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Free 2006 Tax Software

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Free 2006 Tax Software

Free 2006 tax software Publication 600 - Main Contents Table of Contents Actual Expenses Optional Sales Tax Tables Instructions for the State and Local General Sales Tax Deduction WorksheetWhat if you lived in more than one state? What if you lived in more than one locality? What if your local general sales tax rate changed during 2006? What if you lived in more than one locality in the same state during 2006? Actual Expenses Generally, you can deduct the actual state and local general sales taxes (including compensating use taxes) you paid in 2006 if the tax rate was the same as the general sales tax rate. Free 2006 tax software However, sales taxes on food, clothing, medical supplies, and motor vehicles are deductible as a general sales tax even if the tax rate was less than the general sales tax rate. Free 2006 tax software If you paid sales tax on a motor vehicle at a rate higher than the general sales tax rate, you can deduct only the amount of tax that you would have paid at the general sales tax rate on that vehicle. Free 2006 tax software Motor vehicles include cars, motorcycles, motor homes, recreational vehicles, sport utility vehicles, trucks, vans, and off-road vehicles. Free 2006 tax software Also include any state and local general sales taxes paid for a leased motor vehicle. Free 2006 tax software Do not include sales taxes paid on items used in your trade or business. Free 2006 tax software To deduct your actual expenses, enter the amount on Schedule A, line 5, and enter “ST” on the dotted line to the left of the line 5 entry space. Free 2006 tax software You must keep your actual receipts showing general sales taxes paid to use this method. Free 2006 tax software Refund of general sales taxes. Free 2006 tax software   If you received a refund of state or local general sales taxes in 2006 for amounts paid in 2006, reduce your actual 2006 state and local general sales taxes by this amount. Free 2006 tax software If you received a refund of state or local general sales taxes in 2006 for prior year purchases, do not reduce your 2006 state and local general sales taxes by this amount. Free 2006 tax software But if you deducted your actual state and local general sales taxes in the earlier year and the deduction reduced your tax, you may have to include the refund in income on Form 1040, line 21. Free 2006 tax software See Recoveries in Pub. Free 2006 tax software 525 for details. Free 2006 tax software Optional Sales Tax Tables Instead of using your actual expenses, you can use the tables on pages 5 through 7 to figure your state and local general sales tax deduction. Free 2006 tax software You may also be able to add the state and local general sales taxes paid on certain specified items. Free 2006 tax software To figure your state and local general sales tax deduction using the tables, complete the worksheet below. Free 2006 tax software If your filing status is married filing separately, both you and your spouse elect to deduct sales taxes, and your spouse elects to use the optional sales tax tables, you also must use the tables to figure your state and local general sales tax deduction. Free 2006 tax software State and Local General Sales Tax Deduction Worksheet (See the instructions that begin on page 3. Free 2006 tax software ) Before you begin: See the instructions for line 1 on page 3 if: You lived in more than one state during 2006, or You had any nontaxable income in 2006. Free 2006 tax software   1. Free 2006 tax software Enter your state general sales taxes from the applicable table on page 5 or 6 (see page 3 of the instructions) 1. Free 2006 tax software $     Next. Free 2006 tax software If, for all of 2006, you lived only in Connecticut, the District of Columbia, Hawaii, Indiana, Kentucky, Maine, Maryland, Massachusetts, Michigan, Mississippi, New Jersey, Rhode Island, Virginia, or West Virginia, skip lines 2 through 5, enter -0- on line 6, and go to line 7. Free 2006 tax software Otherwise, go to line 2       2. Free 2006 tax software Did you live in Alaska, Arizona, Arkansas (Texarkana only), California (Los Angeles County only), Colorado, Georgia, Illinois, Louisiana, New York State, or North Carolina in 2006?         No. Free 2006 tax software Enter -0-                   Yes. Free 2006 tax software Enter your local general sales taxes from the applicable table on page 7 (see page 3 of the instructions)     2. Free 2006 tax software $       3. Free 2006 tax software Did your locality impose a local general sales tax in 2006? Residents of California, Nevada, and Texarkana, Arkansas, see page 3 of the instructions             No. Free 2006 tax software Skip lines 3 through 5, enter -0- on line 6, and go to line 7             Yes. Free 2006 tax software Enter your local general sales tax rate, but omit the percentage sign. Free 2006 tax software For example, if your local general sales tax rate was 2. Free 2006 tax software 5%, enter 2. Free 2006 tax software 5. Free 2006 tax software If your local general sales tax rate changed or you lived in more than one locality in the same state during 2006, see page 3 of the instructions. Free 2006 tax software (If you do not know your local general sales tax rate, contact your local government. Free 2006 tax software ) 3. Free 2006 tax software . Free 2006 tax software       4. Free 2006 tax software Did you enter -0- on line 2 above?             No. Free 2006 tax software Skip lines 4 and 5 and go to line 6             Yes. Free 2006 tax software Enter your state general sales tax rate (shown in the table heading for your state), but omit the percentage sign. Free 2006 tax software For example, if your state general sales tax rate is 6%, enter 6. Free 2006 tax software 0 4. Free 2006 tax software . Free 2006 tax software       5. Free 2006 tax software Divide line 3 by line 4. Free 2006 tax software Enter the result as a decimal (rounded to at least three places) 5. Free 2006 tax software . Free 2006 tax software       6. Free 2006 tax software Did you enter -0- on line 2 above?             No. Free 2006 tax software Multiply line 2 by line 3   6. Free 2006 tax software $     Yes. Free 2006 tax software Multiply line 1 by line 5. Free 2006 tax software If you lived in more than one locality in the same state during 2006, see page 4 of the instructions           7. Free 2006 tax software Enter your state and local general sales taxes paid on specified items, if any (see page 4 of the instructions) 7. Free 2006 tax software $   8. Free 2006 tax software Deduction for general sales taxes. Free 2006 tax software Add lines 1, 6, and 7. Free 2006 tax software Enter the result here and the total from all your state and local general sales tax deduction worksheets, if you completed more than one, on Schedule A, line 5. Free 2006 tax software Be sure to enter “ST” on the dotted line to the left of the entry space 8. Free 2006 tax software $     Instructions for the State and Local General Sales Tax Deduction Worksheet Line 1. Free 2006 tax software    If you lived in the same state for all of 2006, enter the applicable amount, based on your 2006 income and exemptions, from the optional state sales tax table for your state on page 5 or 6. Free 2006 tax software Read down the “At least-But less than” columns for your state and find the line that includes your 2006 income. Free 2006 tax software If married filing separately, do not include your spouse's income. Free 2006 tax software Your 2006 income is the amount shown on your Form 1040, line 38, plus any nontaxable items, such as the following. Free 2006 tax software Tax-exempt interest. Free 2006 tax software Veterans' benefits. Free 2006 tax software Nontaxable combat pay. Free 2006 tax software Workers' compensation. Free 2006 tax software Nontaxable part of social security and railroad retirement benefits. Free 2006 tax software Nontaxable part of IRA, pension, or annuity distributions. Free 2006 tax software Do not include rollovers. Free 2006 tax software Public assistance payments. Free 2006 tax software The exemptions column refers to the number of exemptions claimed on Form 1040, line 6d. Free 2006 tax software Do not include any additional exemptions you listed on Form 8914 for individuals displaced by Hurricane Katrina. Free 2006 tax software What if you lived in more than one state?    