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2012 1040 Tax Return

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2012 1040 Tax Return

2012 1040 tax return Publication 915 - Main Content Table of Contents Are Any of Your Benefits Taxable?Worksheet A. 2012 1040 tax return Exemption from withholding. 2012 1040 tax return How To Report Your Benefits How Much Is Taxable?Examples Lump-Sum ElectionExample Deductions Related to Your BenefitsRepayments More Than Gross Benefits Worksheets AppendixForm SSA-1099, Social Security Benefit Statement 2013 Form SSA-1042S, Social Security Benefit Statement 2013 (Nonresident Aliens) Form RRB-1099, Payments by the Railroad Retirement Board 2013 Form RRB-1042S, Payments by the Railroad Retirement Board 2013 (Nonresident Aliens) How To Get Tax HelpLow Income Taxpayer Clinics Are Any of Your Benefits Taxable? To find out whether any of your benefits shown on Forms SSA-1099 and RRB-1099 may be taxable, compare the base amount (explained later) for your filing status with the total of: One-half of your benefits, plus All your other income, including tax-exempt interest. 2012 1040 tax return When making this comparison, do not reduce your other income by any exclusions for: Interest from qualified U. 2012 1040 tax return S. 2012 1040 tax return 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 1040 tax return Children's benefits. 2012 1040 tax return   The rules in this publication apply to benefits received by children. 2012 1040 tax return See Who is taxed , later. 2012 1040 tax return The SSA issues Form SSA-1099 and Form SSA-1042S. 2012 1040 tax return The RRB issues Form RRB-1099 and Form RRB-1042S. 2012 1040 tax return These forms (tax statements) report the amounts paid and repaid, and taxes withheld for a tax year. 2012 1040 tax return You may receive more than one of these forms for the same tax year. 2012 1040 tax return See the Appendix at the end of this publication for more information. 2012 1040 tax return Each original Form RRB-1099 or Form RRB-1042S is valid unless it has been corrected. 2012 1040 tax return The RRB will issue a corrected Form RRB-1099 or Form RRB-1042S if there is an error in the original. 2012 1040 tax return A corrected Form RRB-1099 or Form RRB-1042S is indicated as “CORRECTED” and replaces the corresponding original Form RRB-1099 or Form RRB-1042S. 2012 1040 tax return You must use the latest corrected Form RRB-1099 or Form RRB-1042S you received and any original Form RRB-1099 or Form RRB-1042S that the RRB has not corrected when you determine what amounts to report on your tax return. 2012 1040 tax return Figuring total income. 2012 1040 tax return   To figure the total of one-half of your benefits plus your other income, use Worksheet A, discussed later. 2012 1040 tax return If the total is more than your base amount, part of your benefits may be taxable. 2012 1040 tax return   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 1040 tax return 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 1040 tax return 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 1040 tax return 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 1040 tax return Base amount. 2012 1040 tax return   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 1040 tax return Worksheet A. 2012 1040 tax return   You can use Worksheet A to figure the amount of income to compare with your base amount. 2012 1040 tax return This is a quick way to check whether some of your benefits may be taxable. 2012 1040 tax return     Worksheet A. 2012 1040 tax return A Quick Way To Check if Your Benefits May Be Taxable Keep for your records A. 2012 1040 tax return Enter the amount from box 5 of all your Forms SSA-1099 and RRB-1099. 2012 1040 tax return Include the full amount of any lump-sum benefit payments received in 2013, for 2013 and earlier years. 2012 1040 tax return (If you received more than one form, combine the amounts from box 5 and enter the total. 2012 1040 tax return ) A. 2012 1040 tax return   Note. 2012 1040 tax return If the amount on line A is zero or less, stop here; none of your benefits are taxable this year. 2012 1040 tax return B. 2012 1040 tax return Enter one-half of the amount on line A B. 2012 1040 tax return   C. 2012 1040 tax return Enter your taxable pensions, wages, interest, dividends, and other taxable income C. 2012 1040 tax return   D. 2012 1040 tax return Enter any tax-exempt interest income (such as interest on municipal bonds) plus any exclusions from income (listed earlier) D. 2012 1040 tax return   E. 2012 1040 tax return Add lines B, C, and D E. 2012 1040 tax return   Note. 2012 1040 tax return Compare the amount on line E to your base amount for your filing status. 2012 1040 tax return 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 1040 tax return If the amount on line E is more than your base amount, some of your benefits may be taxable. 2012 1040 tax return You need to complete Worksheet 1, shown later. 2012 1040 tax return 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 1040 tax return   Example. 2012 1040 tax return 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 1040 tax return In January 2014, you received a Form SSA-1099 showing net benefits of $7,500 in box 5. 2012 1040 tax return Your spouse received a Form SSA-1099 showing net benefits of $3,500 in box 5. 2012 1040 tax return You also received a taxable pension of $22,800 and interest income of $500. 2012 1040 tax return You did not have any tax-exempt interest income. 2012 1040 tax return Your benefits are not taxable for 2013 because your income, as figured in Worksheet A below, is not more than your base amount ($32,000) for married filing jointly. 2012 1040 tax return   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 1040 tax return     Filled-in Worksheet A. 2012 1040 tax return A Quick Way To Check if Your Benefits May Be Taxable Keep for your records A. 2012 1040 tax return Enter the amount from box 5 of all your Forms SSA-1099 and RRB-1099. 2012 1040 tax return Include the full amount of any lump-sum benefit payments received in 2013, for 2013 and earlier years. 2012 1040 tax return (If you received more than one form, combine the amounts from box 5 and enter the total. 2012 1040 tax return ) A. 2012 1040 tax return $11,000 Note. 2012 1040 tax return If the amount on line A is zero or less, stop here; none of your benefits are taxable this year. 2012 1040 tax return B. 2012 1040 tax return Enter one-half of the amount on line A B. 2012 1040 tax return 5,500 C. 2012 1040 tax return Enter your taxable pensions, wages, interest, dividends, and other taxable income C. 2012 1040 tax return 23,300 D. 2012 1040 tax return Enter any tax-exempt interest income (such as interest on municipal bonds) plus any exclusions from income (listed earlier) D. 2012 1040 tax return -0- E. 2012 1040 tax return Add lines B, C, and D E. 2012 1040 tax return $28,800 Note. 2012 1040 tax return Compare the amount on line E to your base amount for your filing status. 2012 1040 tax return 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 1040 tax return If the amount on line E is more than your base amount, some of your benefits may be taxable. 2012 1040 tax return You need to complete Worksheet 1, shown later. 2012 1040 tax return 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 1040 tax return   Who is taxed. 2012 1040 tax return   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 1040 tax return 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 1040 tax return 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 1040 tax return Repayment of benefits. 2012 1040 tax return   Any repayment of benefits you made during 2013 must be subtracted from the gross benefits you received in 2013. 2012 1040 tax return It does not matter whether the repayment was for a benefit you received in 2013 or in an earlier year. 2012 1040 tax return If you repaid more than the gross benefits you received in 2013, see Repayments More Than Gross Benefits , later. 2012 1040 tax return   Your gross benefits are shown in box 3 of Form SSA-1099 or Form RRB-1099. 2012 1040 tax return Your repayments are shown in box 4. 2012 1040 tax return The amount in box 5 shows your net benefits for 2013 (box 3 minus box 4). 2012 1040 tax return Use the amount in box 5 to figure whether any of your benefits are taxable. 2012 1040 tax return Example. 2012 1040 tax return In 2012, you received $3,000 in social security benefits, and in 2013 you received $2,700. 2012 1040 tax return In March 2013, SSA notified you that you should have received only $2,500 in benefits in 2012. 2012 1040 tax return During 2013, you repaid $500 to SSA. 2012 1040 tax return The Form SSA-1099 you received for 2013 shows $2,700 in box 3 (gross amount) and $500 in box 4 (repayment). 2012 1040 tax return The amount in box 5 shows your net benefits of $2,200 ($2,700 minus $500). 2012 1040 tax return Tax withholding and estimated tax. 2012 1040 tax return   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 1040 tax return If you choose to do this, you must complete a Form W-4V, Voluntary Withholding Statement. 2012 1040 tax return   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 1040 tax return For details, see Publication 505, Tax Withholding and Estimated Tax, or the instructions for Form 1040-ES, Estimated Tax for Individuals. 2012 1040 tax return U. 2012 1040 tax return S. 2012 1040 tax return citizens residing abroad. 2012 1040 tax return   U. 2012 1040 tax return S. 2012 1040 tax return citizens who are residents of the following countries are exempt from U. 2012 1040 tax return S. 2012 1040 tax return tax on their benefits. 2012 1040 tax return Canada. 2012 1040 tax return Egypt. 2012 1040 tax return Germany. 2012 1040 tax return Ireland. 2012 1040 tax return Israel. 2012 1040 tax return Italy. 2012 1040 tax return (You must also be a citizen of Italy for the exemption to apply. 2012 1040 tax return ) Romania. 2012 1040 tax return United Kingdom. 2012 1040 tax return   The SSA will not withhold U. 2012 1040 tax return S. 2012 1040 tax return tax from your benefits if you are a U. 2012 1040 tax return S. 2012 1040 tax return citizen. 2012 1040 tax return   The RRB will withhold U. 2012 1040 tax return S. 2012 1040 tax return tax from your benefits unless you file Form RRB-1001, Nonresident Questionnaire, with the RRB to provide citizenship and residency information. 2012 1040 tax return If you do not file Form RRB-1001, the RRB will consider you a nonresident alien and withhold tax from your railroad retirement benefits at a 30% rate. 2012 1040 tax return Contact the RRB to get this form. 2012 1040 tax return Lawful permanent residents. 2012 1040 tax return   For U. 2012 1040 tax return S. 2012 1040 tax return income tax purposes, lawful permanent residents (green card holders) are considered resident aliens until their lawful permanent resident status under the immigration laws is either taken away or is administratively or judicially determined to have been abandoned. 2012 1040 tax return Social security benefits paid to a green card holder are not subject to 30% withholding. 2012 1040 tax return If you are a green card holder and tax was withheld in error on your social security benefits because you have a foreign address, the withholding tax is refundable by the Social Security Administration (SSA) or the IRS. 2012 1040 tax return SSA will refund taxes erroneously withheld if the refund can be processed during the same calendar year in which the tax was withheld. 2012 1040 tax return If SSA cannot refund the taxes withheld, you must file a Form 1040 or 1040A with the Internal Revenue Service Center, Austin, TX 73301 to determine if you are entitled to a refund. 