taxmap/pubs/p915004.htm#en_us_publink100097901You may be entitled to deduct certain amounts related to the benefits you receive.
taxmap/pubs/p915004.htm#en_us_publink100097902You 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. If you received a lumpsum 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. If the amount you repay is more than $3,000, you may be able to claim a tax credit instead. 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.
taxmap/pubs/p915004.htm#en_us_publink100097903You 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.
Legal expenses for collecting the taxable part of your benefits are deductible as a miscellaneous itemized deduction on Schedule A (Form 1040), line 23.
taxmap/pubs/p915004.htm#en_us_publink100097904In some situations, your Form SSA1099 or Form RRB1099 will show that the total benefits you repaid (box 4) are more than the gross benefits (box 3) you received. 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. Do not use Worksheet 1 in this case. 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.
If you have any questions about this negative figure, contact your local SSA office or your local RRB field office.
taxmap/pubs/p915004.htm#en_us_publink100097905If you and your spouse file a joint return, and your Form SSA1099 or RRB1099 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. You do this to get your net benefits when figuring if your combined benefits are taxable.
taxmap/pubs/p915004.htm#en_us_publink100097906John and Mary file a joint return for 2008. John received Form SSA1099 showing $3,000 in box 5. Mary also received Form SSA1099 and the amount in box 5 was ($500). 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.
taxmap/pubs/p915004.htm#en_us_publink100097907If the total amount shown in box 5 of all of your Forms SSA1099 and RRB1099 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.
taxmap/pubs/p915004.htm#en_us_publink100097908If this deduction is $3,000 or less, it is subject to the 2%ofadjustedgrossincome limit that applies to certain miscellaneous itemized deductions. Claim it on Schedule A (Form 1040), line 23.
taxmap/pubs/p915004.htm#en_us_publink100097909If this deduction is more than $3,000, you should figure your tax two ways:
 Figure your tax for 2008 with the itemized deduction included on Schedule A, line 28.
 Figure your tax for 2008 in the following steps:
 Figure the tax without the itemized deduction included on Schedule A, line 28.
 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. Then refigure the tax for that year.
 Subtract the total of the refigured tax amounts in (b) from the total of your actual tax amounts.
 Subtract the result in (c) from the result in (a).
Compare the tax figured in methods (1) and (2). Your tax for 2008 is the smaller of the two amounts. If method (1) results in less tax, take the itemized deduction on Schedule A (Form 1040), line 28. If method (2) results in less tax, claim a credit for the amount from step 2(c) above on Form 1040, line 68, and write "I.R.C. 1341" in the margin to the left of line 68. If both methods produce the same tax, deduct the repayment on Schedule A (Form 1040), line 28.
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Worksheet 1.  Figuring Your Taxable Benefits   
Before you begin:  If you are married filing separately and you lived apart from your spouse for all of 2008, enter "D" to the right of the word "benefits" on Form 1040, line 20a, or Form 1040A, line 14a.
 Do not use this worksheet if you repaid benefits in 2008 and your total repayments (box 4 of Forms SSA1099 and RRB1099) were more than your gross benefits for 2008 (box 3 of Forms SSA1099 and RRB1099). None of your benefits are taxable for 2008. For more information, see Repayments More Than Gross Benefits.