If you lived in more than one state during 2006, look up the table amount for each state using the above rules. Free 2006 tax software If there is no table for your state, the table amount is considered to be zero. Free 2006 tax software Multiply the table amount for each state you lived in by a fraction. Free 2006 tax software The numerator of the fraction is the number of days you lived in the state during 2006 and the denominator is the total number of days in the year (365). Free 2006 tax software Enter the total of the prorated table amounts for each state on line 1. Free 2006 tax software However, if you also lived in a locality during 2006 that imposed a local general sales tax, do not enter the total on line 1. Free 2006 tax software Instead, complete a separate worksheet for each state you lived in and enter the prorated amount for that state on line 1. Free 2006 tax software Example. Free 2006 tax software You lived in State A from January 1 through August 31, 2006 (243 days), and in State B from September 1 through December 31, 2006 (122 days). Free 2006 tax software The table amount for State A is $500. Free 2006 tax software The table amount for State B is $400. Free 2006 tax software You would figure your state general sales tax as follows. Free 2006 tax software State A: $500 x 243/365 = $333   State B: $400 x 122/365 = 134   Total = $467   If none of the localities in which you lived during 2006 imposed a local general sales tax, enter $467 on line 1 of your worksheet. Free 2006 tax software Otherwise, complete a separate worksheet for State A and State B. Free 2006 tax software Enter $333 on line 1 of the State A worksheet and $134 on line 1 of the State B worksheet. Free 2006 tax software Line 2. Free 2006 tax software   If you checked the “No” box, enter -0- on line 2, and go to line 3. Free 2006 tax software If you checked the “Yes” box and lived in the same locality for all of 2006, enter the applicable amount, based on your 2006 income and exemptions, from the optional local sales tax table for your locality on page 7. Free 2006 tax software Read down the “At least-But less than” columns for your locality and find the line that includes your 2006 income. Free 2006 tax software See the line 1 instructions on this page to figure your 2006 income. Free 2006 tax software The exemptions column refers to the number of exemptions claimed on Form 1040, line 6d. Free 2006 tax software Do not include any additional exemptions you listed on Form 8914 for individuals displaced by Hurricane Katrina. Free 2006 tax software What if you lived in more than one locality?   If you lived in more than one locality during 2006, look up the table amount for each locality using the above rules. Free 2006 tax software If there is no table for your locality, the table amount is considered to be zero. Free 2006 tax software Multiply the table amount for each locality you lived in by a fraction. Free 2006 tax software The numerator of the fraction is the number of days you lived in the locality during 2006 and the denominator is the total number of days in the year (365). Free 2006 tax software If you lived in more than one locality in the same state and the local general sales tax rate was the same for each locality, enter the total of the prorated table amounts for each locality in that state on line 2. Free 2006 tax software Otherwise, complete a separate worksheet for lines 2 through 6 for each locality and enter each prorated table amount on line 2 of the applicable worksheet. Free 2006 tax software Example. Free 2006 tax software You lived in Locality 1 from January 1 through August 31, 2006 (243 days), and in Locality 2 from September 1 through December 31, 2006 (122 days). Free 2006 tax software The table amount for Locality 1 is $100. Free 2006 tax software The table amount for Locality 2 is $150. Free 2006 tax software You would figure the amount to enter on line 2 as follows. Free 2006 tax software Note that this amount may not equal your local sales tax deduction, which is figured on line 6 of the worksheet. Free 2006 tax software Locality 1: $100 x 243/365 = $67   Locality 2: $150 x 122/365 = 50   Total = $117   Line 3. Free 2006 tax software   If you lived in California, check the “No” box if your combined state and local general sales tax rate is 7. Free 2006 tax software 25%. Free 2006 tax software Otherwise, check the “Yes” box and include on line 3 only the part of the combined rate that is more than 7. Free 2006 tax software 25%. Free 2006 tax software   If you lived in Nevada, check the “No” box if your combined state and local general sales tax rate is 6. Free 2006 tax software 5%. Free 2006 tax software Otherwise, check the “Yes” box and include on line 3 only the part of the combined rate that is more than 6. Free 2006 tax software 5%. Free 2006 tax software   If you lived in Texarkana, Arkansas, check the “Yes” box and enter “4. Free 2006 tax software 0” on line 3. Free 2006 tax software Your local general sales tax rate of 4. Free 2006 tax software 0% includes the additional 1. Free 2006 tax software 0% Arkansas state sales tax rate for Texarkana and the 1. Free 2006 tax software 5% sales tax rate for Miller County. Free 2006 tax software What if your local general sales tax rate changed during 2006?    If you checked the “Yes” box and your local general sales tax rate changed during 2006, figure the rate to enter on line 3 as follows. Free 2006 tax software Multiply each tax rate for the period it was in effect by a fraction. Free 2006 tax software The numerator of the fraction is the number of days the rate was in effect during 2006 and the denominator is the total number of days in the year (365). Free 2006 tax software Enter the total of the prorated tax rates on line 3. Free 2006 tax software Example. Free 2006 tax software Locality 1 imposed a 1% local general sales tax from January 1 through September 30, 2006 (273 days). Free 2006 tax software The rate increased to 1. Free 2006 tax software 75% for the period from October 1 through December 31, 2006 (92 days). Free 2006 tax software You would enter “1. Free 2006 tax software 189” on line 3, figured as follows. Free 2006 tax software January 1 - September 30: 1. Free 2006 tax software 00 x 273/365 = 0. Free 2006 tax software 748   October 1 - December 31: 1. Free 2006 tax software 75 x 92/365 = 0. Free 2006 tax software 441   Total = 1. Free 2006 tax software 189   What if you lived in more than one locality in the same state during 2006?    Complete a separate worksheet for lines 2 through 6 for each locality in your state if you lived in more than one locality in the same state during 2006 and either of the following applies. Free 2006 tax software Each locality did not have the same local general sales tax rate. Free 2006 tax software You lived in Texarkana, AR, or Los Angeles County, CA. Free 2006 tax software   To figure the amount to enter on line 3 of the worksheet for each locality in which you lived (except a locality for which you used the table on page 7 to figure your local general sales tax deduction), multiply the local general sales tax rate by a fraction. Free 2006 tax software The numerator of the fraction is the number of days you lived in the locality during 2006 and the denominator is the total number of days in the year (365). Free 2006 tax software Example. Free 2006 tax software You lived in Locality 1 from January 1 through August 31, 2006 (243 days), and in Locality 2 from September 1 through December 31, 2006 (122 days). Free 2006 tax software The local general sales tax rate for Locality 1 is 1%. Free 2006 tax software The rate for Locality 2 is 1. Free 2006 tax software 75%. Free 2006 tax software You would enter “0. Free 2006 tax software 666” on line 3 for the Locality 1 worksheet and “0. Free 2006 tax software 585” for the Locality 2 worksheet, figured as follows. Free 2006 tax software Locality 1: 1. Free 2006 tax software 00 x 243/365 = 0. Free 2006 tax software 666   Locality 2: 1. Free 2006 tax software 75 x 122/365 = 0. Free 2006 tax software 585   Line 6. Free 2006 tax software   If you lived in more than one locality in the same state during 2006, you should have completed line 1 only on the first worksheet for that state and separate worksheets for lines 2 through 6 for any other locality within that state in which you lived during 2006. Free 2006 tax software If you checked the “Yes” box on line 6 of any of those worksheets, multiply line 5 of that worksheet by the amount that you entered on line 1 for that state on the first worksheet. Free 2006 tax software Line 7. Free 2006 tax software    Enter on line 7 any state and local general sales taxes paid on the following specified items. Free 2006 tax software If you are completing more than one worksheet, include the total for line 7 on only one of the worksheets. Free 2006 tax software A motor vehicle (including a car, motorcycle, motor home, recreational vehicle, sport utility vehicle, truck, van, and off-road vehicle). Free 2006 tax software Also include any state and local general sales taxes paid for a leased motor vehicle. Free 2006 tax software If the state sales tax rate on these items is higher than the general sales tax rate, only include the amount of tax you would have paid at the general sales tax rate. Free 2006 tax software An aircraft or boat, if the tax rate was the same as the general sales tax rate. Free 2006 tax software A home (including a mobile home or prefabricated home) or substantial addition to or major renovation of a home, but only if the tax rate was the same as the general sales tax rate and any of the following applies. Free 2006 tax software Your state or locality imposes a general sales tax directly on the sale of a home or on the cost of a substantial addition or major renovation. Free 2006 tax software You purchased the materials to build a home or substantial addition or to perform a major renovation and paid the sales tax directly. Free 2006 tax software Under your state law, your contractor is considered your agent in the construction of the home or substantial addition or the performance of a major renovation. Free 2006 tax software The contract must state that the contractor is authorized to act in your name and must follow your directions on construction decisions. Free 2006 tax software In this case, you will be considered to have purchased any items subject to a sales tax and to have paid the sales tax directly. Free 2006 tax software   Do not include sales taxes paid on items used in your trade or business. Free 2006 tax software If you received a refund of state or local general sales taxes in 2006, see Refund of general sales taxes on page 1. Free 2006 tax software Prev  Up  Next   Home   More Online Publications
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Trusts