2012 1040 tax return You must also attach the following information to your Form 1040 or 1040A: A copy of the Form SSA-1042S, Social Security Benefit Statement, A copy of the “green card,” and A signed declaration that includes the following statements:    “The SSA should not have withheld federal income tax from my social security benefits because I am a U. 2012 1040 tax return S. 2012 1040 tax return lawful permanent resident and my green card has been neither revoked nor administratively or judicially determined to have been abandoned. 2012 1040 tax return I am filing a U. 2012 1040 tax return S. 2012 1040 tax return income tax return for the tax year as a resident alien reporting all of my worldwide income. 2012 1040 tax return I have not claimed benefits for the tax year under an income tax treaty as a nonresident alien. 2012 1040 tax return ” Nonresident aliens. 2012 1040 tax return   A nonresident alien is an individual who is not a citizen or resident of the United States. 2012 1040 tax return If you are a nonresident alien, the rules discussed in this publication do not apply to you. 2012 1040 tax return Instead, 85% of your benefits are taxed at a 30% rate, unless exempt (or subject to a lower rate) by treaty. 2012 1040 tax return You will receive a Form SSA-1042S or Form RRB-1042S showing the amount of your benefits. 2012 1040 tax return These forms will also show the tax rate and the amount of tax withheld from your benefits. 2012 1040 tax return   Under tax treaties with the following countries, residents of these countries are exempt from U. 2012 1040 tax return S. 2012 1040 tax return tax on their benefits. 2012 1040 tax return Canada. 2012 1040 tax return Egypt. 2012 1040 tax return Germany. 2012 1040 tax return Ireland. 2012 1040 tax return Israel. 2012 1040 tax return Italy. 2012 1040 tax return Japan. 2012 1040 tax return Romania. 2012 1040 tax return United Kingdom. 2012 1040 tax return   Under a treaty with India, benefits paid to individuals who are both residents and nationals of India are exempt from U. 2012 1040 tax return S. 2012 1040 tax return tax if the benefits are for services performed for the United States, its subdivisions, or local government authorities. 2012 1040 tax return   If you are a resident of Switzerland, your total benefit amount will be taxed at a 15% rate. 2012 1040 tax return   For more information on whether you are a nonresident alien, see Publication 519, U. 2012 1040 tax return S. 2012 1040 tax return Tax Guide for Aliens. 2012 1040 tax return Exemption from withholding. 2012 1040 tax return   If your social security benefits are exempt from tax because you are a resident of one of the treaty countries listed, the SSA will not withhold U. 2012 1040 tax return S. 2012 1040 tax return tax from your benefits. 2012 1040 tax return   If your railroad retirement benefits are exempt from tax because you are a resident of one of the treaty countries listed, you can claim an exemption from withholding by filing Form RRB-1001 with the RRB. 2012 1040 tax return Contact the RRB to get this form. 2012 1040 tax return Canadian or German social security benefits paid to U. 2012 1040 tax return S. 2012 1040 tax return residents. 2012 1040 tax return   Under income tax treaties with Canada and Germany, social security benefits paid by those countries to U. 2012 1040 tax return S. 2012 1040 tax return residents are treated for U. 2012 1040 tax return S. 2012 1040 tax return income tax purposes as if they were paid under the social security legislation of the United States. 2012 1040 tax return If you receive social security benefits from Canada or Germany, include them on line 1 of Worksheet 1, shown later. 2012 1040 tax return How To Report Your Benefits If part of your benefits are taxable, you must use Form 1040 or Form 1040A. 2012 1040 tax return You cannot use Form 1040EZ. 2012 1040 tax return Reporting on Form 1040. 2012 1040 tax return   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 1040 tax return 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 1040 tax return Reporting on Form 1040A. 2012 1040 tax return   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 1040 tax return 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 1040 tax return Benefits not taxable. 2012 1040 tax return   If you are filing Form 1040EZ, do not report any benefits on your tax return. 2012 1040 tax return 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 1040 tax return Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. 2012 1040 tax return 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 1040 tax return 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 1040 tax return Generally, the higher that total amount, the greater the taxable part of your benefits. 2012 1040 tax return Maximum taxable part. 2012 1040 tax return   Generally, up to 50% of your benefits will be taxable. 2012 1040 tax return However, up to 85% of your benefits can be taxable if either of the following situations applies to you. 2012 1040 tax return 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 1040 tax return You are married filing separately and lived with your spouse at any time during 2013. 2012 1040 tax return Which worksheet to use. 2012 1040 tax return   A worksheet you can use to figure your taxable benefits is in the instructions for your Form 1040 or 1040A. 2012 1040 tax return You can use either that worksheet or Worksheet 1 in this publication, unless any of the following situations applies to you. 2012 1040 tax return You contributed to a traditional individual retirement arrangement (IRA) and you or your spouse is covered by a retirement plan at work. 2012 1040 tax return 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 1040 tax return Situation (1) does not apply and you take an exclusion for interest from qualified U. 2012 1040 tax return S. 2012 1040 tax return 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 1040 tax return In this situation, you must use Worksheet 1 in this publication to figure your taxable benefits. 2012 1040 tax return You received a lump-sum payment for an earlier year. 2012 1040 tax return In this situation, also complete Worksheet 2 or 3 and Worksheet 4 in this publication. 2012 1040 tax return See Lump-Sum Election , later. 2012 1040 tax return Examples A few examples you can use as a guide to figure the taxable part of your benefits follow. 2012 1040 tax return Filled-in Worksheet 1. 2012 1040 tax return 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 1040 tax return 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 1040 tax return None of your benefits are taxable for 2013. 2012 1040 tax return For more information, see Repayments More Than Gross Benefits . 2012 1040 tax return If you are filing Form 8815, Exclusion of Interest From Series EE and I U. 2012 1040 tax return S. 2012 1040 tax return 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 1040 tax return Instead, include the amount from Schedule B (Form 1040A or 1040), line 2. 2012 1040 tax return 1. 2012 1040 tax return Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099. 2012 1040 tax return Also enter this amount on Form 1040, line 20a, or Form 1040A, line 14a 1. 2012 1040 tax return $5,980         2. 2012 1040 tax return Enter one-half of line 1 2. 2012 1040 tax return 2,990     3. 2012 1040 tax return Combine the amounts from: Form 1040: Lines 7, 8a, 9a, 10 through 14, 15b, 16b, 17 through 19, and 21 Form 1040A: Lines 7, 8a, 9a, 10, 11b, 12b, and 13 3. 2012 1040 tax return 28,990     4. 2012 1040 tax return Enter the amount, if any, from Form 1040 or 1040A, line 8b 4. 2012 1040 tax return -0-     5. 2012 1040 tax return Enter the total of any exclusions/adjustments for: Adoption benefits (Form 8839, line 28), Foreign earned income or housing (Form 2555, lines 45 and 50, or Form 2555-EZ, line 18), and Certain income of bona fide residents of American Samoa (Form 4563, line 15) or Puerto Rico 5. 2012 1040 tax return -0-     6. 2012 1040 tax return Combine lines 2, 3, 4, and 5 6. 2012 1040 tax return 31,980     7. 2012 1040 tax return Form 1040 filers: Enter the amounts from Form 1040, lines 23 through 32, and any write-in adjustments you entered on the dotted line next to line 36. 2012 1040 tax return  Form 1040A filers: Enter the amounts from Form 1040A, lines 16 and 17 7. 2012 1040 tax return -0-     8. 2012 1040 tax return Is the amount on line 7 less than the amount on line 6?             No. 2012 1040 tax return None of your social security benefits are taxable. 2012 1040 tax return Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. 2012 1040 tax return             Yes. 2012 1040 tax return Subtract line 7 from line 6 8. 2012 1040 tax return 31,980     9. 2012 1040 tax return If you are:  Married filing jointly, enter $32,000 Single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013, enter $25,000 9. 2012 1040 tax return 25,000       Note. 2012 1040 tax return 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 1040 tax return 85) and enter the result on line 17. 2012 1040 tax return Then go to line 18. 2012 1040 tax return         10. 2012 1040 tax return Is the amount on line 9 less than the amount on line 8?             No. 2012 1040 tax return None of your benefits are taxable. 2012 1040 tax return Enter -0- on Form 1040, line 20b, or on Form 1040A, line 14b. 2012 1040 tax return 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 1040 tax return             Yes. 2012 1040 tax return Subtract line 9 from line 8 10. 2012 1040 tax return 6,980     11. 2012 1040 tax return Enter $12,000 if married filing jointly; $9,000 if single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013 11. 2012 1040 tax return 9,000     12. 2012 1040 tax return Subtract line 11 from line 10. 2012 1040 tax return If zero or less, enter -0- 12. 2012 1040 tax return -0-     13. 2012 1040 tax return Enter the smaller of line 10 or line 11 13. 2012 1040 tax return 6,980     14. 2012 1040 tax return Enter one-half of line 13 14. 2012 1040 tax return 3,490     15. 2012 1040 tax return Enter the smaller of line 2 or line 14 15. 2012 1040 tax return 2,990     16. 2012 1040 tax return Multiply line 12 by 85% (. 2012 1040 tax return 85). 2012 1040 tax return If line 12 is zero, enter -0- 16. 2012 1040 tax return -0-     17. 2012 1040 tax return Add lines 15 and 16 17. 2012 1040 tax return 2,990     18. 2012 1040 tax return Multiply line 1 by 85% (. 2012 1040 tax return 85) 18. 2012 1040 tax return 5,083     19. 2012 1040 tax return Taxable benefits. 2012 1040 tax return Enter the smaller of line 17 or line 18. 2012 1040 tax return Also enter this amount on Form 1040, line 20b, or Form 1040A, line 14b 19. 2012 1040 tax return $2,990       If you received a lump-sum payment in 2013 that was for an earlier year, also complete Worksheet 2 or 3 and Worksheet 4 to see if you can report a lower taxable benefit. 2012 1040 tax return         Example 1. 2012 1040 tax return George White is single and files Form 1040 for 2013. 2012 1040 tax return In addition to receiving social security payments, he received a fully taxable pension of $18,600, wages from a part-time job of $9,400, and taxable interest income of $990, for a total of $28,990. 2012 1040 tax return He received a Form SSA-1099 in January 2014 that shows his net social security benefits of $5,980 in box 5. 2012 1040 tax return   To figure his taxable benefits, George completes Worksheet 1, shown below. 2012 1040 tax return On line 20a of his Form 1040, George enters his net benefits of $5,980. 2012 1040 tax return On line 20b, he enters his taxable benefits of $2,990. 2012 1040 tax return Example 2. 2012 1040 tax return Ray and Alice Hopkins file a joint return on Form 1040A for 2013. 2012 1040 tax return Ray is retired and received a fully taxable pension of $15,500. 2012 1040 tax return He also received social security benefits and his Form SSA-1099 for 2013 shows net benefits of $5,600 in box 5. 2012 1040 tax return Alice worked during the year and had wages of $14,000. 2012 1040 tax return She made a deductible payment to her IRA account of $1,000. 2012 1040 tax return Ray and Alice have two savings accounts with a total of $250 in taxable interest income. 