SOCIAL SECURITY COULD BE TAXABLE

                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: MONDAY, February 24, 1992                   TAG: 9202240020
SECTION: BUSINESS                    PAGE: B6   EDITION: METRO 
SOURCE: Associated Press
DATELINE: WASHINGTON                                LENGTH: Medium
SOCIAL SECURITY COULD BE TAXABLE
As much as half of your Social Security benefits may be subject to tax if your income exceeds $25,000, or $32,000 for a couple.
Here is how to determine if your benefits are taxable:
Start with your adjusted gross income (not counting Social Security) and add any tax-exempt interest your received in 1991. That gives you modified adjusted gross income, to which is added half your Social Security benefits. Call this new figure MAGI-plus.
Next, your filing status determines your "base amount": $32,000 for a couple filing jointly; zero for a married person filing separately who lived with the spouse any time in 1991, and $25,000 for all others.
If MAGI-plus is less than your base amount, none of your Social Security is taxable. If MAGI-plus exceeds the base, you pay tax on the smaller of:
Half your Social Security, or
Half the amount by which MAGI-plus exceeds the base.
For example, a married couple filing a joint return had $31,000 of pension benefits (not counting Social Security), taxable interest and capital gains plus $2,000 of tax-exempt interest. Their 1991 Social Security benefits were $6,200.
Adding $31,000 and $2,000 results in MAGI of $33,000. Adding half their Social Security - $3,100 - produces MAGI-plus of $36,100.
MAGI-plus exceeds their $32,000 base by $4,100. But this couple will pay tax on half their Social Security - $3,100 - since that is less than the $4,100 figure.
The taxable amount is entered on Line 21b of Form 1040 or on Line 13b of 1040A.
Similarly, a single person with $12,000 of pension benefits, $1,000 of taxable interest and $5,000 of Social Security has a MAGI of $13,000 and MAGI-plus of $15,500. Since that total is below the $25,000 base amount, none of the Social Security benefits is taxable.
You should have received a Form SSA-1099, which shows the benefits you were paid in 1991.
A railroad retiree should receive instead Form RRB-1099. Tier I railroad retirement benefits are subject to the same calculations as Social Security.

by Bhavesh Jinadra by CNB