It is a common misconception that trusts, or trust funds as they are commonly called, are only useful for wealthy people. When set up properly, trusts can be appropriate for people with minor children or those who want to avoid having their estate go through probate upon death. These are basic facts about trusts – but, be sure to consult a licensed attorney experienced with estate planning and trust matters before making any final decisions about if one is right for you.

How Trusts Work

Creating a trust (or trust fund) establishes a legal entity that holds property or assets for the person who created it. The person who creates the trust can be called a grantor, donor, or settlor. When the grantor creates the trust he or she appoints a person or entity (like the trust department of a bank) to manage the trust. This person or entity is called a trustee. The grantor also chooses someone who will ultimately benefit from the trust, this person is the beneficiary. In some situations the grantor, trustee, and beneficiary are all the same person. In this case, the grantor should also appoint a successor trustee and beneficiary in case he or she dies or becomes incapacitated. A trust is a helpful estate planning tool because after death a trust doesn’t go through the probate process like a will does.

Reasons To Set Up A Trust

Some common reasons for setting up a trust include:

  • Providing for minor children or family members who are inexperienced or unable to handle financial matters
  • Providing for management of personal assets should one become unable to handle them oneself
  • Avoiding probate and immediately transferring assets to beneficiaries upon death
  • Reducing estate taxes and providing liquid assets to help pay for them
  • The terms of a will are public while the terms of a trust are not so privacy makes a trust an attractive option

Types of Trusts

Trusts can be living (inter vivos) or after-death (testamentary). A living trust is one that a grantor sets up while still alive and an after-death trust is usually established by a will after one’s death. Living trusts can be irrevocable (can’t be changed) or revocable (can be changed) although revocable trusts don’t receive the same tax shelter benefits as irrevocable ones do. The most popular type is the revocable living trust. If there’s a specific purpose in mind for the trust, dozens of different options exist. Some examples include charitable trusts, bypass trusts, spendthrift trusts, and life insurance trusts. New laws have even established a trust that will care for a pet after one’s death.

Setting Up A Trust

Once you’ve decided to set up a trust it is important to remember that a trust, by design, can be very flexible and a grantor has the right – and should take advantage of this right - within the law, to tailor it to meet the anticipated the needs of the beneficiary. Working with an experienced attorney that specializes in estate and trust issues and knows the specific state regulations can help get the maximum benefit from the trust.
Some things to consider when setting up the trust include:

  • The grantor has the right to specify exactly how the money in the trust is invested. The grantor and the trustee might have very different ideas about investment strategies, so make sure this gets clearly defined.
  • The grantor has the right to specify exactly how the assets should be divvied up down to details like including an annual cost of living adjustment for the beneficiary or paying for travel expenses for others to visit the beneficiary in the case of illness.
  • Always be sure to include a “trustee removal clause” – trusts that don’t have this clause take away the beneficiary’s right to fire the trustee if unsatisfied with the service being provided. Remember that the grantor can always add a provision that requires the beneficiary to select a new trustee from legitimate bank trust departments. Contact your state Department of Financial Institutions to get a list of licensed trust departments.
  • If the grantor wants to ensure that upon death any assets that remain outside of the trust are transferred to it, he or she should consider having a “pour-over” will to accomplish this.

Upon establishment of the trust the grantor must complete the process of setting up the trust by transferring his or her assets into the trust. Failure to do this properly makes the trust null and void. This means that upon the grantor’s death the state will decide who gets the assets and cares for minor children.

Protect Yourself From Trust Scams and Fraud

If someone approaches you to set up a trust be very cautious. Before signing any papers to create a living trust, will or other kind of trust make sure to explore all options and shop around for this service just as you would for any other. Also:

  • Avoid high-pressure sales tactics and high speed sales pitches.
  • Avoid salespeople who give the impression that AARP is backing or selling the product – AARP does not endorse living trust products.
  • Do your homework and get information about local probate laws from the Clerk or Register of Wills.
  • If someone tries to sell a living trust to you ask if they are an attorney. Some states restrict sales of living trusts by licensed attorneys.
  • If you buy a trust in your home or another location that is not the seller’s permanent place of business remember you are entitled to take advantage of the Cooling Off Rule and cancel the transaction within 3 business days.