2012 1040 tax return They complete Worksheet 1, entering $29,750 ($15,500 + $14,000 + $250) on line 3. 2012 1040 tax return They find none of Ray's social security benefits are taxable. 2012 1040 tax return On Form 1040A, they enter $5,600 on line 14a and -0- on line 14b. 2012 1040 tax return Filled-in Worksheet 1. 2012 1040 tax return 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 1040 tax return 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 1040 tax return None of your benefits are taxable for 2013. 2012 1040 tax return For more information, see Repayments More Than Gross Benefits . 2012 1040 tax return If you are filing Form 8815, Exclusion of Interest From Series EE and I U. 2012 1040 tax return S. 2012 1040 tax return 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 1040 tax return Instead, include the amount from Schedule B (Form 1040A or 1040), line 2. 2012 1040 tax return 1. 2012 1040 tax return Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099. 2012 1040 tax return Also enter this amount on Form 1040, line 20a, or Form 1040A, line 14a 1. 2012 1040 tax return $5,600         2. 2012 1040 tax return Enter one-half of line 1 2. 2012 1040 tax return 2,800     3. 2012 1040 tax return Combine the amounts from: Form 1040: Lines 7, 8a, 9a, 10 through 14, 15b, 16b, 17 through 19, and 21 Form 1040A: Lines 7, 8a, 9a, 10, 11b, 12b, and 13 3. 2012 1040 tax return 29,750     4. 2012 1040 tax return Enter the amount, if any, from Form 1040 or 1040A, line 8b 4. 2012 1040 tax return -0-     5. 2012 1040 tax return Enter the total of any exclusions/adjustments for: Adoption benefits (Form 8839, line 28), Foreign earned income or housing (Form 2555, lines 45 and 50, or Form 2555-EZ, line 18), and Certain income of bona fide residents of American Samoa (Form 4563, line 15) or Puerto Rico 5. 2012 1040 tax return -0-     6. 2012 1040 tax return Combine lines 2, 3, 4, and 5 6. 2012 1040 tax return 32,550     7. 2012 1040 tax return Form 1040 filers: Enter the amounts from Form 1040, lines 23 through 32, and any write-in adjustments you entered on the dotted line next to line 36. 2012 1040 tax return  Form 1040A filers: Enter the amounts from Form 1040A, lines 16 and 17 7. 2012 1040 tax return 1,000     8. 2012 1040 tax return Is the amount on line 7 less than the amount on line 6?             No. 2012 1040 tax return None of your social security benefits are taxable. 2012 1040 tax return Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. 2012 1040 tax return             Yes. 2012 1040 tax return Subtract line 7 from line 6 8. 2012 1040 tax return 31,550     9. 2012 1040 tax return If you are:  Married filing jointly, enter $32,000 Single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013, enter $25,000 9. 2012 1040 tax return 32,000       Note. 2012 1040 tax return 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 1040 tax return 85) and enter the result on line 17. 2012 1040 tax return Then go to line 18. 2012 1040 tax return         10. 2012 1040 tax return Is the amount on line 9 less than the amount on line 8?             No. 2012 1040 tax return None of your benefits are taxable. 2012 1040 tax return Enter -0- on Form 1040, line 20b, or on Form 1040A, line 14b. 2012 1040 tax return 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 1040 tax return             Yes. 2012 1040 tax return Subtract line 9 from line 8 10. 2012 1040 tax return       11. 2012 1040 tax return Enter $12,000 if married filing jointly; $9,000 if single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013 11. 2012 1040 tax return       12. 2012 1040 tax return Subtract line 11 from line 10. 2012 1040 tax return If zero or less, enter -0- 12. 2012 1040 tax return       13. 2012 1040 tax return Enter the smaller of line 10 or line 11 13. 2012 1040 tax return       14. 2012 1040 tax return Enter one-half of line 13 14. 2012 1040 tax return       15. 2012 1040 tax return Enter the smaller of line 2 or line 14 15. 2012 1040 tax return       16. 2012 1040 tax return Multiply line 12 by 85% (. 2012 1040 tax return 85). 2012 1040 tax return If line 12 is zero, enter -0- 16. 2012 1040 tax return       17. 2012 1040 tax return Add lines 15 and 16 17. 2012 1040 tax return       18. 2012 1040 tax return Multiply line 1 by 85% (. 2012 1040 tax return 85) 18. 2012 1040 tax return       19. 2012 1040 tax return Taxable benefits. 2012 1040 tax return Enter the smaller of line 17 or line 18. 2012 1040 tax return Also enter this amount on Form 1040, line 20b, or Form 1040A, line 14b 19. 2012 1040 tax return         If you received a lump-sum payment in 2013 that was for an earlier year, also complete Worksheet 2 or 3 and Worksheet 4 to see if you can report a lower taxable benefit. 2012 1040 tax return         Example 3. 2012 1040 tax return Joe and Betty Johnson file a joint return on Form 1040 for 2013. 2012 1040 tax return Joe is a retired railroad worker and in 2013 received the social security equivalent benefit (SSEB) portion of tier 1 railroad retirement benefits. 2012 1040 tax return Joe's Form RRB-1099 shows $10,000 in box 5. 2012 1040 tax return Betty is a retired government worker and received a fully taxable pension of $38,000. 2012 1040 tax return They had $2,300 in taxable interest income plus interest of $200 on a qualified U. 2012 1040 tax return S. 2012 1040 tax return savings bond. 2012 1040 tax return The savings bond interest qualified for the exclusion. 2012 1040 tax return They figure their taxable benefits by completing Worksheet 1 below. 2012 1040 tax return Because they have qualified U. 2012 1040 tax return S. 2012 1040 tax return 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 1040 tax return On line 3 of the worksheet, they enter $40,500 ($38,000 + $2,500). 2012 1040 tax return 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 1040 tax return (See Maximum taxable part under How Much Is Taxable earlier. 2012 1040 tax return ) Joe and Betty enter $10,000 on Form 1040, line 20a, and $6,275 on Form 1040, line 20b. 2012 1040 tax return Filled-in Worksheet 1. 2012 1040 tax return 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 1040 tax return 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 1040 tax return None of your benefits are taxable for 2013. 2012 1040 tax return For more information, see Repayments More Than Gross Benefits . 2012 1040 tax return If you are filing Form 8815, Exclusion of Interest From Series EE and I U. 2012 1040 tax return S. 2012 1040 tax return 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 1040 tax return Instead, include the amount from Schedule B (Form 1040A or 1040), line 2. 2012 1040 tax return 1. 2012 1040 tax return Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099. 2012 1040 tax return Also enter this amount on Form 1040, line 20a, or Form 1040A, line 14a 1. 2012 1040 tax return $10,000         2. 2012 1040 tax return Enter one-half of line 1 2. 2012 1040 tax return 5,000     3. 2012 1040 tax return Combine the amounts from: Form 1040: Lines 7, 8a, 9a, 10 through 14, 15b, 16b, 17 through 19, and 21 Form 1040A: Lines 7, 8a, 9a, 10, 11b, 12b, and 13 3. 2012 1040 tax return 40,500     4. 2012 1040 tax return Enter the amount, if any, from Form 1040 or 1040A, line 8b 4. 2012 1040 tax return -0-     5. 2012 1040 tax return Enter the total of any exclusions/adjustments for: Adoption benefits (Form 8839, line 28), Foreign earned income or housing (Form 2555, lines 45 and 50, or Form 2555-EZ, line 18), and Certain income of bona fide residents of American Samoa (Form 4563, line 15) or Puerto Rico 5. 2012 1040 tax return -0-     6. 2012 1040 tax return Combine lines 2, 3, 4, and 5 6. 2012 1040 tax return 45,500     7. 2012 1040 tax return Form 1040 filers: Enter the amounts from Form 1040, lines 23 through 32, and any write-in adjustments you entered on the dotted line next to line 36. 2012 1040 tax return  Form 1040A filers: Enter the amounts from Form 1040A, lines 16 and 17 7. 2012 1040 tax return -0-     8. 2012 1040 tax return Is the amount on line 7 less than the amount on line 6?             No. 2012 1040 tax return None of your social security benefits are taxable. 2012 1040 tax return Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. 2012 1040 tax return             Yes. 2012 1040 tax return Subtract line 7 from line 6 8. 2012 1040 tax return 45,500     9. 2012 1040 tax return If you are:  Married filing jointly, enter $32,000 Single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013, enter $25,000 9. 2012 1040 tax return 32,000       Note. 2012 1040 tax return 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 1040 tax return 85) and enter the result on line 17. 2012 1040 tax return Then go to line 18. 2012 1040 tax return         10. 2012 1040 tax return Is the amount on line 9 less than the amount on line 8?             No. 2012 1040 tax return None of your benefits are taxable. 2012 1040 tax return Enter -0- on Form 1040, line 20b, or on Form 1040A, line 14b. 2012 1040 tax return 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 1040 tax return             Yes. 2012 1040 tax return Subtract line 9 from line 8 10. 2012 1040 tax return 13,500     11. 2012 1040 tax return Enter $12,000 if married filing jointly; $9,000 if single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013 11. 2012 1040 tax return 12,000     12. 2012 1040 tax return Subtract line 11 from line 10. 2012 1040 tax return If zero or less, enter -0- 12. 2012 1040 tax return 1,500     13. 2012 1040 tax return Enter the smaller of line 10 or line 11 13. 2012 1040 tax return 12,000     14. 2012 1040 tax return Enter one-half of line 13 14. 2012 1040 tax return 6,000     15. 2012 1040 tax return Enter the smaller of line 2 or line 14 15. 2012 1040 tax return 5,000     16. 2012 1040 tax return Multiply line 12 by 85% (. 2012 1040 tax return 85). 2012 1040 tax return If line 12 is zero, enter -0- 16. 2012 1040 tax return 1,275     17. 2012 1040 tax return Add lines 15 and 16 17. 2012 1040 tax return 6,275     18. 2012 1040 tax return Multiply line 1 by 85% (. 2012 1040 tax return 85) 18. 2012 1040 tax return 8,500     19. 2012 1040 tax return Taxable benefits. 2012 1040 tax return Enter the smaller of line 17 or line 18. 2012 1040 tax return Also enter this amount on Form 1040, line 20b, or Form 1040A, line 14b 19. 2012 1040 tax return $6,275       If you received a lump-sum payment in 2013 that was for an earlier year, also complete Worksheet 2 or 3 and Worksheet 4 to see if you can report a lower taxable benefit. 2012 1040 tax return         Filled-in Worksheet 1. 2012 1040 tax return 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 1040 tax return 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 1040 tax return None of your benefits are taxable for 2013. 2012 1040 tax return For more information, see Repayments More Than Gross Benefits . 2012 1040 tax return If you are filing Form 8815, Exclusion of Interest From Series EE and I U. 2012 1040 tax return S. 2012 1040 tax return 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 1040 tax return Instead, include the amount from Schedule B (Form 1040A or 1040), line 2. 2012 1040 tax return 1. 2012 1040 tax return Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099. 2012 1040 tax return Also enter this amount on Form 1040, line 20a, or Form 1040A, line 14a 1. 2012 1040 tax return $4,000         2. 2012 1040 tax return Enter one-half of line 1 2. 2012 1040 tax return 2,000     3. 2012 1040 tax return Combine the amounts from: Form 1040: Lines 7, 8a, 9a, 10 through 14, 15b, 16b, 17 through 19, and 21 Form 1040A: Lines 7, 8a, 9a, 10, 11b, 12b, and 13 3. 2012 1040 tax return 8,000     4. 2012 1040 tax return Enter the amount, if any, from Form 1040 or 1040A, line 8b 4. 2012 1040 tax return -0-     5. 2012 1040 tax return Enter the total of any exclusions/adjustments for: Adoption benefits (Form 8839, line 28), Foreign earned income or housing (Form 2555, lines 45 and 50, or Form 2555-EZ, line 18), and Certain income of bona fide residents of American Samoa (Form 4563, line 15) or Puerto Rico 5. 