There’s a chance you may not have to file a tax return if your Social Security or equivalent railroad retirement benefits are the only source of income you’ve received throughout the tax year. If you have received additional forms of income, the aforementioned benefits are typically tax-free providing your modified adjusted gross income (MAGI) is greater than the base income level for your specific filing status.
In cases where Social Security benefits are not your only form of income, you may be required to file a tax return even if the benefits aren’t taxed. You will need to file a Form 1040 worksheet to determine your MAGI and the amount of taxable benefits. There are special circumstances that apply when you receive benefits for prior tax years. You may be able to claim a lump-sum election that can reduce the amount of benefits subject to taxes.
When determining the amount of your benefits that are taxable, you’re only required to include in your gross income those with which you are legally eligible to receive. For example, if you and a dependent both received benefits, you can only calculate the portion which you have the legal right to, regardless of whose name the check was made out to. If a child receives benefits by way of a check made out to your name, you cannot calculate that portion in your own worksheet. Instead, you’ll have to add that portion of benefits to your child’s other income sources in order to figure out how much of the benefits are taxable for the child.
Those who file joint returns with their spouses have to combine their incomes, as well as Social Security benefits and equivalent railroad retirement benefits. Joint returns require the addition of a spouse’s income as well as your own in order to get the accurate amount of taxable benefits, regardless of whether or not your spouse received benefits.
Taxpayers with taxable benefits should file a Form 1040 or 1040A, U.S. Individual Income Tax Return. You are not eligible to file a Form 1040EZ. You will also receive a Form SSA-1099, Social Security Benefit Statement, or Form RRB-1099, Payments by the Railroad Retirement Board, for benefits you receive in the previous tax year. Either form will document the amount of benefits paid to legal recipients, as well as any amounts which were repaid. If you received any form of worker’s compensation benefits, the forms will report how much the benefits were reduced due to compensation payments.
If your benefits are taxable in the current tax year, you can opt to withhold additional tax amount from other income sources, or you can pay estimated tax throughout the year. You can decide to have income tax withheld directly from Social Security or equivalent railroad retirement benefits.