The Free 2006 Tax Software

Free 2006 tax software 11. Free 2006 tax software   Social Security and Equivalent Railroad Retirement Benefits Table of Contents Introduction Useful Items - You may want to see: Are Any of Your Benefits Taxable? How To Report Your BenefitsHow Much Is Taxable? Examples Deductions Related to Your BenefitsRepayments More Than Gross Benefits Introduction This chapter explains the federal income tax rules for social security benefits and equivalent tier 1 railroad retirement benefits. Free 2006 tax software It explains the following topics. Free 2006 tax software How to figure whether your benefits are taxable. Free 2006 tax software How to use the social security benefits worksheet (with examples). Free 2006 tax software How to report your taxable benefits. Free 2006 tax software How to treat repayments that are more than the benefits you received during the year. Free 2006 tax software Social security benefits include monthly retirement, survivor, and disability benefits. Free 2006 tax software They do not include supplemental security income (SSI) payments, which are not taxable. Free 2006 tax software 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. Free 2006 tax software They are commonly called the social security equivalent benefit (SSEB) portion of tier 1 benefits. Free 2006 tax software If you received these benefits during 2013, you should have received a Form SSA-1099, Social Security Benefit Statement, or Form RRB-1099, Payments by the Railroad Retirement Board. Free 2006 tax software These forms show the amounts received and repaid, and taxes withheld for the year. Free 2006 tax software You may receive more than one of these forms for the same year. Free 2006 tax software You should add the amounts shown on all the Forms SSA-1099 and Forms RRB-1099 you receive for the year to determine the total amounts received and repaid, and taxes withheld for that year. Free 2006 tax software See the Appendix at the end of Publication 915 for more information. Free 2006 tax software Note. Free 2006 tax software When the term “benefits” is used in this chapter, it applies to both social security benefits and the SSEB portion of tier 1 railroad retirement benefits. Free 2006 tax software What is not covered in this chapter. Free 2006 tax software   This chapter does not cover the tax rules for the following railroad retirement benefits. Free 2006 tax software Non-social security equivalent benefit (NSSEB) portion of tier 1 benefits. Free 2006 tax software Tier 2 benefits. Free 2006 tax software Vested dual benefits. Free 2006 tax software Supplemental annuity benefits. Free 2006 tax software For information on these benefits, see Publication 575, Pension and Annuity Income. Free 2006 tax software   This chapter does not cover the tax rules for social security benefits reported on Form SSA-1042S, Social Security Benefit Statement, or Form RRB-1042S, Statement for Nonresident Alien Recipients of: Payments by the Railroad Retirement Board. Free 2006 tax software For information about these benefits, see Publication 519, U. Free 2006 tax software S. Free 2006 tax software Tax Guide for Aliens, and Publication 915, Social Security and Equivalent Railroad Retirement Benefits. Free 2006 tax software   This chapter also does not cover the tax rules for foreign social security benefits. Free 2006 tax software These benefits are taxable as annuities, unless they are exempt from U. Free 2006 tax software S. Free 2006 tax software tax or treated as a U. Free 2006 tax software S. Free 2006 tax software social security benefit under a tax treaty. Free 2006 tax software Useful Items - You may want to see: Publication 505 Tax Withholding and Estimated Tax 575 Pension and Annuity Income 590 Individual Retirement Arrangements (IRAs) 915 Social Security and Equivalent Railroad Retirement Benefits Forms (and Instructions) 1040-ES Estimated Tax for Individuals SSA-1099 Social Security Benefit Statement RRB-1099 Payments by the Railroad Retirement Board W-4V Voluntary Withholding Request Are Any of Your Benefits Taxable? To find out whether any of your benefits may be taxable, compare the base amount for your filing status with the total of: One-half of your benefits, plus All your other income, including tax-exempt interest. Free 2006 tax software When making this comparison, do not reduce your other income by any exclusions for: Interest from qualified U. Free 2006 tax software S. Free 2006 tax software savings bonds, Employer-provided adoption benefits, Foreign earned income or foreign housing, or Income earned by bona fide residents of American Samoa or Puerto Rico. Free 2006 tax software Children's benefits. Free 2006 tax software   The rules in this chapter apply to benefits received by children. Free 2006 tax software See Who is taxed , later. Free 2006 tax software Figuring total income. Free 2006 tax software   To figure the total of one-half of your benefits plus your other income, use Worksheet 11-1 later in this discussion. Free 2006 tax software If the total is more than your base amount, part of your benefits may be taxable. Free 2006 tax software    If you are married and file a joint return for 2013, you and your spouse must combine your incomes and your benefits to figure whether any of your combined benefits are taxable. Free 2006 tax software Even if your spouse did not receive any benefits, you must add your spouse's income to yours to figure whether any of your benefits are taxable. Free 2006 tax software    If the only income you received during 2013 was your social security or the SSEB portion of tier 1 railroad retirement benefits, your benefits generally are not taxable and you probably do not have to file a return. Free 2006 tax software If you have income in addition to your benefits, you may have to file a return even if none of your benefits are taxable. Free 2006 tax software Base amount. Free 2006 tax software   Your base amount is: $25,000 if you are single, head of household, or qualifying widow(er), $25,000 if you are married filing separately and lived apart from your spouse for all of 2013, $32,000 if you are married filing jointly, or $-0- if you are married filing separately and lived with your spouse at any time during 2013. Free 2006 tax software Worksheet 11-1. Free 2006 tax software   You can use Worksheet 11-1 to figure the amount of income to compare with your base amount. Free 2006 tax software This is a quick way to check whether some of your benefits may be taxable. Free 2006 tax software Worksheet 11-1. Free 2006 tax software A Quick Way To Check if Your Benefits May Be Taxable A. Free 2006 tax software Enter the amount from box 5 of all your Forms SSA-1099 and RRB-1099. Free 2006 tax software Include the full amount of any lump-sum benefit payments received in 2013, for 2013 and earlier years. Free 2006 tax software (If you received more than one form, combine the amounts from box 5 and enter the total. Free 2006 tax software ) A. Free 2006 tax software   Note. Free 2006 tax software If the amount on line A is zero or less, stop here; none of your benefits are taxable this year. Free 2006 tax software B. Free 2006 tax software Enter one-half of the amount on line A B. Free 2006 tax software   C. Free 2006 tax software Enter your taxable pensions, wages, interest, dividends, and other taxable income C. Free 2006 tax software   D. Free 2006 tax software Enter any tax-exempt interest