2012 1040 tax return -0-     6. 2012 1040 tax return Combine lines 2, 3, 4, and 5 6. 2012 1040 tax return 10,000     7. 2012 1040 tax return Form 1040 filers: Enter the amounts from Form 1040, lines 23 through 32, and any write-in adjustments you entered on the dotted line next to line 36. 2012 1040 tax return  Form 1040A filers: Enter the amounts from Form 1040A, lines 16 and 17 7. 2012 1040 tax return -0-     8. 2012 1040 tax return Is the amount on line 7 less than the amount on line 6?             No. 2012 1040 tax return None of your social security benefits are taxable. 2012 1040 tax return Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. 2012 1040 tax return             Yes. 2012 1040 tax return Subtract line 7 from line 6 8. 2012 1040 tax return 10,000     9. 2012 1040 tax return If you are:  Married filing jointly, enter $32,000 Single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013, enter $25,000 9. 2012 1040 tax return         Note. 2012 1040 tax return 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 1040 tax return 85) and enter the result on line 17. 2012 1040 tax return Then go to line 18. 2012 1040 tax return         10. 2012 1040 tax return Is the amount on line 9 less than the amount on line 8?             No. 2012 1040 tax return None of your benefits are taxable. 2012 1040 tax return Enter -0- on Form 1040, line 20b, or on Form 1040A, line 14b. 2012 1040 tax return 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 1040 tax return             Yes. 2012 1040 tax return Subtract line 9 from line 8 10. 2012 1040 tax return       11. 2012 1040 tax return Enter $12,000 if married filing jointly; $9,000 if single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013 11. 2012 1040 tax return       12. 2012 1040 tax return Subtract line 11 from line 10. 2012 1040 tax return If zero or less, enter -0- 12. 2012 1040 tax return       13. 2012 1040 tax return Enter the smaller of line 10 or line 11 13. 2012 1040 tax return       14. 2012 1040 tax return Enter one-half of line 13 14. 2012 1040 tax return       15. 2012 1040 tax return Enter the smaller of line 2 or line 14 15. 2012 1040 tax return       16. 2012 1040 tax return Multiply line 12 by 85% (. 2012 1040 tax return 85). 2012 1040 tax return If line 12 is zero, enter -0- 16. 2012 1040 tax return       17. 2012 1040 tax return Add lines 15 and 16 17. 2012 1040 tax return 8,500     18. 2012 1040 tax return Multiply line 1 by 85% (. 2012 1040 tax return 85) 18. 2012 1040 tax return 3,400     19. 2012 1040 tax return Taxable benefits. 2012 1040 tax return Enter the smaller of line 17 or line 18. 2012 1040 tax return Also enter this amount on Form 1040, line 20b, or Form 1040A, line 14b 19. 2012 1040 tax return $3,400       If you received a lump-sum payment in 2013 that was for an earlier year, also complete Worksheet 2 or 3 and Worksheet 4 to see if you can report a lower taxable benefit. 2012 1040 tax return         Example 4. 2012 1040 tax return Bill and Eileen Jones are married and live together, but file separate Form 1040 returns for 2013. 2012 1040 tax return Bill earned $8,000 during 2013. 2012 1040 tax return The only other income he had for the year was $4,000 net social security benefits (box 5 of his Form SSA-1099). 2012 1040 tax return Bill figures his taxable benefits by completing Worksheet 1 below. 2012 1040 tax return He must include 85% of his social security benefits in his taxable income because he is married filing separately and lived with his spouse during 2013. 2012 1040 tax return See How Much Is Taxable earlier. 2012 1040 tax return Bill enters $4,000 on his Form 1040, line 20a, and $3,400 on Form 1040, line 20b. 2012 1040 tax return Lump-Sum Election You must include the taxable part of a lump-sum (retroactive) payment of benefits received in 2013 in your 2013 income, even if the payment includes benefits for an earlier year. 2012 1040 tax return 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 1040 tax return No part of the lump-sum death benefit is subject to tax. 2012 1040 tax return Generally, you use your 2013 income to figure the taxable part of the total benefits received in 2013. 2012 1040 tax return 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 1040 tax return You can elect this method if it lowers your taxable benefits. 2012 1040 tax return Under the lump-sum election method, you refigure the taxable part of all your benefits for the earlier year (including the lump-sum payment) using that year's income. 2012 1040 tax return Then you subtract any taxable benefits for that year that you previously reported. 2012 1040 tax return The remainder is the taxable part of the lump-sum payment. 2012 1040 tax return Add it to the taxable part of your benefits for 2013 (figured without the lump-sum payment for the earlier year). 2012 1040 tax return Because the earlier year's taxable benefits are included in your 2013 income, no adjustment is made to the earlier year's return. 2012 1040 tax return Do not file an amended return for the earlier year. 2012 1040 tax return Will the lump-sum election method lower your taxable benefits?   To find out, take the following steps. 2012 1040 tax return Complete Worksheet 1 in this publication. 2012 1040 tax return Complete Worksheet 2 and Worksheet 3 as appropriate. 2012 1040 tax return Use Worksheet 2 if your lump-sum payment was for a year after 1993. 2012 1040 tax return Use Worksheet 3 if it was for 1993 or an earlier year. 2012 1040 tax return Complete a separate Worksheet 2 or Worksheet 3 for each earlier year for which you received the lump-sum payment. 2012 1040 tax return Complete Worksheet 4. 2012 1040 tax return Compare the taxable benefits on line 19 of Worksheet 1 with the taxable benefits on line 21 of Worksheet 4. 2012 1040 tax return If the taxable benefits on Worksheet 4 are lower than the taxable benefits on Worksheet 1, you can elect to report the lower amount on your return. 2012 1040 tax return Making the election. 2012 1040 tax return   If you elect to report your taxable benefits under the lump-sum election method, follow the instructions at the bottom of Worksheet 4. 2012 1040 tax return Do not attach the completed worksheets to your return. 2012 1040 tax return Keep them with your records. 2012 1040 tax return    Once you elect this method of figuring the taxable part of a lump-sum payment, you can revoke your election only with the consent of the IRS. 2012 1040 tax return Lump-sum payment reported on Form SSA-1099 or RRB-1099. 2012 1040 tax return   If you received a lump-sum payment in 2013 that includes benefits for one or more earlier years after 1983, it will be included in box 3 of either Form SSA-1099 or Form RRB-1099. 2012 1040 tax return That part of any lump-sum payment for years before 1984 is not taxed and will not be shown on the form. 2012 1040 tax return The form will also show the year (or years) the payment is for. 2012 1040 tax return However, Form RRB-1099 will not show a breakdown by year (or years) of any lump-sum payment for years before 2011. 2012 1040 tax return You must contact the RRB for a breakdown by year for any amount shown in box 9. 2012 1040 tax return Example Jane Jackson is single. 2012 1040 tax return In 2012 she applied for social security disability benefits but was told she was ineligible. 2012 1040 tax return She appealed the decision and won. 2012 1040 tax return In 2013, she received a lump-sum payment of $6,000, of which $2,000 was for 2012 and $4,000 was for 2013. 2012 1040 tax return Jane also received $5,000 in social security benefits in 2013, so her total benefits in 2013 were $11,000. 2012 1040 tax return Jane's other income for 2012 and 2013 is as follows. 2012 1040 tax return   Income 2012 2013     Wages $20,000 $ 3,500     Interest income 2,000 2,500     Dividend income 1,000 1,500     Fully taxable pension   18,000     Total $23,000 $25,500   To see if the lump-sum election method results in lower taxable benefits, she completes Worksheets 1, 2, and 4 from this publication. 2012 1040 tax return She does not need to complete Worksheet 3 because her lump-sum payment was for years after 1993. 2012 1040 tax return Jane completes Worksheet 1 to find the amount of her taxable benefits for 2013 under the regular method. 2012 1040 tax return She completes Worksheet 2 to find the taxable part of the lump-sum payment for 2012 under the lump-sum election method. 2012 1040 tax return She completes Worksheet 4 to decide if the lump-sum election method will lower her taxable benefits. 2012 1040 tax return After completing the worksheets, Jane compares the amounts from Worksheet 4, line 21, and Worksheet 1, line 19. 2012 1040 tax return Because the amount on Worksheet 4 is smaller, she chooses to use the lump-sum election method. 2012 1040 tax return To do this, she prints “LSE” to the left of Form 1040, line 20a. 2012 1040 tax return She then enters $11,000 on Form 1040, line 20a, and her taxable benefits of $2,500 on line 20b. 2012 1040 tax return Jane's filled-in worksheets (1, 2, and 4) follow. 2012 1040 tax return Jane Jackson's Filled-in Worksheet 1. 2012 1040 tax return 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 1040 tax return 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 1040 tax return None of your benefits are taxable for 2013. 2012 1040 tax return For more information, see Repayments More Than Gross Benefits . 2012 1040 tax return If you are filing Form 8815, Exclusion of Interest From Series EE and I U. 2012 1040 tax return S. 2012 1040 tax return 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 1040 tax return Instead, include the amount from Schedule B (Form 1040A or 1040), line 2. 2012 1040 tax return 1. 2012 1040 tax return Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099. 2012 1040 tax return Also enter this amount on Form 1040, line 20a, or Form 1040A, line 14a 1. 2012 1040 tax return $11,000         2. 2012 1040 tax return Enter one-half of line 1 2. 2012 1040 tax return 5,500     3. 2012 1040 tax return Combine the amounts from: Form 1040: Lines 7, 8a, 9a, 10 through 14, 15b, 16b, 17 through 19, and 21 Form 1040A: Lines 7, 8a, 9a, 10, 11b, 12b, and 13 3. 2012 1040 tax return 25,500     4. 2012 1040 tax return Enter the amount, if any, from Form 1040 or 1040A, line 8b 4. 2012 1040 tax return -0-     5. 2012 1040 tax return Enter the total of any exclusions/adjustments for: Adoption benefits (Form 8839, line 28), Foreign earned income or housing (Form 2555, lines 45 and 50, or Form 2555-EZ, line 18), and Certain income of bona fide residents of American Samoa (Form 4563, line 15) or Puerto Rico 5. 2012 1040 tax return -0-     6. 2012 1040 tax return Combine lines 2, 3, 4, and 5 6. 2012 1040 tax return 31,000     7. 2012 1040 tax return Form 1040 filers: Enter the amounts from Form 1040, lines 23 through 32, and any write-in adjustments you entered on the dotted line next to line 36. 2012 1040 tax return  Form 1040A filers: Enter the amounts from Form 1040A, lines 16 and 17 7. 2012 1040 tax return -0-     8. 2012 1040 tax return Is the amount on line 7 less than the amount on line 6?             No. 2012 1040 tax return None of your social security benefits are taxable. 2012 1040 tax return Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. 2012 1040 tax return             Yes. 2012 1040 tax return Subtract line 7 from line 6 8. 2012 1040 tax return 31,000     9. 2012 1040 tax return If you are:  Married filing jointly, enter $32,000 Single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013, enter $25,000 9. 2012 1040 tax return 25,000       Note. 2012 1040 tax return 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 1040 tax return 85) and enter the result on line 17. 2012 1040 tax return Then go to line 18. 2012 1040 tax return         10. 2012 1040 tax return Is the amount on line 9 less than the amount on line 8?             