Taxation...

TAXATION OF BENEFITS

Determining Whether Benefits Are Includible in Taxable Income 

A. Procedure
You must include Social Security benefits in the gross income of a taxpayer in an amount equal to the lesser of: 
            o One-half of the net benefits received during the taxable year; or 
            o One-half of the sum derived by subtracting a "base amount" from the taxpayers "modified adjusted gross income" plus                one-half of the Social Security benefits received. 

B. Definitions 
    1. Base Amounts
        The base amounts are: 
            o $32,000 for a couple filing a joint return; 
            o Zero for a married person filing a separate return who has not lived apart from his spouse during the entire year; and 
            o $25,000 in all other cases 

    2. Modified Adjusted Gross Income
        The modified adjusted gross income is the adjusted gross income without considering Social Security benefits but adding in: 
            o tax exempt interest; 
            o foreign earned income exclusions; 
            o foreign housing cost; 
            o income received from sources in Puerto Rico and certain possessions of the U.S. 

THE SOCIAL SECURITY BENEFIT STATEMENT 

CITATION
Section 6050F of the Internal Revenue Code 

NOTE: REFER ALL TAX RELATED QUESTIONS TO IRS. 

A. KINDS OF FORMS 
    1. Statements
        The two basic statements used to notify beneficiaries that a portion of  their Social Security benefits may be taxable are: 
        a. SSA-1099, Social Security Benefit Statement, issued to U.S. citizens and residents; and 
        b. 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 is provided with the SSA-1099 for beneficiary's use in determining whether any part of the benefit is taxable  for Federal income tax purposes. 

B. POLICY 
    1. Issuance
        SSA is required to issue all statements by January 31 of each year. Corrected and replacement statements are issued as required through April 14th. 
        Statements will not be issued after April 14 except in special circumstances. 
    2. Mailing
        Statements are mailed first class between January 2 and 29. Sequence of mailing is based on the terminal ZIP code digit.