income (such as interest on municipal bonds) plus any exclusions from income (listed earlier) D. Free 2006 tax software   E. Free 2006 tax software Add lines B, C, and D E. Free 2006 tax software   Note. Free 2006 tax software Compare the amount on line E to your base amount for your filing status. Free 2006 tax software If the amount on line E equals or is less than the base amount for your filing status, none of your benefits are taxable this year. Free 2006 tax software If the amount on line E is more than your base amount, some of your benefits may be taxable. Free 2006 tax software You need to complete Worksheet 1 in Publication 915 (or the Social Security Benefits Worksheet in your tax form instructions). Free 2006 tax software If none of your benefits are taxable, but you otherwise must file a tax return, see Benefits not taxable , later, under How To Report Your Benefits. Free 2006 tax software Example. Free 2006 tax software You and your spouse (both over 65) are filing a joint return for 2013 and you both received social security benefits during the year. Free 2006 tax software In January 2014, you received a Form SSA-1099 showing net benefits of $7,500 in box 5. Free 2006 tax software Your spouse received a Form SSA-1099 showing net benefits of $3,500 in box 5. Free 2006 tax software You also received a taxable pension of $22,800 and interest income of $500. Free 2006 tax software You did not have any tax-exempt interest income. Free 2006 tax software Your benefits are not taxable for 2013 because your income, as figured in Worksheet 11-1, is not more than your base amount ($32,000) for married filing jointly. Free 2006 tax software Even though none of your benefits are taxable, you must file a return for 2013 because your taxable gross income ($23,300) exceeds the minimum filing requirement amount for your filing status. Free 2006 tax software Filled-in Worksheet 11-1. Free 2006 tax software A Quick Way To Check if Your Benefits May Be Taxable A. Free 2006 tax software Enter the amount from box 5 of all your Forms SSA-1099 and RRB-1099. Free 2006 tax software Include the full amount of any lump-sum benefit payments received in 2013, for 2013 and earlier years. Free 2006 tax software (If you received more than one form, combine the amounts from box 5 and enter the total. Free 2006 tax software ) A. Free 2006 tax software $11,000 Note. Free 2006 tax software If the amount on line A is zero or less, stop here; none of your benefits are taxable this year. Free 2006 tax software B. Free 2006 tax software Enter one-half of the amount on line A B. Free 2006 tax software 5,500 C. Free 2006 tax software Enter your taxable pensions, wages, interest, dividends, and other taxable income C. Free 2006 tax software 23,300 D. Free 2006 tax software Enter any tax-exempt interest income (such as interest on municipal bonds) plus any exclusions from income (listed earlier) D. Free 2006 tax software -0- E. Free 2006 tax software Add lines B, C, and D E. Free 2006 tax software $28,800 Note. Free 2006 tax software Compare the amount on line E to your base amount for your filing status. Free 2006 tax software If the amount on line E equals or is less than the base amount for your filing status, none of your benefits are taxable this year. Free 2006 tax software If the amount on line E is more than your base amount, some of your benefits may be taxable. Free 2006 tax software You need to complete Worksheet 1 in Publication 915 (or the Social Security Benefits Worksheet in your tax form instructions). Free 2006 tax software If none of your benefits are taxable, but you otherwise must file a tax return, see Benefits not taxable , later, under How To Report Your Benefits. Free 2006 tax software Who is taxed. Free 2006 tax software   Benefits are included in the taxable income (to the extent they are taxable) of the person who has the legal right to receive the benefits. Free 2006 tax software For example, if you and your child receive benefits, but the check for your child is made out in your name, you must use only your part of the benefits to see whether any benefits are taxable to you. Free 2006 tax software One-half of the part that belongs to your child must be added to your child's other income to see whether any of those benefits are taxable to your child. Free 2006 tax software Repayment of benefits. Free 2006 tax software   Any repayment of benefits you made during 2013 must be subtracted from the gross benefits you received in 2013. Free 2006 tax software It does not matter whether the repayment was for a benefit you received in 2013 or in an earlier year. Free 2006 tax software If you repaid more than the gross benefits you received in 2013, see Repayments More Than Gross Benefits , later. Free 2006 tax software   Your gross benefits are shown in box 3 of Form SSA-1099 or RRB-1099. Free 2006 tax software Your repayments are shown in box 4. Free 2006 tax software The amount in box 5 shows your net benefits for 2013 (box 3 minus box 4). Free 2006 tax software Use the amount in box 5 to figure whether any of your benefits are taxable. Free 2006 tax software Tax withholding and estimated tax. Free 2006 tax software   You can choose to have federal income tax withheld from your social security benefits and/or the SSEB portion of your tier 1 railroad retirement benefits. Free 2006 tax software If you choose to do this, you must complete a Form W-4V. Free 2006 tax software   If you do not choose to have income tax withheld, you may have to request additional withholding from other income or pay estimated tax during the year. Free 2006 tax software For details, see Publication 505 or the instructions for Form 1040-ES. Free 2006 tax software How To Report Your Benefits If part of your benefits are taxable, you must use Form 1040 or Form 1040A. Free 2006 tax software You cannot use Form 1040EZ. Free 2006 tax software Reporting on Form 1040. Free 2006 tax software   Report your net benefits (the total amount from box 5 of all your Forms SSA-1099 and Forms RRB-1099) on line 20a and the taxable part on line 20b. Free 2006 tax software If you are married filing separately and you lived apart from your spouse for all of 2013, also enter “D” to the right of the word “benefits” on line 20a. Free 2006 tax software Reporting on Form 1040A. Free 2006 tax software   Report your net benefits (the total amount from box 5 of all your Forms SSA-1099 and Forms RRB-1099) on line 14a and the taxable part on line 14b. Free 2006 tax software If you are married filing separately and you lived apart from your spouse for all of 2013, also enter “D” to the right of the word “benefits” on line 14a. Free 2006 tax software Benefits not taxable. Free 2006 tax software   If you are filing Form 1040EZ, do not report any benefits on your tax return. Free 2006 tax software If you are filing Form 1040 or Form 1040A, report your net benefits (the total amount from box 5 of all your Forms SSA-1099 and Forms RRB-1099) on Form 1040, line 20a, or Form 1040A, line 14a. Free 2006 tax software Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. Free 2006 tax software If you are married filing separately and you lived apart from your spouse for all of 2013, also enter “D” to the right of the word “benefits” on Form 1040, line 20a, or Form 1040A, line 14a. Free 2006 tax software How Much Is Taxable? If part of your benefits are taxable, how much is taxable depends on the total amount