From 1935, when the 32nd president of the United States Franklin Delano Roosevelt has adopted the Social Security Act, US citizens are ensured that they will have the possibility to survive when they get old or get severely sick, money-vise.
The Act declares basic principles under which the citizens get certain social security benefits that support people in specific cases. Sums they get may depend on various factors. This Act has affected economics in the country quite positively. The poverty level has gone down since the Act is enforceable. Social Security Administration (SSA) manages all things tied to various benefits in the US.
It might be unexpected for some residents, but a part of their benefits may require paying taxes. Every year, each benefits recipient gets several forms issued by public authorities to obtain information on how much did they get in a specific year. The US Internal Revenue Service (or IRS), responsible for taxation procedures in the country, has released a special form that allows taxpayers to understand whether they should or should not cover any taxes for their social security perks: IRS Notice 703.
This form is considered a worksheet that you use only to make certain calculations and find out if you owe something or not. You do not need to file the form anywhere; instead, you should store it in your documents archive. This notice must be used every year because your situation and the amount of the benefits might change.
Perks are received by certain categories of US citizens. Generally, those categories are:
As you already know, SSA defines who can get what. This governmental institution has its own list of characteristics used to recognize qualified benefits recipients and understand how much they should receive annually. If you are curious about those characteristics, you can turn to the SSA official site and learn about the rules there.
No. If you do not get any income from other sources than your benefits, highly likely they will not be taxable. However, you should always check the Service’s guidance on the topic because the rules and the taxable amounts can change from year to year.
The Service also recommends reading its Publication 501 to see more info about tax returns people have to send when they receive governmental perks. Publication 915 will tell about taxes that are applied to your benefits every year. Additionally, the Service provides a link to its detailed guide on the topic — you will see it inside the template.
Basically, the template is one page where you have five lines asking you to provide certain numbers. Besides these lines, you have a detailed guide explaining what you should do with the results. You have to prepare your SSA-1099 form: you will take some figures from this document and insert them into the notice.
If this is your first year when you get any governmental perks in frames of the social security program, you should know that every year in January, you will be furnished with the completed SSA-1099 form. This document demonstrates how much did you get throughout the last year. It is sent to every single recipient of the benefits.
You can feel unconfident while filling out tax forms or just have no desire to do this job. There is a solution: you can contract a specialist who works with such documents regularly and can complete the template for you. It will be, of course, quick and easy; however, prepare to pay a certain sum for such services if you prefer them. If you already have your personal accountant, do not even bother with reading the notice’s instructions — just pass the template to your expert.
If nothing of the above-mentioned solutions apply, you should create the document individually. It is possible with the help of our guidelines below. Also, the IRS guide will be a useful thing to read. Prepare both and proceed to the form completion.
Find the Template
You cannot create any legal form without a template you can use. With our exemplary form-building software, you will easily get IRS Notice 703. Try it to obtain the form’s current version. Also, you can switch to the Service’s webpage and get the document there, but it might take a bit more time.
Read the Instructions
Remember we have mentioned that not all your benefits require paying taxes? This is what the initial instructions tell about. Read them thoroughly before you complete the form. If you have received some other forms (like SSA-1042S, RRB-1099, or RRB-1042S), you can completely omit this worksheet.
There are five lines to fill out (A, B, C, D, and E). Line A demands that you take all your SSA-1099 forms and insert the total sum from line 5 there (if you have more than one form, add all the numbers from line 5).
In line B, you have to multiply the line A number by 0,50 (or 50%). Write your total taxable income in line C (you will understand what to write because the items you should count are listed here). If you have any tax-exempt interest, enter it in line D.
Finally, in line E, you will add the sum you have gotten when you add numbers from B, C, and D together.,
Read Another Set of Instructions
Below the calculations, you will see guidelines that help to interpret the numbers you have gotten. The list contains three conditions that define whether your benefits require paying any tax or not. It depends on the sum you have obtained and on your marital status. You might have to pay taxes on your perks if:
If you realize that you might need to pay, check Publication 915 issued by the Service. If not, keep reading the provided instructions to understand what you should do next.
Keep the Filled-out Form
As we have already told you, you are not required to send the document after you complete it. Add it to your archive, where you keep other essential forms. Do not lose it because sometimes such worksheets might be needed, and public authorities can demand them at any moment.