 1.  Enter the total amount from box 5 of ALL your Forms SSA1099 and RRB1099. Also enter this amount on Form 1040, line 20a, or Form 1040A, line 14a  1.       2.  Enter onehalf of line 1  2.     3.  Enter the total of 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.     4.  Enter the amount, if any, from Form 1040 or 1040A, line 8b  4.     5.  Form 1040 filers: Enter the total of any exclusions/adjustments for:  Qualified U.S. savings bond interest (Form 8815, line 14)
 Adoption benefits (Form 8839, line 30)
 Foreign earned income or housing (Form 2555, lines 45 and 50, or Form 2555EZ, line 18), and
 Certain income of bona fide residents of American Samoa (Form 4563, line 15) or Puerto Rico
Form 1040A filers: Enter the total of any exclusions for:  Qualified U.S. savings bond interest (Form 8815, line 14)
 Adoption benefits (Form 8839, line 30)
 5.     6.  Add lines 2, 3, 4, and 5  6.     7.  Form 1040 filers: Enter the amounts from Form 1040, lines 23 through 32, and any writein adjustments you entered on the dotted line next to line 36. Form 1040A filers: Enter the amounts from Form 1040A, lines 16 and 17  7.     8.  Is the amount on line 7 less than the amount on line 6?        No.   None of your social security benefits are taxable. Enter 0 on Form 1040, line 20b, or Form 1040A, line 14b.        Yes.  Subtract line 7 from line 6  8.     9.  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 2008, enter $25,000
 9.      Note. If you are married filing separately and you lived with your spouse at any time in 2008, skip lines 9 through 16; multiply line 8 by 85% (.85) and enter the result on line 17. Then go to line 18.      10.  Is the amount on line 9 less than the amount on line 8?        No.   None of your benefits are taxable. Enter 0 on Form 1040, line 20b, or on Form 1040A, line 14b. If you are married filing separately and you lived apart from your spouse for all of 2008, be sure you entered "D" to the right of the word "benefits" on Form 1040, line 20a, or on Form 1040A, line 14a.        Yes.  Subtract line 9 from line 8  10.     11.  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 2008  11.     12.  Subtract line 11 from line 10. If zero or less, enter 0  12.     13.  Enter the smaller of line 10 or line 11  13.     14.  Enter onehalf of line 13  14.     15.  Enter the smaller of line 2 or line 14  15.     16.  Multiply line 12 by 85% (.85). If line 12 is zero, enter 0  16.     17.  Add lines 15 and 16  17.     18.  Multiply line 1 by 85% (.85)  18.     19.  Taxable benefits. Enter the smaller of line 17 or line 18. Also enter this amount on Form 1040, line 20b, or Form 1040A, line 14b  19.       If you received a lumpsum payment in 2008 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.     

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Worksheet 2.  Figure Your Additional Taxable Benefits (From a LumpSum Payment for a Year After 1993)  Enter earlier year   
1.  Enter the total amount from box 5 of ALL your Forms SSA1099 and RRB1099 for the earlier year, plus the lumpsum payment for the earlier year received after that year  1.        Note. If line 1 is zero or less, skip lines 2 through 20 and enter 0 on line 21. Otherwise, go on to line 2.        2.  Enter onehalf of line 1  2.     3.  Enter your adjusted gross income for the earlier year  3.     4.  Enter the total of any exclusions/adjustments you claimed in the earlier year for:  Adoption benefits (Form 8839)
 Qualified U.S. 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 2007) (Form 1040, page 1)
 Foreign earned income or housing (Form 2555 or Form 2555EZ)
 Certain income of bona fide residents of American Samoa (Form 4563) or Puerto Rico
 4.     5.  Enter any taxexempt interest received in the earlier year  5.     6.  Add lines 2 through 5  6.     7.  Enter your taxable benefits for the earlier year  7.     8.  Subtract line 7 from line 6  8.     9.  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.      Note. 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% (.85) and enter the result on line 17. Then go to line 18.      10.  Is the amount on line 8 more than the amount on line 9?     No. Skip lines 10 through 20 and enter 0 on line 21.     Yes. Subtract line 9 from line 8  10.     11.  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.     12.  Subtract line 11 from line 10. If zero or less, enter 0  12.     13.  Enter the smaller of line 10 or line 11  13.     14.  Enter onehalf of line 13  14.     15.  Enter the smaller of line 2 or line 14  15.     16.  Multiply line 12 by 85% (.85). If line 12 is zero, enter 0  16.     17.  Add lines 15 and 16  17.     18.  Multiply line 1 by 85% (.85)  18.     19.  Refigured taxable benefits. Enter the smaller of line 17 or line 18  19.     20.  Enter your taxable benefits for the earlier year (or as refigured due to a previous lumpsum payment for the year)  20.     21.  Additional taxable benefits. Subtract line 20 from line 19. Also enter this amount on Worksheet 4, line 20  21.       Do not file an amended return for this earlier year. Complete a separate Worksheet 2 or Worksheet 3 for each earlier year for which you received a lumpsum payment in 2008.  