of your benefits and other income. Free 2006 tax software Generally, the higher that total amount, the greater the taxable part of your benefits. Free 2006 tax software Maximum taxable part. Free 2006 tax software   Generally, up to 50% of your benefits will be taxable. Free 2006 tax software However, up to 85% of your benefits can be taxable if either of the following situations applies to you. Free 2006 tax software The total of one-half of your benefits and all your other income is more than $34,000 ($44,000 if you are married filing jointly). Free 2006 tax software You are married filing separately and lived with your spouse at any time during 2013. Free 2006 tax software Which worksheet to use. Free 2006 tax software   A worksheet you can use to figure your taxable benefits is in the instructions for your Form 1040 or Form 1040A. Free 2006 tax software You can use either that worksheet or Worksheet 1 in Publication 915, unless any of the following situations applies to you. Free 2006 tax software You contributed to a traditional individual retirement arrangement (IRA) and you or your spouse is covered by a retirement plan at work. Free 2006 tax software In this situation, you must use the special worksheets in Appendix B of Publication 590 to figure both your IRA deduction and your taxable benefits. Free 2006 tax software Situation (1) does not apply and you take an exclusion for interest from qualified U. Free 2006 tax software S. Free 2006 tax software savings bonds (Form 8815), for adoption benefits (Form 8839), for foreign earned income or housing (Form 2555 or Form 2555-EZ), or for income earned in American Samoa (Form 4563) or Puerto Rico by bona fide residents. Free 2006 tax software In this situation, you must use Worksheet 1 in Publication 915 to figure your taxable benefits. Free 2006 tax software You received a lump-sum payment for an earlier year. Free 2006 tax software In this situation, also complete Worksheet 2 or 3 and Worksheet 4 in Publication 915. Free 2006 tax software See Lump-sum election next. Free 2006 tax software Lump-sum election. Free 2006 tax software   You must include the taxable part of a lump-sum (retroactive) payment of benefits received in 2013 in your 2013 income, even if the payment includes benefits for an earlier year. Free 2006 tax software    This type of lump-sum benefit payment should not be confused with the lump-sum death benefit that both the SSA and RRB pay to many of their beneficiaries. Free 2006 tax software No part of the lump-sum death benefit is subject to tax. Free 2006 tax software   Generally, you use your 2013 income to figure the taxable part of the total benefits received in 2013. Free 2006 tax software However, you may be able to figure the taxable part of a lump-sum payment for an earlier year separately, using your income for the earlier year. Free 2006 tax software You can elect this method if it lowers your taxable benefits. Free 2006 tax software Making the election. Free 2006 tax software   If you received a lump-sum benefit payment in 2013 that includes benefits for one or more earlier years, follow the instructions in Publication 915 under Lump-Sum Election to see whether making the election will lower your taxable benefits. Free 2006 tax software That discussion also explains how to make the election. Free 2006 tax software    Because the earlier year's taxable benefits are included in your 2013 income, no adjustment is made to the earlier year's return. Free 2006 tax software Do not file an amended return for the earlier year. Free 2006 tax software Examples The following are a few examples you can use as a guide to figure the taxable part of your benefits. Free 2006 tax software Example 1. Free 2006 tax software George White is single and files Form 1040 for 2013. Free 2006 tax software He received the following income in 2013: Fully taxable pension $18,600 Wages from part-time job 9,400 Taxable interest income 990 Total $28,990 George also received social security benefits during 2013. Free 2006 tax software The Form SSA-1099 he received in January 2014 shows $5,980 in box 5. Free 2006 tax software To figure his taxable benefits, George completes the worksheet shown here. Free 2006 tax software Filled-in Worksheet 1. Free 2006 tax software Figuring Your Taxable Benefits 1. Free 2006 tax software Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099. Free 2006 tax software Also enter this amount on Form 1040, line 20a, or Form 1040A, line 14a $5,980 2. Free 2006 tax software Enter one-half of line 1 2,990 3. Free 2006 tax software Combine the amounts from:     Form 1040: Lines 7, 8a, 9a, 10 through 14, 15b, 16b, 17 through 19, and 21. Free 2006 tax software     Form 1040A: Lines 7, 8a, 9a, 10, 11b, 12b, and 13 28,990 4. Free 2006 tax software Enter the amount, if any, from Form 1040 or 1040A, line 8b -0-       5. Free 2006 tax software Enter the total of any exclusions/adjustments for: Adoption benefits (Form 8839, line 28), Foreign earned income or housing (Form 2555, lines 45 and 50, or Form 2555-EZ, line 18), and Certain income of bona fide residents of American Samoa (Form 4563, line 15) or Puerto Rico -0-       6. Free 2006 tax software Combine lines 2, 3, 4, and 5 31,980 7. Free 2006 tax software Form 1040 filers: Enter the amount from Form 1040, lines 23 through 32, and any write-in adjustments you entered on the dotted line next to line 36. Free 2006 tax software     Form 1040A filers: Enter the amount from Form 1040A, lines 16 and 17 -0- 8. Free 2006 tax software Is the amount on line 7 less than the amount on line 6?     No. Free 2006 tax software None of your social security benefits are taxable. Free 2006 tax software Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. Free 2006 tax software   Yes. Free 2006 tax software Subtract line 7 from line 6 31,980 9. Free 2006 tax software 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 2013, enter $25,000 25,000   Note. Free 2006 tax software If you are married filing separately and you lived with your spouse at any time in 2013, skip lines 9 through 16; multiply line 8 by 85% (. Free 2006 tax software 85) and enter the result on line 17. Free 2006 tax software Then go to line 18. Free 2006 tax software   10. Free 2006 tax software Is the amount on line 9 less than the amount on line 8?     No. Free 2006 tax software None of your benefits are taxable. Free 2006 tax software Enter -0- on Form 1040, line 20b, or on Form 1040A, line 14b. Free 2006 tax software If you are married filing separately and you lived apart from your spouse for all of 2013, be sure you entered “D” to the right of the word “benefits” on Form 1040, line 20a, or on Form 1040A, line 14a. Free 2006 tax software     Yes. Free 2006 tax software Subtract line 9 from line 8 6,980 11. Free 2006 tax software 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 2013 9,000 12. Free 2006 tax software Subtract line 11 from line 10. Free 2006 tax software If zero or less, enter -0- -0- 13. Free 2006 tax software Enter the smaller of line 10 or line 11 6,980 14. Free 2006 tax software Enter one-half of line 13 3,490 15. Free 2006 tax software Enter the smaller of line 2 or line 14 2,990 16. Free 2006 tax software Multiply line 12 by 85% (. Free 2006 tax software 85). Free 2006 tax software If line 12 is zero, enter -0- -0- 17. Free 2006 tax software Add lines 15 and 16 2,990 18. Free 2006 tax software Multiply line 1 by 85% (. Free 2006 