No. 2012 1040 tax return None of your benefits are taxable. 2012 1040 tax return Enter -0- on Form 1040, line 20b, or on Form 1040A, line 14b. 2012 1040 tax return 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 1040 tax return             Yes. 2012 1040 tax return Subtract line 9 from line 8 10. 2012 1040 tax return 6,000     11. 2012 1040 tax return Enter $12,000 if married filing jointly; $9,000 if single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013 11. 2012 1040 tax return 9,000     12. 2012 1040 tax return Subtract line 11 from line 10. 2012 1040 tax return If zero or less, enter -0- 12. 2012 1040 tax return -0-     13. 2012 1040 tax return Enter the smaller of line 10 or line 11 13. 2012 1040 tax return 6,000     14. 2012 1040 tax return Enter one-half of line 13 14. 2012 1040 tax return 3,000     15. 2012 1040 tax return Enter the smaller of line 2 or line 14 15. 2012 1040 tax return 3,000     16. 2012 1040 tax return Multiply line 12 by 85% (. 2012 1040 tax return 85). 2012 1040 tax return If line 12 is zero, enter -0- 16. 2012 1040 tax return -0-     17. 2012 1040 tax return Add lines 15 and 16 17. 2012 1040 tax return 3,000     18. 2012 1040 tax return Multiply line 1 by 85% (. 2012 1040 tax return 85) 18. 2012 1040 tax return 9,350     19. 2012 1040 tax return Taxable benefits. 2012 1040 tax return Enter the smaller of line 17 or line 18. 2012 1040 tax return Also enter this amount on Form 1040, line 20b, or Form 1040A, line 14b 19. 2012 1040 tax return $3,000       If you received a lump-sum payment in 2013 that was for an earlier year, also complete Worksheet 2 or 3 and Worksheet 4 to see if you can report a lower taxable benefit. 2012 1040 tax return         Jane Jackson's Filled-in Worksheet 2. 2012 1040 tax return Figure Your Additional Taxable Benefits (From a Lump-Sum Payment for a Year After 1993)     Enter earlier year 2012 1. 2012 1040 tax return 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. 2012 1040 tax return $2,000           Note. 2012 1040 tax return If line 1 is zero or less, skip lines 2 through 20 and enter -0- on line 21. 2012 1040 tax return Otherwise, go on to line 2. 2012 1040 tax return             2. 2012 1040 tax return Enter one-half of line 1 2. 2012 1040 tax return 1,000   3. 2012 1040 tax return Enter your adjusted gross income for the earlier year 3. 2012 1040 tax return 23,000   4. 2012 1040 tax return Enter the total of any exclusions/adjustments you claimed in the earlier year for: Adoption benefits (Form 8839) Qualified U. 2012 1040 tax return S. 2012 1040 tax return savings bond interest (Form 8815) Student loan interest (Form 1040, page 1, or Form 1040A, page 1) Tuition and fees (Form 1040, page 1, or Form 1040A, page 1) Domestic production activities (for 2005 through 2012) (Form 1040, page 1) Foreign earned income or housing (Form 2555 or Form 2555-EZ) Certain income of bona fide residents of American Samoa (Form 4563) or Puerto Rico 4. 2012 1040 tax return -0-   5. 2012 1040 tax return Enter any tax-exempt interest received in the earlier year 5. 2012 1040 tax return -0-   6. 2012 1040 tax return Add lines 2 through 5 6. 2012 1040 tax return 24,000   7. 2012 1040 tax return Enter your taxable benefits for the earlier year that you previously reported 7. 2012 1040 tax return -0-   8. 2012 1040 tax return Subtract line 7 from line 6 8. 2012 1040 tax return 24,000   9. 2012 1040 tax return 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. 2012 1040 tax return 25,000     Note. 2012 1040 tax return If you were married filing separately and you lived with your spouse at any time during the earlier year, skip lines 9 through 16; multiply line 8 by 85% (. 2012 1040 tax return 85) and enter the result on line 17. 2012 1040 tax return Then go to line 18. 2012 1040 tax return         10. 2012 1040 tax return Is the amount on line 8 more than the amount on line 9?       No. 2012 1040 tax return Skip lines 10 through 20 and enter -0- on line 21. 2012 1040 tax return       Yes. 2012 1040 tax return Subtract line 9 from line 8 10. 2012 1040 tax return     11. 2012 1040 tax return 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. 2012 1040 tax return     12. 2012 1040 tax return Subtract line 11 from line 10. 2012 1040 tax return If zero or less, enter -0- 12. 2012 1040 tax return     13. 2012 1040 tax return Enter the smaller of line 10 or line 11 13. 2012 1040 tax return     14. 2012 1040 tax return Enter one-half of line 13 14. 2012 1040 tax return     15. 2012 1040 tax return Enter the smaller of line 2 or line 14 15. 2012 1040 tax return     16. 2012 1040 tax return Multiply line 12 by 85% (. 2012 1040 tax return 85). 2012 1040 tax return If line 12 is zero, enter -0- 16. 2012 1040 tax return     17. 2012 1040 tax return Add lines 15 and 16 17. 2012 1040 tax return     18. 2012 1040 tax return Multiply line 1 by 85% (. 2012 1040 tax return 85) 18. 2012 1040 tax return     19. 2012 1040 tax return Refigured taxable benefits. 2012 1040 tax return Enter the smaller of line 17 or line 18 19. 2012 1040 tax return     20. 2012 1040 tax return Enter your taxable benefits for the earlier year (or as refigured due to a previous lump-sum payment for the year) 20. 2012 1040 tax return     21. 2012 1040 tax return Additional taxable benefits. 2012 1040 tax return Subtract line 20 from line 19. 2012 1040 tax return Also enter this amount on Worksheet 4, line 20 21. 2012 1040 tax return -0-     Do not file an amended return for this earlier year. 2012 1040 tax return Complete a separate Worksheet 2 or Worksheet 3 for each earlier year for which you received a lump-sum payment in 2013. 2012 1040 tax return   Jane Jackson's Filled-in Worksheet 4. 2012 1040 tax return 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. 2012 1040 tax return 1. 2012 1040 tax return Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099 for 2013, minus the lump-sum payment for years before 2013 1. 2012 1040 tax return $9,000         Note. 2012 1040 tax return If line 1 is zero or less, skip lines 2 through 18, enter -0- on line 19 and go to line 20. 2012 1040 tax return Otherwise, go on to line 2. 2012 1040 tax return           2. 2012 1040 tax return Enter one-half of line 1 2. 2012 1040 tax return 4,500   3. 2012 1040 tax return Enter the amount from Worksheet 1, line 3 3. 2012 1040 tax return 25,500   4. 2012 1040 tax return Enter the amount from Worksheet 1, line 4 4. 2012 1040 tax return -0-   5. 2012 1040 tax return Enter the amount from Worksheet 1, line 5 5. 2012 1040 tax return -0-   6. 2012 1040 tax return Combine lines 2, 3, 4, and 5 6. 2012 1040 tax return 30,000   7. 2012 1040 tax return Enter the amount from Worksheet 1, line 7 7. 2012 1040 tax return -0-   8. 2012 1040 tax return Subtract line 7 from line 6 8. 2012 1040 tax return 30,000   9. 2012 1040 tax return Enter the amount from Worksheet 1, line 9. 2012 1040 tax return But if you are married filing separately and lived with your spouse at any time during 2013, skip lines 9 through 16; multiply line 8 by 85% (. 2012 1040 tax return 85) and enter the result on line 17. 2012 1040 tax return Then, go to line 18 9. 2012 1040 tax return 25,000   10. 2012 1040 tax return Is the amount on line 8 more than the amount on line 9? No. 2012 1040 tax return Skip lines 10 through 18, enter -0- on line 19, and go to line 20. 2012 1040 tax return  Yes. 2012 1040 tax return Subtract line 9 from line 8 10. 2012 1040 tax return 5,000   11. 2012 1040 tax return Enter the amount from Worksheet 1, line 11 11. 2012 1040 tax return 9,000   12. 2012 1040 tax return Subtract line 11 from line 10. 2012 1040 tax return If zero or less, enter -0- 12. 2012 1040 tax return -0-   13. 2012 1040 tax return Enter the smaller of line 10 or line 11 13. 2012 1040 tax return 5,000   14. 2012 1040 tax return Enter one-half of line 13 14. 2012 1040 tax return 2,500   15. 2012 1040 tax return Enter the smaller of line 2 or line 14 15. 2012 1040 tax return 2,500   16. 2012 1040 tax return Multiply line 12 by 85% (. 2012 1040 tax return 85). 2012 1040 tax return If line 12 is zero, enter -0- 16. 2012 1040 tax return -0-   17. 2012 1040 tax return Add lines 15 and 16 17. 2012 1040 tax return 2,500   18. 2012 1040 tax return Multiply line 1 by 85% (. 2012 1040 tax return 85) 18. 2012 1040 tax return 7,650   19. 2012 1040 tax return Enter the smaller of line 17 or line 18 19. 2012 1040 tax return 2,500   20. 2012 1040 tax return Enter the total of the amounts from Worksheet 2, line 21, and Worksheet 3, line 14, for all earlier years for which the lump-sum payment was received 20. 2012 1040 tax return -0-   21. 2012 1040 tax return Taxable benefits under lump-sum election method. 2012 1040 tax return Add lines 19 and 20 21. 2012 1040 tax return $2,500   Next. 2012 1040 tax return Is line 21 above smaller than Worksheet 1, line 19? No. 2012 1040 tax return Do not use this method to figure your taxable benefits. 2012 1040 tax return Follow the instructions on Worksheet 1 to report your benefits. 2012 1040 tax return  Yes. 2012 1040 tax return You can elect to report your taxable benefits under this method. 2012 1040 tax return To elect this method:     Enter “LSE” to the left of Form 1040, line 20a, or Form 1040A, line 14a. 2012 1040 tax return If line 21 above is zero, follow the instructions in line 10 for “No” on Worksheet 1. 2012 1040 tax return Otherwise: Enter the amount from Worksheet 1, line 1, on Form 1040, line 20a, or on Form 1040A, line 14a. 2012 1040 tax return Enter the amount from line 21 above on Form 1040, line 20b, or on Form 1040A, line 14b. 2012 1040 tax return 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 1040 tax return   Deductions Related to Your Benefits You may be entitled to deduct certain amounts related to the benefits you receive. 2012 1040 tax return Disability payments. 2012 1040 tax return   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 1040 tax return 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 1040 tax return If the amount you repay is more than $3,000, you may be able to claim a tax credit instead. 2012 1040 tax return Claim the deduction or credit in the same way explained under Repayment of benefits received in an earlier year in the section Repayments More Than Gross Benefits , later. 2012 1040 tax return Legal expenses. 2012 1040 tax return   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 1040 tax return   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 1040 tax return 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 1040 tax return 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 1040 tax return Do not use Worksheet 1 in this case. 2012 1040 tax return 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 1040 tax return If you have any questions about this negative figure, contact your local SSA office or your local RRB field office. 2012 1040 tax return Joint return. 2012 1040 tax return   If you and your spouse file a joint return, and your Form SSA-1099 or RRB-1099 has a negative figure in box 5, but your spouse's does not, subtract the amount in box 5 of your form from the amount in box 5 of your spouse's form. 2012 1040 tax return You do this to get your net benefits when figuring if your combined benefits are taxable. 2012 1040 tax return Example. 2012 1040 tax return John and Mary file a joint return for 2013. 2012 1040 tax return John received Form SSA-1099 showing $3,000 in box 5. 2012 1040 tax return Mary also received Form SSA-1099 and the amount in box 5 was ($500). 2012 1040 tax return 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 1040 tax return Repayment of benefits received in an earlier year. 2012 1040 tax return   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 1040 tax return Deduction $3,000 or less. 2012 1040 tax return   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 1040 tax return Claim it on Schedule A (Form 1040), line 23. 2012 1040 tax return Deduction more than $3,000. 