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. 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.
Joint return: 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. You do this to get your net benefits when figuring if your combined benefits are taxable.
Example: John and Mary file a joint return for 2015. John received Form SSA-1099 showing $3,000 in box 5. Mary also received Form SSA-1099 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
Deduction $3,000 or less: 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. Claim it on Schedule A (Form 1040), line 23.
Deduction more than $3,000: If this deduction is more than $3,000, you should figure your tax two ways:
- Figure your tax for 2015 with the itemized deduction included on Schedule A, line 28.
- Figure your tax for 2015 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 2015 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 71, and write "I.R.C. 1341" in the margin to the left of line 71. If both methods produce the same tax, deduct the repayment on Schedule A (Form 1040), line 28.