 Now again you can go through the social security worksheet of course and go through a more formal type of calculation but obviously in practice software is quite useful for doing that, you know, to put together that worksheet. So in practice the general idea would be someone's asking you a question, is it taxable? Yeah, you're probably gonna have to include up to like 85% as income unless your income is relatively low in which case you might have to include something up to like 50% and you probably don't want to get into the weeds talking to someone in too much detail on how the tax calculation works and you're probably in practice going to be depending more on the software to do the nitty gritty in terms of the tax calculation. So your goal obviously communication with clients and yourself understanding, you could get into the nitty gritty of the calculations to better understand it but that's probably not what like a client's going to want to hear and the software is going to help you to do that. So you repaid any benefits in 2022 and your total repayments box four were more than your total benefits for 2022 box three. None of your benefits are taxable for 2022. Also if your total repayments in 2022 exceeds your total benefits received in 2022 by more than 3,000 you may be able to take an itemized deduction or retread it for part of the excess payments if they were benefits you included in income in an earlier year for more details you can see publication 915 there. You file form 255-4563 or 8815 or you exclude employer provided adoption benefits or income from sources with Puerto Rico instead use the worksheet in publication 915. Social security information social security benefits can now get a variety of information from the SSA social security administration website with a my social security account. So notice that the government is trying to get better with this information on their website. Click on this website. The kind of rationale with the IRS and some other government entities was that the websites aren't secure or whatnot so we don't want to do the login and that kind of stuff but obviously they've been showing up so badly by other financial institutions that deal with similar kind of security issues with regards to personal information like financials institutions and banks that they have to update and add this ability to log into accounts so you would think that we would be logging into these types of accounts like our social security and our our internal revenue service and whatnot and being able to get information there instead of relying completely on like snail mail still these days and so they are starting to update all that kind of stuff so including a replacement form SSA 1099 if needed for more information and to set up an account go to the ssa.gov my account now notice that some people start to think that the all government entities are kind of like the same as as though they talk to each other all the time or something and obviously they might share information but the you know the IRS doesn't really know exactly what's going on with your state tax situation you know just because they're two government entities and obviously the social security information in terms of identified who you are is what is used by the IRS but you need to know which place to go to when you're talking about a particular thing when you're talking about the taxes based on the 1099 that you got from the government from the SSA then you're going to you're going to report that to the IRS but if you have questions about of course the amount of benefits you're receiving and that kind of stuff then you're going to have to go to the social security information in that website right so disability payments so in other words don't all these all these entities are like talking to a different different bureaucracy and their own little silo that's all they know right so you've got to go to the right silo or you're going to you're going to get nowhere they don't know what's going on and in the other silo and they love to be able to say that's outside my jurisdiction right I don't know what what you're talking about with that that's you know that's that's how it works so disability payments don't include in your income any disability payments including social security disability insurance SSDI payments you receive for entries incurred as a direct result of a terrorist attack directed against the United States or its allies whether outside or within the United States now obviously again this comes into this play where when we have some things that are considered welfare programs you would think that you know the money that you get wouldn't really be taxable in those cases and whatnot and so this is where this funny kind of interplay comes between like a welfare state type of thing where the big government is getting to the point where they want just everybody's retirement plan to be through the government or something like social security is everybody's retirement plan somehow versus a reduction of some of those those benefits and whatnot so that it's actually a welfare program designed to help people with a safety net kind of situation and again that's the interplay that's just a kind of interesting interplay that's playing out in our our thought process of these of these rules at this time so in the case of September 11th attacks injuries eligible for for coverage by the September 11th victim compensation fund are treated as incurred as a direct result of the attack so if the payments are incorrectly reported as taxable on form ssa 1099 don't include the non-taxable portion of income on your tax return you got to finish these tax returns you may receive a notice from the irs regarding the omitted payments follow the instructions in the notice to explain that the excluded payments aren't taxable for more information about these payments you can see publication 3920 example taxpayer x a firefighter was it was disabled as a direct result of the September 11th terrorist attack on the world trade center x began receiving social security disability insurance ssdi benefits at age 54 x's full retirement age for social security retirement benefits is age 66 x's birthday is April 25th in the year x turned 66 x received $1,500 per month in benefits from the social security administration for a total of $18,000 because x became eligible for a full retirement benefit in May the month after x turned 66 x can exclude only four months january through april of their annual benefits from their income $6,000 x must report the remaining $12,000 online 6a x must also complete the social security benefits worksheet to find out if any part of the $12,000 is taxable tip form rrb 1099 if you need a replacement form rrb 1099 call the railroad retirement board there's a there's a number here and you can go to the the website as well accrued leave payment if you retire on disability any lump sum payment you receive for accrued annual leave is a salary payment so the payment is not a disability payment include it in your income in the tax year you receive it line 6c check the box on line 6c if you elect to use the lump sum election method for your benefits if any of your benefits are taxable for 2022 and they include a lump sum benefit payment that was for an earlier year you may be able to reduce the taxable amount with the lump sum election you can see lump sum election in publication 915 for details so the general takeaway is obviously when we put the money into the social security program it's coming out of our w2s and whatnot and that's usually taken care of by the employer or we have to do these the self-employment tax if we're a sole proprietor or something like that and and that's going into the social security program when we get the money out of the social security program then it the question is does it have to be included in income generally up to like 85 percent is likely to be included in there unless your income is below a fairly low threshold in which case up to 50 percent might be included in in income and therefore the tax rate might be applied to that income we'll take a look at some examples of this in a following presentation