2012 1040 tax return   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 1040 tax return Figure your tax for 2013 in the following steps: Figure the tax without the itemized deduction included on Schedule A, line 28. 2012 1040 tax return 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 1040 tax return Then refigure the tax for that year. 2012 1040 tax return Subtract the total of the refigured tax amounts in (b) from the total of your actual tax amounts. 2012 1040 tax return Subtract the result in (c) from the result in (a). 2012 1040 tax return   Compare the tax figured in methods (1) and (2). 2012 1040 tax return Your tax for 2013 is the smaller of the two amounts. 2012 1040 tax return If method (1) results in less tax, take the itemized deduction on Schedule A (Form 1040), line 28. 2012 1040 tax return If method (2) results in less tax, claim a credit for the amount from step 2(c) above on Form 1040, line 71. 2012 1040 tax return Check box d and enter “I. 2012 1040 tax return R. 2012 1040 tax return C. 2012 1040 tax return 1341” in the space next to that box. 2012 1040 tax return If both methods produce the same tax, deduct the repayment on Schedule A (Form 1040), line 28. 2012 1040 tax return Worksheets Blank Worksheets 1 through 4 are provided in this section: Worksheet 1, Figuring Your Taxable Benefits; Worksheet 2, Figure Your Additional Taxable Benefits (From a Lump-Sum Payment for a Year After 1993); Worksheet 3, Figure Your Additional Taxable Benefits (From a Lump-Sum Payment for a Year Before 1994); Worksheet 4, Figure Your Taxable Benefits Under the Lump-Sum Election Method (Use With Worksheet 2 or 3). 2012 1040 tax return Worksheet 1. 2012 1040 tax return 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 1040 tax return 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 1040 tax return None of your benefits are taxable for 2013. 2012 1040 tax return For more information, see Repayments More Than Gross Benefits . 2012 1040 tax return If you are filing Form 8815, Exclusion of Interest From Series EE and I U. 2012 1040 tax return S. 2012 1040 tax return 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 1040 tax return Instead, include the amount from Schedule B (Form 1040A or 1040), line 2. 2012 1040 tax return 1. 2012 1040 tax return Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099. 2012 1040 tax return Also enter this amount on Form 1040, line 20a, or Form 1040A, line 14a 1. 2012 1040 tax return           2. 2012 1040 tax return Enter one-half of line 1 2. 2012 1040 tax return       3. 2012 1040 tax return Combine the amounts from: Form 1040: Lines 7, 8a, 9a, 10 through 14, 15b, 16b, 17 through 19, and 21 Form 1040A: Lines 7, 8a, 9a, 10, 11b, 12b, and 13 3. 2012 1040 tax return       4. 2012 1040 tax return Enter the amount, if any, from Form 1040 or 1040A, line 8b 4. 2012 1040 tax return       5. 2012 1040 tax return Enter the total of any exclusions/adjustments for: Adoption benefits (Form 8839, line 28), Foreign earned income or housing (Form 2555, lines 45 and 50, or Form 2555-EZ, line 18), and Certain income of bona fide residents of American Samoa (Form 4563, line 15) or Puerto Rico 5. 2012 1040 tax return       6. 2012 1040 tax return Combine lines 2, 3, 4, and 5 6. 2012 1040 tax return       7. 2012 1040 tax return Form 1040 filers: Enter the amounts from Form 1040, lines 23 through 32, and any write-in adjustments you entered on the dotted line next to line 36. 2012 1040 tax return  Form 1040A filers: Enter the amounts from Form 1040A, lines 16 and 17 7. 2012 1040 tax return       8. 2012 1040 tax return Is the amount on line 7 less than the amount on line 6?             No. 2012 1040 tax return None of your social security benefits are taxable. 2012 1040 tax return Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. 2012 1040 tax return             Yes. 2012 1040 tax return Subtract line 7 from line 6 8. 2012 1040 tax return       9. 2012 1040 tax return If you are:  Married filing jointly, enter $32,000 Single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013, enter $25,000 9. 2012 1040 tax return         Note. 2012 1040 tax return 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 1040 tax return 85) and enter the result on line 17. 2012 1040 tax return Then go to line 18. 2012 1040 tax return         10. 2012 1040 tax return Is the amount on line 9 less than the amount on line 8?             No. 2012 1040 tax return None of your benefits are taxable. 2012 1040 tax return Enter -0- on Form 1040, line 20b, or on Form 1040A, line 14b. 2012 1040 tax return 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 1040 tax return             Yes. 2012 1040 tax return Subtract line 9 from line 8 10. 2012 1040 tax return       11. 2012 1040 tax return Enter $12,000 if married filing jointly; $9,000 if single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013 11. 2012 1040 tax return       12. 2012 1040 tax return Subtract line 11 from line 10. 2012 1040 tax return If zero or less, enter -0- 12. 2012 1040 tax return       13. 2012 1040 tax return Enter the smaller of line 10 or line 11 13. 2012 1040 tax return       14. 2012 1040 tax return Enter one-half of line 13 14. 2012 1040 tax return       15. 2012 1040 tax return Enter the smaller of line 2 or line 14 15. 2012 1040 tax return       16. 2012 1040 tax return Multiply line 12 by 85% (. 2012 1040 tax return 85). 2012 1040 tax return If line 12 is zero, enter -0- 16. 2012 1040 tax return       17. 2012 1040 tax return Add lines 15 and 16 17. 2012 1040 tax return       18. 2012 1040 tax return Multiply line 1 by 85% (. 2012 1040 tax return 85) 18. 2012 1040 tax return       19. 2012 1040 tax return Taxable benefits. 2012 1040 tax return Enter the smaller of line 17 or line 18. 2012 1040 tax return Also enter this amount on Form 1040, line 20b, or Form 1040A, line 14b 19. 2012 1040 tax return         If you received a lump-sum payment in 2013 that was for an earlier year, also complete Worksheet 2 or 3 and Worksheet 4 to see if you can report a lower taxable benefit. 2012 1040 tax return         Worksheet 2. 2012 1040 tax return Figure Your Additional Taxable Benefits (From a Lump-Sum Payment for a Year After 1993)     Enter earlier year 1. 2012 1040 tax return 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. 2012 1040 tax return             Note. 2012 1040 tax return If line 1 is zero or less, skip lines 2 through 20 and enter -0- on line 21. 2012 1040 tax return Otherwise, go on to line 2. 2012 1040 tax return             2. 2012 1040 tax return Enter one-half of line 1 2. 2012 1040 tax return     3. 2012 1040 tax return Enter your adjusted gross income for the earlier year 3. 2012 1040 tax return     4. 2012 1040 tax return Enter the total of any exclusions/adjustments you claimed in the earlier year for: Adoption benefits (Form 8839) Qualified U. 2012 1040 tax return S. 2012 1040 tax return savings bond interest (Form 8815) Student loan interest (Form 1040, page 1, or Form 1040A, page 1) Tuition and fees (Form 1040, page 1, or Form 1040A, page 1) Domestic production activities (for 2005 through 2012) (Form 1040, page 1) Foreign earned income or housing (Form 2555 or Form 2555-EZ) Certain income of bona fide residents of American Samoa (Form 4563) or Puerto Rico 4. 2012 1040 tax return     5. 2012 1040 tax return Enter any tax-exempt interest received in the earlier year 5. 2012 1040 tax return     6. 2012 1040 tax return Add lines 2 through 5 6. 2012 1040 tax return     7. 2012 1040 tax return Enter your taxable benefits for the earlier year that you previously reported 7. 2012 1040 tax return     8. 2012 1040 tax return Subtract line 7 from line 6 8. 2012 1040 tax return     9. 2012 1040 tax return 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. 2012 1040 tax return       Note. 2012 1040 tax return If you were married filing separately and you lived with your spouse at any time during the earlier year, skip lines 9 through 16; multiply line 8 by 85% (. 2012 1040 tax return 85) and enter the result on line 17. 2012 1040 tax return Then go to line 18. 2012 1040 tax return         10. 2012 1040 tax return Is the amount on line 8 more than the amount on line 9?       No. 2012 1040 tax return Skip lines 10 through 20 and enter -0- on line 21. 2012 1040 tax return       Yes. 2012 1040 tax return Subtract line 9 from line 8 10. 2012 1040 tax return     11. 2012 1040 tax return 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. 2012 1040 tax return     12. 2012 1040 tax return Subtract line 11 from line 10. 2012 1040 tax return If zero or less, enter -0- 12. 2012 1040 tax return     13. 2012 1040 tax return Enter the smaller of line 10 or line 11 13. 2012 1040 tax return     14. 2012 1040 tax return Enter one-half of line 13 14. 2012 1040 tax return     15. 2012 1040 tax return Enter the smaller of line 2 or line 14 15. 2012 1040 tax return     16. 2012 1040 tax return Multiply line 12 by 85% (. 2012 1040 tax return 85). 2012 1040 tax return If line 12 is zero, enter -0- 16. 2012 1040 tax return     17. 2012 1040 tax return Add lines 15 and 16 17. 2012 1040 tax return     18. 2012 1040 tax return Multiply line 1 by 85% (. 2012 1040 tax return 85) 18. 2012 1040 tax return     19. 2012 1040 tax return Refigured taxable benefits. 2012 1040 tax return Enter the smaller of line 17 or line 18 19. 2012 1040 tax return     20. 2012 1040 tax return Enter your taxable benefits for the earlier year (or as refigured due to a previous lump-sum payment for the year) 20. 2012 1040 tax return     21. 2012 1040 tax return Additional taxable benefits. 2012 1040 tax return Subtract line 20 from line 19. 2012 1040 tax return Also enter this amount on Worksheet 4, line 20 21. 2012 1040 tax return       Do not file an amended return for this earlier year. 2012 1040 tax return Complete a separate Worksheet 2 or Worksheet 3 for each earlier year for which you received a lump-sum payment in 2013. 2012 1040 tax return   Worksheet 3. 2012 1040 tax return Figure Your Additional Taxable Benefits (From a Lump-Sum Payment for a Year Before 1994) Enter earlier year 1. 2012 1040 tax return 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. 2012 1040 tax return           Note. 2012 1040 tax return If line 1 is zero or less, skip lines 2 through 13 and enter -0- on line 14. 2012 1040 tax return Otherwise, go on to line 2. 2012 1040 tax return           2. 2012 1040 tax return Enter one-half of line 1 2. 2012 1040 tax return     3. 2012 1040 tax return Enter your adjusted gross income for the earlier year 3. 2012 1040 tax return     4. 2012 1040 tax return Enter the total of any exclusions/adjustments you claimed in the earlier year for: Qualified U. 2012 1040 tax return S. 2012 1040 tax return 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. 2012 1040 tax return     5. 2012 1040 tax return Enter any tax-exempt interest received in the earlier year 5. 2012 1040 tax return     6. 2012 1040 tax return Add lines 2 through 5 6. 2012 1040 tax return     7. 2012 1040 tax return Enter your taxable benefits for the earlier year that you previously reported 7. 2012 1040 tax return     8. 2012 1040 tax return Subtract line 7 from line 6 8. 2012 1040 tax return     9. 2012 1040 tax return 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. 2012 1040 tax return     10. 2012 1040 tax return Is the amount on line 8 more than the amount on line 9? No. 2012 1040 tax return Skip lines 10 through 13 and enter -0- on line 14. 2012 1040 tax return  Yes. 2012 1040 tax return Subtract line 9 from line 8. 2012 1040 tax return 10. 2012 1040 tax return     11. 2012 1040 tax return Enter one-half of line 10 11. 2012 1040 tax return     12. 2012 1040 tax return Refigured taxable benefits. 2012 1040 tax return Enter the smaller of line 2 or line 11 12. 2012 1040 tax return     13. 2012 1040 tax return Enter your taxable benefits for the earlier year (or as refigured due to a previous
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Deducting Business Expenses