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Worksheet 3.  Figure Your Additional Taxable Benefits (From a LumpSum Payment for a Year Before 1994)  Enter earlier year   
1.  Enter the total amount from box 5 of ALL your Forms SSA1099 and RRB1099 for the earlier year, plus the lumpsum payment for the earlier year received after that year  1.       Note. If line 1 is zero or less, skip lines 2 through 13 and enter 0 on line 14. Otherwise, go on to line 2.       2.  Enter onehalf of line 1  2.    3.  Enter your adjusted gross income for the earlier year  3.    4.  Enter the total of any exclusions/adjustments you claimed in the earlier year for:  Qualified U.S. savings bond interest (Form 8815)
 Foreign earned income or housing (Form 2555 or Form 2555EZ)
 Certain income of bona fide residents of American Samoa (Form 4563) or Puerto Rico
 4.    5.  Enter any taxexempt interest received in the earlier year  5.    6.  Add lines 2 through 5  6.    7.  Enter your taxable benefits for the earlier year  7.    8.  Subtract line 7 from line 6  8.    9.  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.    10.  Is the amount on line 8 more than the amount on line 9? No. Skip lines 10 through 13 and enter 0 on line 14. Yes. Subtract line 9 from line 8.  10.    11.  Enter onehalf of line 10  11.    12.  Refigured taxable benefits. Enter the smaller of line 2 or line 11  12.    13.  Enter your taxable benefits for the earlier year (or as refigured due to a previous lumpsum payment for the year)  13.    14.  Additional taxable benefits. Subtract line 13 from line 12. Also enter this amount on Worksheet 4, line 20  14.      Do not file an amended return for this earlier year. Complete a separate Worksheet 2 or Worksheet 3 for each earlier year for which you received a lumpsum payment in 2008.  

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Worksheet 4.  Figure Your Taxable Benefits Under the LumpSum Election Method (Use With Worksheet 2 or 3)       
Complete Worksheet 1 and Worksheets 2 and 3 as appropriate before completing this worksheet.  1.  Enter the total amount from box 5 of ALL your Forms SSA1099 and RRB1099 for 2008, minus the lumpsum payment for years before 2008  1.       Note. If line 1 is zero or less, skip lines 2 through 18, enter 0 on line 19 and go to line 20. Otherwise, go on to line 2.       2.  Enter onehalf of line 1  2.    3.  Enter the amount from Worksheet 1, line 3  3.    4.  Enter the amount from Worksheet 1, line 4  4.    5.  Enter the amount from Worksheet 1, line 5  5.    6.  Add lines 2, 3, 4, and 5  6.    7.  Enter the amount from Worksheet 1, line 7  7.    8.  Subtract line 7 from line 6  8.    9.  Enter the amount from Worksheet 1, line 9. But if you are married filing separately and lived with your spouse at any time during 2008, skip lines 9 through 16; multiply line 8 by 85% (.85) and enter the result on line 17. Then, go to line 18  9.    10.  Is the amount on line 8 more than the amount on line 9? No. Skip lines 10 through 18, enter 0 on line 19, and go to line 20. Yes. Subtract line 9 from line 8  10.    11.  Enter the amount from Worksheet 1, line 11  11.    12.  Subtract line 11 from line 10. If zero or less, enter 0  12.    13.  Enter the smaller of line 10 or line 11  13.    14.  Enter onehalf of line 13  14.    15.  Enter the smaller of line 2 or line 14  15.    16.  Multiply line 12 by 85% (.85). If line 12 is zero, enter 0  16.    17.  Add lines 15 and 16  17.    18.  Multiply line 1 by 85% (.85)  18.    19.  Enter the smaller of line 17 or line 18  19.    20.  Enter the total of the amounts from Worksheet 2, line 21, and Worksheet 3, line 14, for all earlier years for which the lumpsum payment was received  20.    21.  Taxable benefits under lumpsum election method. Add lines 19 and 20  21.    Next. Is line 21 above smaller than Worksheet 1, line 19? No. Do not use this method to figure your taxable benefits. Follow the instructions on Worksheet 1 to report your benefits. Yes. You can elect to report your taxable benefits under this method. To elect this method:     Enter "LSE" to the left of Form 1040, line 20a, or Form 1040A, line 14a.
 If line 21 above is zero, follow the instructions in line 10 for "No" on Worksheet 1. Otherwise:
 Enter the amount from Worksheet 1, line 1 on Form 1040, line 20a, or on Form 1040A, line 14a.
 Enter the amount from line 21 above on Form 1040, line 20b, or on 1040A, line 14b.
 If you are married filing separately and you lived apart from your spouse for all of 2008, enter "D" to the right of the word "benefits" on Form 1040, line 20a, or Form 1040A, line 14a.
 
