enter any tax-exempt interest received in the earlier year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.6. Add lines 2 through 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.7. Enter your taxable benefits for the earlier year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.8. Subtract line 7 from line 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.9. Enter $25,000 ($32,000 if married filing jointly for the earlier year; $0 if married filing separately for the earlier year

and you lived with your spouse at any time during the earlier year) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.10. Is the amount on line 8 more than the amount on line 9?

No. Skip lines 10 through 13 and enter -0- on line 14.Yes. Subtract line 9 from line 8. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.11. Enter one-half of line 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.12. Refigured taxable benefits. Enter the smaller of line 2 or line 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.13. Enter your taxable benefits for the earlier year (or as refigured due to a previous lump-sum payment for the year) 13.14. Additional taxable benefits. Subtract line 13 from line 12. Also enter this amount on Worksheet 4, line 19 . . . . . . 14.

Do not file an amended return for this earlier year. Complete a separate Worksheet 2 orWorksheet 3 for each earlier year for which you received a lump-sum payment in 2006.

CAUTION

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Worksheet 4. 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.

1. Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099 for 2006,minus the lump-sum payment for years before 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.

Note. If line 1 is zero or less, skip lines 2 through 17, enter -0- on line 18 and go to line 19.Otherwise, go on to line 2.

2. Enter one-half of line 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3. Enter the amount from Worksheet 1, line 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4. Enter the amount from Worksheet 1, line 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.5. Add lines 2, 3, and 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.6. Enter the amount from Worksheet 1, line 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.7. Subtract line 6 from line 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.8. Enter the amount from Worksheet 1, line 8. But if you are married filing separately and lived with your spouse

at any time during 2006, skip lines 8 through 15; multiply line 7 by 85% (.85) and enter the result on line 16.Then, go to line 17 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.

9. Is the amount on line 7 more than the amount on line 8?No. Skip lines 9 through 17 and enter -0- on line 18.Yes. Subtract line 8 from line 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.

10. Enter the amount from Worksheet 1, line 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.

11. Subtract line 10 from line 9. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.12. Enter the smaller of line 9 or line 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.13. Enter one-half of line 12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Documents

US Internal Revenue Service: p915