Business expenses are the cost of carrying on a trade or business. These expenses are usually deductible if the business is operated to make a profit.

What Can I Deduct?

To be deductible, a business expense must be both ordinary and necessary. An ordinary expense is one that is common and accepted in your trade or business. A necessary expense is one that is helpful and appropriate for your trade or business. An expense does not have to be indispensable to be considered necessary.

It is important to separate business expenses from the following expenses:

  • The expenses used to figure the cost of goods sold,
  • Capital Expenses, and
  • Personal Expenses.

Cost of Goods Sold

If your business manufactures products or purchases them for resale, you generally must value inventory at the beginning and end of each tax year to determine your cost of goods sold. Some of your expenses may be included in figuring the cost of goods sold. Cost of goods sold is deducted from your gross receipts to figure your gross profit for the year. If you include an expense in the cost of goods sold, you cannot deduct it again as a business expense.

The following are types of expenses that go into figuring the cost of goods sold.

  • The cost of products or raw materials, including freight
  • Storage
  • Direct labor costs (including contributions to pensions or annuity plans) for workers who produce the products
  • Factory overhead

Under the uniform capitalization rules, you must capitalize the direct costs and part of the indirect costs for certain production or resale activities. Indirect costs include rent, interest, taxes, storage, purchasing, processing, repackaging, handling, and administrative costs.

This rule does not apply to personal property you acquire for resale if your average annual gross receipts (or those of your predecessor) for the preceding 3 tax years are not more than $10 million.

For additional information, refer to the chapter on Cost of Goods Sold, Publication 334, Tax Guide for Small Businesses and the chapter on Inventories, Publication 538, Accounting Periods and Methods.

Capital Expenses

You must capitalize, rather than deduct, some costs. These costs are a part of your investment in your business and are called capital expenses. Capital expenses are considered assets in your business. There are, in general, three types of costs you capitalize.

  • Business start-up cost (See the note below)
  • Business assets
  • Improvements

Note: You can elect to deduct or amortize certain business start-up costs. Refer to chapters 7 and 8 of Publication 535, Business Expenses.

Personal versus Business Expenses

Generally, you cannot deduct personal, living, or family expenses. However, if you have an expense for something that is used partly for business and partly for personal purposes, divide the total cost between the business and personal parts. You can deduct the business part.

For example, if you borrow money and use 70% of it for business and the other 30% for a family vacation, you can deduct 70% of the interest as a business expense. The remaining 30% is personal interest and is not deductible. Refer to chapter 4 of Publication 535, Business Expenses, for information on deducting interest and the allocation rules.

Business Use of Your Home

If you use part of your home for business, you may be able to deduct expenses for the business use of your home. These expenses may include mortgage interest, insurance, utilities, repairs, and depreciation. Refer to Home Office Deduction and Publication 587, Business Use of Your Home, for more information.

Business Use of Your Car

If you use your car in your business, you can deduct car expenses. If you use your car for both business and personal purposes, you must divide your expenses based on actual mileage. Refer to Publication 463, Travel, Entertainment, Gift, and Car Expenses. For a list of current and prior year mileage rates see the Standard Mileage Rates.

Other Types of Business Expenses

  • Employees' Pay - You can generally deduct the pay you give your employees for the services they perform for your business.
  • Retirement Plans - Retirement plans are savings plans that offer you tax advantages to set aside money for your own, and your employees' retirement.
  • Rent Expense - Rent is any amount you pay for the use of property you do not own. In general, you can deduct rent as an expense only if the rent is for property you use in your trade or business. If you have or will receive equity in or title to the property, the rent is not deductible.
  • Interest - Business interest expense is an amount charged for the use of money you borrowed for business activities.
  • Taxes - You can deduct various federal, state, local, and foreign taxes directly attributable to your trade or business as business expenses.
  • Insurance - Generally, you can deduct the ordinary and necessary cost of insurance as a business expense, if it is for your trade, business, or profession.

This list is not all inclusive of the types of business expenses that you can deduct. For additional information, refer to Publication 535, Business Expenses.

