TN 6 (01-08)
GN 05002.005 The Social Security Benefit Statement - Introduction
Section 6050F of the Internal Revenue Code
In accordance with the provisions of Public Law 98-21 (the Social Security Amendments of 1983), SSA began issuing Social Security Benefit Statements (Forms SSA-1099 and 1042) in 1985 for tax year 1984 when Social Security benefits first became subject to the Federal Income Tax.
CAUTION: Do not confuse the Social Security Benefit Statement with the Social Security Statement. Use the Social Security Benefit Statement to determine if a beneficiary’s benefits are taxable and the amount they need to report to the Internal Revenue Service (IRS). The Social Security Statement provides workers with their wages and self-employment income, estimates of tax contributions and potential benefits.
A. Kinds of Forms
The two basic statements used to notify beneficiaries that a portion of their Social Security benefits may be taxable are:
SSA-1099, Social Security Benefit Statement, issued to U.S. citizens and residents; and
SSA-1042S, Social Security Benefit Statement, issued to persons outside the U.S. who are not U.S. citizens or residents.
2. IRS Notice
IRS Notice 703, Read This to See If Your Social Security Benefits May Be Taxable is provided with the SSA-1099 for a beneficiary's use in determining whether any part of the benefit is taxable for Federal income tax purposes.
The policy includes the issuance and mailing of the SSA-1099.
SSA is required to issue all benefit statements by January 31 of each year. If a beneficiary requests a replacement benefit statement for the current tax year before January 31, advise the beneficiary that he or she must wait until after January 31 before requesting a replacement benefit statement. Do not attempt to request a replacement SSA-1099 before January 31.
A printing contractor mails the benefit statement first class between January 3 and 29 each year. The contractor bases the sequence of mailing on the terminal ZIP code digit.
C. How the End-of-Year Benefit Statement Process Works
How to Compute Taxable Benefits that are Paid and Repaid
The benefit statement process:
builds certain events from the MBR
uses events on PHUS
Similar events are totaled and resulting amounts along with corresponding remarks are displayed under the descriptions of the various boxes and legends on the benefit statement.
The descriptive remark amounts are totaled and sums entered in the appropriate boxes on the benefit statement.
For a detailed explanation, see SM 00630.040 How the End-of-Year Benefit Statement Process Works.
D. Variants for Form 1099
Several versions of Form 1099 are used, depending on the nature of the income transaction:
1. SSA-1099-SM (Self-Mailer)
A commercial contractor prints and mails Form SSA-1099-SM. Payment Update Total Tax Year (PUTTY) is a subsystem that generates the computation data of benefits paid to domestic and foreign Title II beneficiaries for their End of Year Tax Statements. The PUTTY system reads the payment history data from the MBR and PHUS to create end of year benefit tax statements. PUTTY provides this information on magnetic tapes that are then used by a contractor/vendor to prepare these benefit statements. Tapes include information for all Title II beneficiaries who receive or repay benefits during the previous calendar year (closed tax year) excluding those records with End of Year Benefit Tax Statement alerts.
2. SSA-1099-SM-UD (Updated)
A commercial contractor prints and mails Form SSA-1099-SM-UD from the Supplemental PUTTY run, which includes all benefits paid and repaid through December of the closed tax year. This benefit statement replaces SSA-1099-SM and will be dated and mailed in the last week of January.
3. SSA-1099-SM-C (Corrected)
An automated Central Office Systems process issues Form SSA-1099-SM-C. The National Computer Center (NCC) prints and mails the benefit statements. These forms include those processed from End of Year Benefit Tax Statement alerts.
4. SSA-1099-U3 (Manual Update)
A PSC technician manually prepares and mails Form SSA-1099-U3 when the automated statement cannot be issued (see SM 00630.070 and SM 00630.081B.).
5. Spanish Language Forms
There are three Spanish language benefit statements.
SSA-1099-SM-SP, the original Spanish-language benefit statement is printed and mailed by a commercial contractor to all beneficiaries in Puerto Rico.
SSA-1099-SP is a Spanish-language form used for issuing replacement benefit statements. This form is available in offices on the Spanish Publication List (List 345).
SSA-1042S-SP is the foreign Spanish-language benefit statement printed and mailed by the commercial contractor to all beneficiaries who have alien tax coding and live in Spain, Mexico, Argentina, Bolivia, Chile, Colombia, Costa Rica, Dominican Republic, El Salvador, Guatemala, Peru, Honduras, Nicaragua, Panama, Paraguay, and Venezuela.
6. SSA-1099-F2-INST (Instruction Sheet)
This is an instruction sheet which explains items on the self-mailer, corrected and replacement SSA-1099s benefit statements as well as information needed to determine if Social Security benefits may be taxable. The printing contractor encloses these forms with the cited statements.
NOTE: Internal Revenue Services regulations require that SSA issue Forms 1099-MISC to representatives who receive, by direct payment from SSA, fees of $600 or more in a calendar year. To comply with this requirement, an appointed representative who 1) is an attorney or a non-attorney participant in the direct fee payment demonstration project, 2) is appointed to represent the claimant on or after January 1, 2007, and 3) has not waived a fee or direct payment, must provide SSA the information to issue a Form 1099-MISC before SSA effectuates a favorable decision that yields past-due benefits.
CAUTION: Do not confuse the Form 1099-MISC with any of the SSA-1099s mentioned. Form 1099-MISC is an IRS form.