Effective Dates: 12/28/2023 - Present Previous | Next

TN 5 (12-23)

GN 05001.005 Taxation of Benefits

A. Introduction

This chapter defines a “social security benefit” and explains how to handle taxation of benefits inquiries.

Some beneficiaries have to pay federal income taxes on their Social Security benefits. This usually happens if they have other substantial income (such as wages, self-employment, interest, dividends and other taxable income that individuals report on their tax returns) in addition to their benefits. No one pays federal income tax on more than 85 percent of their Social Security benefits based on the IRS rules.

Equivalent tier 1 railroad retirement benefits are the part of tier 1 benefits that a railroad employee or beneficiary would have been entitled to receive under the social security system. They are commonly called the Social Security Equivalent Benefit (SSEB) portion of tier 1 benefits. Individuals, who receive these benefits, receive a Form SSA-1099, Social Security Benefit Statement, or Form RRB-1099, Payments by the Railroad Retirement Board, or Form SSA-1042S, Social Security Benefit Statement.

B. Process

1. Statements to Beneficiaries

Every January Social Security issues a Form SSA-1099 (Social Security Benefit Statement) to individuals who in the previous year:

  • •

    received benefits; or

  • •

    repaid benefits

NOTE: Medicare-only uninsured beneficiaries (BIC Ms) and Medicare-only insured beneficiaries (e.g., BIC T, BIC TA,BIC TC1, etc.) do not receive an SSA-1099 or SSA-1042S. If Medicare-only beneficiaries request proof of their out-of-pocket Medicare premiums, offer to send them a benefit verification letter. Type the monthly premium amount for 12 months in the remarks section.

2. Information to the Internal Revenue Service (IRS)

Social Security gives the same information included on the SSA-1099 or SSA-1042S to the IRS. SSA is required to provide the SSN on the Social Security Benefit Statement (SSA-1099) to notify recipients and the Internal Revenue Service of SSA benefits that are subject to income tax.

To Link to this section - Use this URL:
http://policy.ssa.gov/poms.nsf/lnx/0205001005
GN 05001.005 - Taxation of Benefits - 12/28/2023
Batch run: 12/28/2023
Rev:12/28/2023