tax software 85) 5,083 19. Free 2006 tax software Taxable benefits. Free 2006 tax software Enter the smaller of line 17 or line 18. Free 2006 tax software Also enter this amount on Form 1040, line 20b, or Form 1040A, line 14b $2,990 The amount on line 19 of George's worksheet shows that $2,990 of his social security benefits is taxable. Free 2006 tax software On line 20a of his Form 1040, George enters his net benefits of $5,980. Free 2006 tax software On line 20b, he enters his taxable benefits of $2,990. Free 2006 tax software Example 2. Free 2006 tax software Ray and Alice Hopkins file a joint return on Form 1040A for 2013. Free 2006 tax software Ray is retired and received a fully taxable pension of $15,500. Free 2006 tax software He also received social security benefits, and his Form SSA-1099 for 2013 shows net benefits of $5,600 in box 5. Free 2006 tax software Alice worked during the year and had wages of $14,000. Free 2006 tax software She made a deductible payment to her IRA account of $1,000. Free 2006 tax software Ray and Alice have two savings accounts with a total of $250 in taxable interest income. Free 2006 tax software They complete Worksheet 1, entering $29,750 ($15,500 + $14,000 + $250) on line 3. Free 2006 tax software They find none of Ray's social security benefits are taxable. Free 2006 tax software On Form 1040A, they enter $5,600 on line 14a and -0- on line 14b. Free 2006 tax software Filled-in Worksheet 1. Free 2006 tax software Figuring Your Taxable Benefits 1. Free 2006 tax software Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099. Free 2006 tax software Also enter this amount on Form 1040, line 20a, or Form 1040A, line 14a $5,600 2. Free 2006 tax software Enter one-half of line 1 2,800 3. Free 2006 tax software Combine the amounts from:     Form 1040: Lines 7, 8a, 9a, 10 through 14, 15b, 16b, 17 through 19, and 21. Free 2006 tax software     Form 1040A: Lines 7, 8a, 9a, 10, 11b, 12b, and 13 29,750 4. Free 2006 tax software Enter the amount, if any, from Form 1040 or 1040A, line 8b -0-       5. Free 2006 tax software Enter the total of any exclusions/adjustments for: Adoption benefits (Form 8839, line 28), Foreign earned income or housing (Form 2555, lines 45 and 50, or Form 2555-EZ, line 18), and Certain income of bona fide residents of American Samoa (Form 4563, line 15) or Puerto Rico -0-       6. Free 2006 tax software Combine lines 2, 3, 4, and 5 32,550 7. Free 2006 tax software Form 1040 filers: Enter the amount from Form 1040, lines 23 through 32, and any write-in adjustments you entered on the dotted line next to line 36. Free 2006 tax software     Form 1040A filers: Enter the amount from Form 1040A, lines 16 and 17 1,000 8. Free 2006 tax software Is the amount on line 7 less than the amount on line 6?     No. Free 2006 tax software None of your social security benefits are taxable. Free 2006 tax software Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. Free 2006 tax software   Yes. Free 2006 tax software Subtract line 7 from line 6 31,550 9. Free 2006 tax software 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 2013, enter $25,000 32,000   Note. Free 2006 tax software If you are married filing separately and you lived with your spouse at any time in 2013, skip lines 9 through 16; multiply line 8 by 85% (. Free 2006 tax software 85) and enter the result on line 17. Free 2006 tax software Then go to line 18. Free 2006 tax software   10. Free 2006 tax software Is the amount on line 9 less than the amount on line 8?     No. Free 2006 tax software None of your benefits are taxable. Free 2006 tax software Enter -0- on Form 1040, line 20b, or on Form 1040A, line 14b. Free 2006 tax software If you are married filing separately and you lived apart from your spouse for all of 2013, be sure you entered “D” to the right of the word “benefits” on Form 1040, line 20a, or on Form 1040A, line 14a. Free 2006 tax software     Yes. Free 2006 tax software Subtract line 9 from line 8   11. Free 2006 tax software 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 2013   12. Free 2006 tax software Subtract line 11 from line 10. Free 2006 tax software If zero or less, enter -0-   13. Free 2006 tax software Enter the smaller of line 10 or line 11   14. Free 2006 tax software Enter one-half of line 13   15. Free 2006 tax software Enter the smaller of line 2 or line 14   16. Free 2006 tax software Multiply line 12 by 85% (. Free 2006 tax software 85). Free 2006 tax software If line 12 is zero, enter -0-   17. Free 2006 tax software Add lines 15 and 16   18. Free 2006 tax software Multiply line 1 by 85% (. Free 2006 tax software 85)   19. Free 2006 tax software Taxable benefits. Free 2006 tax software Enter the smaller of line 17 or line 18. Free 2006 tax software Also enter this amount on Form 1040, line 20b, or Form 1040A, line 14b   Example 3. Free 2006 tax software Joe and Betty Johnson file a joint return on Form 1040 for 2013. Free 2006 tax software Joe is a retired railroad worker and in 2013 received the social security equivalent benefit (SSEB) portion of tier 1 railroad retirement benefits. Free 2006 tax software Joe's Form RRB-1099 shows $10,000 in box 5. Free 2006 tax software Betty is a retired government worker and receives a fully taxable pension of $38,000. Free 2006 tax software They had $2,300 in taxable interest income plus interest of $200 on a qualified U. Free 2006 tax software S. Free 2006 tax software savings bond. Free 2006 tax software The savings bond interest qualified for the exclusion. Free 2006 tax software They figure their taxable benefits by completing Worksheet 1. Free 2006 tax software Because they have qualified U. Free 2006 tax software S. Free 2006 tax software savings bond interest, they follow the note at the beginning of the worksheet and use the amount from line 2 of their Schedule B (Form 1040A or 1040) on line 3 of the worksheet instead of the amount from line 8a of their Form 1040. Free 2006 tax software On line 3 of the worksheet, they enter $40,500 ($38,000 + $2,500). Free 2006 tax software Filled-in Worksheet 1. Free 2006 tax software Figuring Your Taxable Benefits Before you begin: • If you are married filing separately and you lived apart from your spouse for all of 2013, enter “D” to the right of the word “benefits” on Form 1040, line 20a, or Form 1040A, line 14a. Free 2006 tax software • Do not use this worksheet if you repaid benefits in 2013 and your total repayments (box 4 of Forms SSA-1099 and RRB-1099) were more than your gross benefits for 2013 (box 3 of Forms SSA-1099 and RRB-1099). Free 2006 tax software None of your benefits are taxable for 2013. Free 2006 tax software For more information, see Repayments More Than Gross Benefits. Free 2006 tax software • If you are filing Form 8815, Exclusion of Interest From Series EE and I U. Free 2006 tax software S. Free 2006 tax software Savings Bonds Issued After 1989, do not include the amount from line 8a of Form 1040 or Form 1040A on line 3 of this worksheet. Free 2006 tax software Instead, include the amount from Schedule B (Form 1040A or 1040), line 2. Free 2006 tax software 1. Free 2006 tax software Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099. Free 2006 tax software Also enter this amount on Form 1040, line 20a, or Form 1040A, line 14a $10,000 2. Free 2006 tax software Enter one-half of line 1 5,000 3. Free 2006 tax software Combine the amounts from:     Form 1040: Lines 7, 8a, 9a, 10 through 14, 15b, 16b, 17 through 19, and 21. Free 2006 tax software     Form 1040A: Lines 7, 8a, 9a, 10, 11b, 12b, and 13 40,500 4. Free 2006 tax software Enter the amount, if any, from Form 1040 or 1040A, line 8b -0-       5. Free 2006 tax software Enter the total of any exclusions/adjustments for: Adoption benefits (Form 8839, line 28), Foreign earned income or housing (Form 2555, lines 45 and 50, or Form 2555-EZ, line 18), and Certain income of bona fide residents of American Samoa (Form 4563, line 15) or Puerto Rico -0-       6. Free 2006 tax software Combine lines 2, 3, 4, and 5 45,500 7. Free 2006 tax software Form 1040 filers: Enter the amount from Form 1040, lines 23 through 32, and any write-in adjustments you entered on the dotted line next to line 36. Free 2006 tax software     Form 1040A filers: Enter the amount from Form 1040A, lines 16 and 17 -0- 8. Free 2006 tax software Is the amount on line 7 less than the amount on line 6?     