Social Security and Railroad Retirement Equivalent Form 1040 – Line 22 Pub 4491 – Part 3 – Lesson 15 Pub 4012 – Page D – 25 NTTC Training – 2013

Intake and Interview Ask for Social Security statement SSA-1099 and/or Railroad Retirement RRB-1099 if line 13 is checked either Yes or Unsure. If any lump-sum payments, does taxpayer have returns for those years? NTTC Training – TY2015 NTTC Training – 2013

NTTC Training Slides Fabricated person Make sure to use Form SSA-1099 and not the estimate for the next year. Sometimes taxpayers mistakenly bring in that form. NTTC Training – TY2015 NTTC Training – 2013

Social Security Income in TaxWise Select Wkt1 from Tree Enter data for both Taxpayer and Spouse Check for Federal withholding Add Medicare payments and enter on Medicare line, it will carry automatically to Sch A NTTC Training – TY2015 NTTC Training – 2013

Add SS Income NTTC Training Slides Enter data as indicated for Taxpayer and Spouse. Add Medicare Parts, if shown, together and enter on line Medicare To Schedule A if not self-employment health care deduction which is out of scope Railroad Tier 1 benefits are SS equivalent – more later NTTC Training – TY2015 NTTC Training – 2013

Lump-Sum Social Security Benefits paid may include lump-sum payments for prior years Prior year amounts will show in DESCRIPTION block of Form SSA-1099 All must be included in the current return Compare whether refund/tax owed changes when all entered for current year versus allocating appropriate amounts to prior year(s) Sometimes if a taxpayer files for disability, it takes a long time to work through the approval process. This can result in social security allocated to several years. An example is shown on the next chart. For multiple year social security it may be possible that there isn’t any tax impact if all of the social security is entered as lump-sum for the current year. If there is an impact it may be better to use lump sum worksheets for each year; however, the AGI, taxable social security, total social security and tax exempt interest are needed for each year. If lump sum is used, taxpayer must have tax returns available for those years. NTTC Training – TY2015 NTTC Training – 2013 6

Lump-Sum Distribution None None Sample SSA-1099 Lump-Sum Distribution If attorney fees are included in the Description of Amount in Box 3 section, those attorney fees can be included as an itemized deduction on line 23 of the Schedule A, but only to the extend that the income is taxable. For example, if one half of the Social Security benefit is taxable than only half of the attorney fees are deductible. NTTC Training – TY2015 NTTC Training – 2013

Start With 1040 Wkt1 In TaxWise, at the bottom of 1040 Wkt1 you’ll see “Lump Sum Payment…” Enter amount(s) for 2015 then click here and link (F9) for worksheet Taxpayer MUST have previous year(s) return(s) x x NTTC Training – TY2015 NTTC Training – 2013

Complete one worksheet for each year Lump-Sum Worksheet 2013 2015 2015 Complete one worksheet for each year Click 1 – Enter the previous year benefits were received. A separate worksheet will be required for each year. In this example worksheets would be required for 2014, 2013, and 2012 Click 2 – Enter filing status for the year indicated. Click 3 – Enter the total amount of social security received for the earlier year and reported for that year Click 4 – Enter the lump-sum payment for the earlier year received this year Click 5 – Enter the adjusted gross income reported on the tax return for the earlier year. Click 6 – Enter taxable social security, if any, reported on the tax return for the earlier year. Note: You have to have all of this information (ideally prior year returns) for the years for which payments were received NTTC Training – TY2015 NTTC Training – 2013

Comments… Taxpayer must have copies of previous year tax return(s) Be sure to enter any SS income received by taxpayer and spouse in previous year Be sure to check previous return for any tax-exempt interest (Line 8b) [line 5 on worksheet] NTTC Training – TY2015 NTTC Training – 2013

Railroad Retirement Benefits Pub 4012 Pg D-25 Railroad Retirement Tier 1 Blue form RRB-1099 Same Rules as Social Security Enter data on Railroad Tier 1 line on Wkt1 – do not use Social Security line Enter Medicare B and D on Medicare line NTTC Training – TY2015 NTTC Training – 2013

RRB-1099 2015 21,320 -0- A316-23-1085 1 21,320 316-23-1085 JOHN CONDUCTOR 1 MAIN STREET ALBUQUERQUE, NM 87110 Click 1 – Box 5 Net Social Security Equivalent Benefit to be entered on Worksheet 1. Click 2 – Box 10 Federal Income Tax Withheld to be entered on Worksheet 1. Click 3 – Box 11 Medicare Premium Total to be entered on Worksheet 1. 1,258.80 3,192.00 NTTC Training – TY2015 NTTC Training – 2013

1040 Wkt1 – Railroad Retirement 2015 Click 1 – Net Social Security Equivalent Portion of tier 1 received this year from line 5 of RRB – 1099 Form. Be sure to enter the amount on Railroad tier 1 line, not Social security line . This will trigger an adjustment on the state return if any portion of your tier 1 is taxable. The Railroad Retirement Act specifically exempts benefits paid by the Railroad Retirement Board from all state and local taxes. Click 2 – Total Medicare payments from line 11 of RRB-1099 Form Click 3 – Federal tax withheld from line 10 of RRB-1099 form. NTTC Training – TY2015 NTTC Training – 2013

Railroad Retirement Benefits Railroad Retirement Tier 2 Green form RRB-1099 – R Taxed like pension. Taxation of Tier 2 Covered in Retirement income lesson NTTC Training – TY2015

Foreign Old Age Payments Canada Pension Plan, Quebec Pension Plan and Old Age Security from Canada and Germany By treaty are added to/treated like U.S. Social Security (Pub 915) Taxpayer must have converted amount into US dollars (bank statement shows) Other countries and pensions from all countries (other than above) out-of-scope NTTC Training – TY2015 NTTC Training – 2013

If Taxpayer does not have SSA-1099 Use SSA-4926 for 2016 (statement of benefits to be paid). Since there was no cost of living adjustment for 2016, the 2015 and 2016 benefits are the same. Taxpayer can set up account at https://secure.ssa.gov to get information Account at secure.ssa.gov is taxpayer responsibility. Requires taxpayer email address. Not a task for counselors. NTTC Training – TY2015 NTTC Training – 2013

Quality Review Check that all information transferred from Form(s) SSA-1099 to Wkt1 (particularly Federal Income Tax Withheld) If benefits are shown for multiple years, determine if lump-sum worksheets are needed For Form(s) RRB-1099 (Blue) make sure all information has been transferred to Wkt1 NTTC Training – TY2015 NTTC Training – 2013

Questions/Comments? NTTC Training – TY2015 NTTC Training – 2013