Tax Lesson 18 - Social Security and Equivalent Railroad Retirement Benefits

1. Look at the Form 1040A you prepared for John Barton. What is the amount on Form 1040A, Line 14b?

A. $ 26,200.
B. $ 23,200.
C. $ -0-. 
D. $ 786.

2. Look at the Form 1040A you prepared for John Barton. What is the amount on Form 1040A, Line 47?

A. $ 135.00
B. $ 338.00
C. $ 1,697. 
D. $ 3,437.00

3.  To find out whether or not any of your social security benefits are taxable, compare the base amount for your filing status with the total of:

A. One-half of your benefits.
B. All your other income, including tax-exempt interest.
C. Interest from qualified U.S. savings bonds.
D. Both A and B above.

A. Part of your benefits may be taxable.
B. All of your benefits may be taxable.
C. None of your benefits may be taxable.
D. None of the above.

5. If your filing status is single, head of household, or qualifying widow(er), your base amount is:

A. $ 25,000
B. $ 32,000
C. $ 34,000
D. $ 44,000

6. If you are married filing separately and lived apart from your spouse for all of 2008, your base amount is

A. $ 25,000
B. $ 32,000.
C. $ 34,000.
D. $ 44,000.

7. If you are married filing jointly, your base amount is 

A. $ 25,000.
B. $ 32,000.
C. $ 34,000.
D. $ 44,000.

8. If you are married filing separately and lived with your spouse at any time during tax year 2008, your base amount is:

A. $ 25,000.
B. $ 32,000.
C. $ 34,000.
D. $ -0-.

9. You and your spouse (both over age 65) are filing a joint return for 2008, and you both receive social security benefits during the year. In January 2009, you received a Form SSA-1099 showing net benefits of $7,700 in box 5.  Your spouse received a Form SSA-1099 showing net benefits of $2,400 in box 5. You also received a taxable pension of $18,000 and interest income of $450.  You did not have any tax-exempt interest income. How much of your social security benefits are taxable for tax year 2008?

A. $ -0-.
B. $10,100.
C. $ 7,700.
D. $ 2,400.

10. You and your spouse (both over age 65) are filing a joint return for 2008, and you both receive social security benefits during the year. In January 2008, you received a Form SSA-1099 showing net benefits of $6,600 in box 5.  Your spouse received a Form SSA-1099 showing net benefits of $2,400 in box 5. You also received a taxable pension of $23,000 and interest income of $500.  You did not have any tax-exempt interest income. How much of your social security benefits may be taxable for tax year 2008?

A. $ -0-.
B. $6,600.
C. $2,400.
D. $ 500.

11. If the total of one-half of your benefits and all of your other income is more than $ 34,000 ($44,000 if you are married filing jointly), up to what percentage of your benefits amy be taxable?

A. 50%
B. 85%
C. 15%
D. 0%

12. If you are married filing separately and lived with your spouse at any time during 2008, up to what percentage of your benefits can be taxable?

A. 50%
B. 85%
C. 15%
D. 0%

13. Joe and Betty file a joint return on Form 1040 for tax year 2008. Joe is a retired railroad worker and in tax year 2008 received the social security equivalent benefit (SSEB) portion of tier 1 railroad retirement benefits. Joe's Form RRB-1099 shows $10,000 in box 5. Betty is a retired government worker and receives a fully taxable pension of $38,000.  They had $2,300 in interest income plus interest of $200 on a qualified U.S. savings bond. The savings bond interest qualified for the exclusion. What part of social security benefits could be taxable?

A. $ 13,500
B. $ 8,500
C. $ 5,000
D. $ 10,000

14.  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) your received.  If this occurred, your net benefits in box 5 will be a negative figure and

A. All of your benefits will be taxable.
B. None of your benefits will be taxable.
C. Some of your benefits will be taxable.
D. You have to amend your return.

15.  John and Mary file a joint return for 2008.  John received Form SSA-1099 showing $3,000 in box 5.  Mary also received Form SSA-1099 and the amount in box 5 was -$700. How much will John and Mary use as the amount of their net benefits when figuring if any of their combined benefits are taxable or not?

A. $ 700.
B. $ 2,500.
C. $ 2,300.
D. $ 3,000.

16. If the total amount shown in box 5 of all your Forms SSA-1099 and RRB-1099 is a negative figure,

A. You cannot take any deduction for it.
B. None of your benefits will be taxable.
C. You have to report the amount as income in this year because you cannot go back to a previous year to make adjustment.
D. None of the above above.

17. 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. 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 and itemized deduction for the part of the payments you included in gross income in an earlier year. You may be able to claim a tax credit instead of the amount you repay is more than

A. $2,500
B. $500
C. $3,000
D. $5,000

18. Because the earlier year's taxable benefits are included in your 2008 income, an adjustment is made to the earlier year's return and thus, you must file an amended return for the earlier tax year.                 

True False

19.  You must include the taxable part of a lump-sum (retroactive) payment of benefits received in 2008 in your 2008 income, even if the payment includes benefits for an earlier year.               

True False

20.  A nonresident alien is an individual who is not a citizen or resident of the United States. If you are a nonresident alien 85% of your benefits are tax at a 30% rate, unless exempt (or subject to a lower rate) by treaty. Residents of the following country are not exempt from U.S. tax on their social security benefits.

A. Israel.
B. Romania.
C. Japan.
D. None of the above.