No. Free 2006 tax software None of your social security benefits are taxable. Free 2006 tax software Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. Free 2006 tax software   Yes. Free 2006 tax software Subtract line 7 from line 6 45,500 9. Free 2006 tax software 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 2013, enter $25,000 32,000   Note. Free 2006 tax software If you are married filing separately and you lived with your spouse at any time in 2013, skip lines 9 through 16; multiply line 8 by 85% (. Free 2006 tax software 85) and enter the result on line 17. Free 2006 tax software Then go to line 18. Free 2006 tax software   10. Free 2006 tax software Is the amount on line 9 less than the amount on line 8?     No. Free 2006 tax software None of your benefits are taxable. Free 2006 tax software Enter -0- on Form 1040, line 20b, or on Form 1040A, line 14b. Free 2006 tax software If you are married filing separately and you lived apart from your spouse for all of 2013, be sure you entered “D” to the right of the word “benefits” on Form 1040, line 20a, or on Form 1040A, line 14a. Free 2006 tax software     Yes. Free 2006 tax software Subtract line 9 from line 8 13,500 11. Free 2006 tax software 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 2013 12,000 12. Free 2006 tax software Subtract line 11 from line 10. Free 2006 tax software If zero or less, enter -0- 1,500 13. Free 2006 tax software Enter the smaller of line 10 or line 11 12,000 14. Free 2006 tax software Enter one-half of line 13 6,000 15. Free 2006 tax software Enter the smaller of line 2 or line 14 5,000 16. Free 2006 tax software Multiply line 12 by 85% (. Free 2006 tax software 85). Free 2006 tax software If line 12 is zero, enter -0- 1,275 17. Free 2006 tax software Add lines 15 and 16 6,275 18. Free 2006 tax software Multiply line 1 by 85% (. Free 2006 tax software 85) 8,500 19. Free 2006 tax software Taxable benefits. Free 2006 tax software Enter the smaller of line 17 or line 18. Free 2006 tax software Also enter this amount on Form 1040, line 20b, or Form 1040A, line 14b $6,275 More than 50% of Joe's net benefits are taxable because the income on line 8 of the worksheet ($45,500) is more than $44,000. Free 2006 tax software Joe and Betty enter $10,000 on Form 1040, line 20a, and $6,275 on Form 1040, line 20b. Free 2006 tax software Deductions Related to Your Benefits You may be entitled to deduct certain amounts related to the benefits you receive. Free 2006 tax software Disability payments. Free 2006 tax software   You 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. Free 2006 tax software If you received a lump-sum 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. Free 2006 tax software If the amount you repay is more than $3,000, you may be able to claim a tax credit instead. Free 2006 tax software Claim the deduction or credit in the same way explained under Repayments More Than Gross Benefits , later. Free 2006 tax software Legal expenses. Free 2006 tax software   You 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. Free 2006 tax software   Legal expenses for collecting the taxable part of your benefits are deductible as a miscellaneous itemized deduction on Schedule A (Form 1040), line 23. Free 2006 tax software Repayments More Than Gross Benefits In some situations, your Form SSA-1099 or Form RRB-1099 will show that the total benefits you repaid (box 4) are more than the gross benefits (box 3) you received. Free 2006 tax software 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. Free 2006 tax software Do not use a worksheet in this case. Free 2006 tax software 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. Free 2006 tax software If you have any questions about this negative figure, contact your local SSA office or your local RRB field office. Free 2006 tax software Joint return. Free 2006 tax software   If you and your spouse file a joint return, and your Form SSA-1099 or RRB-1099 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. Free 2006 tax software You do this to get your net benefits when figuring if your combined benefits are taxable. Free 2006 tax software Example. Free 2006 tax software John and Mary file a joint return for 2013. Free 2006 tax software John received Form SSA-1099 showing $3,000 in box 5. Free 2006 tax software Mary also received Form SSA-1099 and the amount in box 5 was ($500). Free 2006 tax software 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. Free 2006 tax software Repayment of benefits received in an earlier year. Free 2006 tax software   If the total amount shown in box 5 of all of your Forms SSA-1099 and RRB-1099 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. Free 2006 tax software Deduction $3,000 or less. Free 2006 tax software   If this deduction is $3,000 or less, it is subject to the 2%-of-adjusted-gross-income limit that applies to certain miscellaneous itemized deductions. Free 2006 tax software Claim it on Schedule A (Form 1040), line 23. Free 2006 tax software Deduction more than $3,000. Free 2006 tax software    If this deduction is more than $3,000, you should figure your tax two ways: Figure your tax for 2013 with the itemized deduction included on Schedule A, line 28. Free 2006 tax software Figure your tax for 2013 in the following steps. Free 2006 tax software Figure the tax without the itemized deduction included on Schedule A, line 28. Free 2006 tax software 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. Free 2006 tax software Then refigure the tax for that year. Free 2006 tax software Subtract the total of the refigured tax amounts in (b) from the total of your actual tax amounts. Free 2006 tax software Subtract the result in (c) from the result in (a). Free 2006 tax software Compare the tax figured in methods (1) and (2). Free 2006 tax software Your tax for 2013 is the smaller of the two amounts. Free 2006 tax software If method (1) results in less tax, take the itemized deduction on Schedule A (Form 1040), line 28. Free 2006 tax software If method (2) results in less tax, claim a credit for the amount from step 2(c) above on Form 1040, line 71. Free 2006 tax software Check box d and enter “I. Free 2006 tax software R. Free 2006 tax software C. Free 2006 tax software 1341” in the space next to that box. Free 2006 tax software If both methods produce the same tax, deduct the repayment on Schedule A (Form 1040), line 28. Free 2006 tax software Prev  Up  Next   Home   More Online Publications