Page Last Reviewed or Updated: 04-Feb-2014

The 2012 1040 Tax Return

2012 1040 tax return Publication 54 - Introductory Material Table of Contents Future Developments What's New Reminders IntroductionOrdering forms and publications. 2012 1040 tax return Tax questions. 2012 1040 tax return Future Developments For the latest information about developments related to Publication 54, such as legislation enacted after it was published, go to www. 2012 1040 tax return irs. 2012 1040 tax return gov/pub54. 2012 1040 tax return What's New Exclusion amount. 2012 1040 tax return  The maximum foreign earned income exclusion is adjusted annually for inflation. 2012 1040 tax return For 2013, the maximum exclusion has increased to $97,600. 2012 1040 tax return See Limit on Excludable Amount under Foreign Earned Income Exclusion in chapter 4. 2012 1040 tax return Housing expenses — base amount. 2012 1040 tax return  The computation of the base housing amount (line 32 of Form 2555) is tied to the maximum foreign earned income exclusion. 2012 1040 tax return The amount is 16 percent of the exclusion amount (computed on a daily basis), multiplied by the number of days in your qualifying period that fall within your 2013 tax year. 2012 1040 tax return For 2013, this amount is $42. 2012 1040 tax return 78 per day ($15,616 per year). 2012 1040 tax return See Housing Amount under Foreign Housing Exclusion and Deduction in chapter 4. 2012 1040 tax return Housing expenses — maximum amount. 2012 1040 tax return  The amount of qualified housing expenses eligible for the housing exclusion and housing deduction has changed for some locations. 2012 1040 tax return See Limit on housing expenses under Foreign Housing Exclusion and Deduction in chapter 4. 2012 1040 tax return Filing requirements. 2012 1040 tax return  Generally, the amount of income you can receive before you must file an income tax return has increased. 2012 1040 tax return These amounts are shown in chapter 1 under Filing Requirements . 2012 1040 tax return Self-employment tax rate. 2012 1040 tax return  For 2013, the self-employment tax rate of 13. 2012 1040 tax return 3% has increased to 15. 2012 1040 tax return 3%. 2012 1040 tax return The maximum amount of net earnings from self-employment that is subject to the social security part of the self-employment tax has increased to $113,700. 2012 1040 tax return All net earnings are subject to the Medicare part of the tax. 2012 1040 tax return For more information, see chapter 3. 2012 1040 tax return IRA limitations for 2013. 2012 1040 tax return . 2012 1040 tax return  The 2013 contribution limit to an IRA has increased to $5,500 ($6,500 if age 50 or older). 2012 1040 tax return You may be able to take an IRA deduction if you were covered by a retirement plan and your 2013 modified adjusted gross income (AGI) is less than $69,000 ($115,000 if married filing jointly or a qualifying widow(er)). 2012 1040 tax return If your spouse was covered by a retirement plan, but you were not, you may be able to take an IRA deduction if your 2013 modified AGI is less than $188,000. 2012 1040 tax return See the Instructions for Form 1040 or the Instructions for Form 1040A for details and exceptions. 2012 1040 tax return Reminders Figuring tax on income not excluded. 2012 1040 tax return  If you claim the foreign earned income exclusion, the housing exclusion, or both, you must figure the tax on your nonexcluded income using the tax rates that would have applied had you not claimed the exclusions. 2012 1040 tax return See the Instructions for Form 1040 and complete the Foreign Earned Income Tax Worksheet to figure the amount of tax to enter on Form 1040, line 44. 2012 1040 tax return If you must attach Form 6251 to your return, use the Foreign Earned Income Tax Worksheet provided in the Instructions for Form 6251. 2012 1040 tax return Form 8938. 2012 1040 tax return  If you had foreign financial assets in 2013, you may have to file Form 8938 with your return. 2012 1040 tax return See Form 8938 in chapter 1. 2012 1040 tax return Change of address. 2012 1040 tax return  If you change your home mailing address, notify the Internal Revenue Service using Form 8822, Change of Address. 2012 1040 tax return If you are changing your business address, use Form 8822-B, Change of Address or Responsible Party—Business. 2012 1040 tax return Photographs of missing children. 2012 1040 tax return  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. 2012 1040 tax return Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. 2012 1040 tax return You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. 2012 1040 tax return Introduction This publication discusses special tax rules for U. 2012 1040 tax return S. 2012 1040 tax return citizens and resident aliens who work abroad or who have income earned in foreign countries. 2012 1040 tax return If you are a U. 2012 1040 tax return S. 2012 1040 tax return citizen or resident alien, your worldwide income generally is subject to U. 2012 1040 tax return S. 2012 1040 tax return income tax, regardless of where you are living. 2012 1040 tax return Also, you are subject to the same income tax filing requirements that apply to U. 2012 1040 tax return S. 2012 1040 tax return citizens or resident aliens living in the United States. 2012 1040 tax return Expatriation tax provisions apply to U. 2012 1040 tax return S. 2012 1040 tax return citizens who have renounced their citizenship and long-term residents who have ended their residency. 2012 1040 tax return These provisions are discussed in chapter 4 of Publication 519, U. 2012 1040 tax return S. 2012 1040 tax return Tax Guide for Aliens. 2012 1040 tax return Resident alien. 2012 1040 tax return   A resident alien is an individual who is not a citizen or national of the United States and who meets either the green card test or the substantial presence test for the calendar year. 2012 1040 tax return Green card test. 2012 1040 tax return You are a U. 2012 1040 tax return S. 2012 1040 tax return resident if you were a lawful permanent resident of the United States at any time during the calendar year. 2012 1040 tax return This is known as the green card test because resident aliens hold immigrant visas (also known as green cards). 2012 1040 tax return Substantial presence test. 2012 1040 tax return You are considered a U. 2012 1040 tax return S. 2012 1040 tax return resident if you meet the substantial presence test for the calendar year. 2012 1040 tax return To meet this test, you must be physically present in the United States on at least: 31 days during the current calendar year, and A total of 183 days during the current year and the 2 preceding years, counting all the days of physical presence in the current year, but only 1/3 the number of days of presence in the first preceding year, and only 1/6 the number of days in the second preceding year. 2012 1040 tax return Example. 2012 1040 tax return You were physically present in the United States on 120 days in each of the years 2011, 2012, and 2013. 2012 1040 tax return To determine if you meet the substantial presence test for 2013, count the full 120 days of presence in 2013, 40 days in 2012 (1/3 of 120), and 20 days in 2011 (1/6 of 120). 2012 1040 tax return Because the total for the 3-year period is 180 days, you are not considered a resident under the substantial presence test for 2013. 2012 1040 tax return   For more information on resident and nonresident status, the tests for residence, and the exceptions to them, see Publication 519. 2012 1040 tax return Filing information. 2012 1040 tax return    Chapter 1 contains general filing information, such as: Whether you must file a U. 2012 1040 tax return S. 2012 1040 tax return tax return, When and where to file your return, How to report your income if it is paid in foreign currency, How to treat a nonresident alien spouse as a U. 2012 1040 tax return S. 2012 1040 tax return resident, and Whether you must pay estimated tax. 2012 1040 tax return Withholding tax. 2012 1040 tax return    Chapter 2 discusses the withholding of income, social security, and Medicare taxes from the pay of U. 2012 1040 tax return S. 2012 1040 tax return citizens and resident aliens. 2012 1040 tax return Self-employment tax. 2012 1040 tax return    Chapter 3 discusses who must pay self-employment tax. 2012 1040 tax return Foreign earned income exclusion and housing exclusion and deduction. 2012 1040 tax return    Chapter 4 discusses income tax benefits that apply if you meet certain requirements while living abroad. 2012 1040 tax return You may qualify to treat up to $97,600 of your income as not taxable by the United States. 2012 1040 tax return You also may be able to either deduct part of your housing expenses from your income or treat a limited amount of income used for housing expenses as not taxable by the United States. 2012 1040 tax return These benefits are called the foreign earned income exclusion and the foreign housing deduction and exclusion. 2012 1040 tax return   To qualify for either of the exclusions or the deduction, you must have a tax home in a foreign country and earn income from personal services performed in a foreign country. 2012 1040 tax return These rules are explained in chapter 4. 2012 1040 tax return   If you are going to exclude or deduct your income as discussed above, you must file Form 2555, Foreign Earned Income, or Form 2555-EZ, Foreign Earned Income Exclusion. 2012 1040 tax return Exemptions, deductions, and credits. 2012 1040 tax return    Chapter 5 discusses exemptions, deductions, and credits you may be able to claim on your return. 2012 1040 tax return These are generally the same as if you were living in the United States. 2012 1040 tax return However, if you choose to exclude foreign earned income or housing amounts, you cannot deduct or exclude any item or take a credit for any item that is related to the amounts you exclude. 2012 1040 tax return Among the topics discussed in chapter 5 are: Exemptions, Contributions to foreign organizations, Foreign moving expenses, Contributions to individual retirement arrangements (IRAs), and Foreign taxes. 2012 1040 tax return Tax treaty benefits. 2012 1040 tax return    Chapter 6 discusses some benefits that are common to most tax treaties and explains how to get help if you think you are not receiving a treaty benefit to which you are entitled. 2012 1040 tax return It also explains how to get copies of tax treaties. 2012 1040 tax return How to get tax help. 2012 1040 tax return    Chapter 7 is an explanation of how to get information and assistance from the IRS. 2012 1040 tax return Questions and answers. 2012 1040 tax return   Frequently asked questions and answers to those questions are presented in the back of the publication. 2012 1040 tax return Comments and suggestions. 2012 1040 tax return   We welcome your comments about this publication and your suggestions for future editions. 2012 1040 tax return   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. 2012 1040 tax return NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. 2012 1040 tax return Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. 2012 1040 tax return   You can send us comments from www. 2012 1040 tax return irs. 2012 1040 tax return gov/formspubs/. 2012 1040 tax return Click on “More Information” and then on “Comment on Tax Forms and Publications. 2012 1040 tax return ”   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. 2012 1040 tax return Ordering forms and publications. 2012 1040 tax return   Visit www. 2012 1040 tax return irs. 2012 1040 tax return gov/formspubs/ to download forms and publications, call 1-800-829-3676, or write to the address below and receive a response within 10 days after your request is received. 2012 1040 tax return Internal Revenue Service 1201 N. 2012 1040 tax return Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. 2012 1040 tax return   If you have a tax question, check the information available on IRS. 2012 1040 tax return gov or call 1-800-TAX–FORM (1-800-829-1040). 2012 1040 tax return We cannot answer tax questions sent to either of the above addresses. 2012 1040 tax return Prev  Up  Next   Home   More Online Publications