Tax Topic 17 - 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 14a?

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 14b?

A. $0
B. $1,850
C. $1,697
D. $3,437

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 2009, 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 2009, 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 2009, and you both receive social security benefits during the year. In January 2010, you received a Form SSA-1099 showing net benefits of $7,700 in box 5 for 2009 tax year.  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 2009?

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 2009, and you both receive social security benefits during the year. In January 2009, 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 2009?

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 may 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 2009, 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 2009. Joe is a retired railroad worker and in tax year 2009 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 2009.  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, if 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 2009 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 2009 in your 2009 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.

21. Under a treaty with India, benefits paid to individuals who are both residents and nationals of India are exempt for U.S. tax if

A. The benefits are for services performed for the United States, its subdivisions, or local government authorities.
B. The total benefit amount is taxed at less than 15% by India.
C. They were not paid under the social security legislation of the United States.
D. Your social security benefits are exempt from tax because you are a resident of a country not listed as treaty country.

22. If you are a resident of Switzerland, your total benefit amount will be taxed at

A. 5%.
B. 10%.
C. 15%.
D. 30%.

23. The RRB will withhold U.S. tax from your benefits unless you file Form RRB-1001. If you do not file Form RRB-1001, the RRB will consider you a nonresident alien and withhold tax from your railroad retirement benefits at

A. 15%.
B. 30%.
C. 20%.
D. 25%.

24. Social security benefits paid to a green card holder are subject to _____ withholding.

A. 30%.
B. 10%.
C. 15%.
D. None of the above.

25. Once you elect to report your taxable social security benefits under the lump-sum election method, you can revoke your election

A. With the filing of a new return every year.
B. Only with the consent of the IRS.
C. As long as you do so before the end of the tax year.
D. As long as you do so within three years of filing your tax return or 2 years of paying your tax, whichever one is first.

26. 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. Legal expenses for collecting the taxable part of your benefits are deductible as a

A. Business expense deduction on Schedule C (Form 1040) line 12.
B. Itemized deduction subject to the 7.5% limit on Schedule A (Form 1040).
C. Miscellaneous itemized deduction on Schedule A (Form 1040), line 23.
D. Deduction directly on Form 1040, line 23.

27. Social security benefits do not include

A. Supplemental security income (SSI) payments.
B. Monthly retirement benefits.
C. Survivor benefits.
D. Disability benefits.

28. The term benefits applies to both social security benefits and the SSEB portion of tier 1 railroad retirement benefits.

True False

29. 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. When making this comparison, you must reduce your other income by

A. Employer-provided adoption benefits.
B. Exclusions for interest from qualified U.S. savings bonds.
C. Income earned by bona fide residents of American Samoa or Puerto Rico.
D. None of the above.

30. The SSA issues Form SSA-1099 and Form SSA-1042S. The RRB issues Form RRB-1099 and Form RRB-1042S. Each original Form RRB-1099 or Form RRB-1042S is valid

A. Unless it has been corrected.
B. If it says original on top.
C. Another form has not been issued after the original.
D. If it is not lost.

31. If the only income you received during 2009 was your social security or the SSEB portion of tier 1 railroad retirement benefits, your benefits are taxable and you should file a return.

True False

32. 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. If you choose to do this, you must complete

A. Form W-2.
B. Form W-4V.
C. Form 1099-Misc.
D. Form SSA-1099.

33. If you are married filing separately and lived with your spouse at any time during 2009, up to ___ of your social security benefits can be taxable.

A. 50%.
B. 30%.
C. 85%.
D. 25%.

34. 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.

True False

35. A lump-sum death payment is subject to tax.

True False

36. Social security benefits paid through the RRB are reported on Form RRB-1099 or RRB-1042S.

True False

37. If you and your child receive benefits, but the check for your child is made out in your name, you

A. Must use the whole amount of the benefits to see whether any benefits are taxable to you.
B. Must use only your part of the benefits to see whether any benefits are taxable to you.
C. Must add one half of the part that belongs to your child to see whether any of those benefits are taxable to you.
D. Must subtract from your gross income the part of the benefits that are for your child.

38. You can choose to have federal income tax withheld from  your social security benefits. If you do not choose to have income tax withheld, you

A. May request additional withholding form other income.
B. May have to pay estimated tax during the year.
C. Either A or B above.
D. Will have withholding taken out of your benefits automatically.