1099-SSA - does it include the total of monthly BENEFITS from previous year or the total of monthly PAYMENTS (which are paid one month in arrears)?

[Questionasker]

Social Security monthly benefits are paid one month in arrears.  From their letter:  "Social Security benefits for a given month are paid the following month.  (For example, Social Security benefits for March are paid in April.)"

Example for this question: I started a benefit of $100 in November, which is paid in December.  In this example will my 1099-SSA state I received $100 for the year (the November benefit amount paid in December) or $200 (the benefit amount for November plus the benefit amount for December?  (Even though I only received a payment of $100 for the year, that is, the November benefit paid in December.)

[xmasbaby0]

Not sure why you are worried about this.   All you need to do is enter your SSA1099 exactly as it appears when you enter it into the software.  You do not have to do any sort of calculations yourself regarding payments in "arrears", etc.  

Social Security will mail your SSA1099 in January.

  Go to Federal> Wages & Income>>Retirement Plans and Social Security  (SSA1099 and 1099RRB) to enter your SSA1099.

[rjs · Accepted solution]

Form SSA-1099 shows the payments you actually received during the year. In your example, it would show $100 because that's the amount you received during the year.

[Questionasker]

Here is the reason I want to know the answer now to what the 1099-SSA will say when I receive it: Year end tax planning that I am doing now.  In other words if the income is 2 months worth, it may kick me over a threshold that I need to stay under, whereas if it is one month I will remain below what is required to keep income within a certain limit. 

I now see that the question I asked was answered above by rjs.  At first I didn't see the 2nd answer.  Thanks!

[db_sedwxtfzc]

I agree with xmasbaby0: use the amount showing in Box 3 as Benefits Paid on the Form 1099-SSA. 

For most taxpayers, income from Social Security is reported on the 1040, Personal Income Tax Form, on a "cash-basis".  So in your example, since you have gotten just one month's deposit from Social Security (November's benefits), your Form 1099-SSA will show just 1 month's payment.  This is so even though you are due December's benefits, which will arrive in January of the following year.  In the next year, you should expect to see 12 month's payments on the Form 1099-SSA.  For tax purposes it does not matter that the benefit payment cover Dec to Nov, rather than Jan - Dec.  Another way of thinking of this is that the Form 1099-SSA is an IRS form, which follows a cash basis; and does not care what is due you until you actually receive it (again on a cash basis).  

But you may still be surprised or even shocked to discover the amount on the 1099-SSA.  It's not due to the BENEFITS vs PAYMENTS timing issue you allude to, but possible Medicare deductions which make Social Security income complicated to estimate.  On Form 1099-SSA, Box 3 is the "gross" amount, "Benefits Paid".  This is the sum of Benefits paid to you before deductions.  Below Box 3 is description of the Box 3 amount.  In the description is a figure, "Paid by check or Direct deposit", this is the sum of your benefits received for the calendar year (sum of deposited amounts for the year).   The difference between the Box 3 "gross" amount and the Direct deposit amount are deductions: health care premiums paid into Medicare.  It may be difficult to sum the premiums deducted for Medicare based on benefits letters because in my experience the SSA does not provide a schedule of amounts deducted; and benefits notices can be confusing, and sometimes appear contradictory.  I recommend you wait until you receive your Form 1099-SSA to determine the exact amount of Medicare Part B, possibly Part D premiums and other premiums deducted.   

Here's an example (taken from my own 2022 SSA-1099 (amounts modified):

Box 3 Benefits Paid in 2022: $ $24,985.20

Description of Amount in Box 3:

Paid by check or direct deposit                                                  +  $22,075.60 (sum of deposits Jan 1 to Dec31)

Medicare Part B premiums deducted                                                + 2307.60

Medicare Prescription Drug Premiums (Part D) deducted             +   602.00

Total Additions                                                                                      $24,985.20 (Amount to be reported on 1040)

Benefits for 2022                                                                                   $24,985.20

Hope this helps,

Dan B.

[xmasbaby0]

@Questionasker 

And....you did not ask about this, but since it seems you are new to receiving Social Security, this might be helpful to you:

TAX ON SOCIAL SECURITY

Up to 85% of your Social Security benefits can be taxable on your federal tax return.  There is no age limit for having to pay taxes on Social Security benefits if you have other sources of income along with the SS benefits.  When you have other income such as earnings from continuing to work, investment income, pensions, etc. up to 85% of your SS can be taxable. 

 What confuses people about this is that before you reach full retirement age, if you continue working while drawing SS, your benefits can be reduced if you earn over a certain limit. (For 2019 it was $17,640— for 2020 it was $18,240; for 2021 it was  $18,960.  For 2022 it was  $19,560  —  for 2023 $21,240)  For 2024, $22,320.

After full retirement age, no matter how much you continue to earn, your benefits are not reduced by your earnings; your employer will still have to withhold for Social Security and Medicare.  If you work as an independent contractor then you will pay self-employment tax for Social Security and Medicare.

To see how much of your Social Security was taxable, look at lines 6a and 6b of your 2022 Form 1040

https://ttlc.intuit.com/questions/1899144-is-my-social-security-income-taxable

https://www.irs.gov/help/ita/are-my-social-security-or-railroad-retirement-tier-i-benefits-taxable

You need to file a federal return if half your Social Security plus your other income is $25,000 when filing single or head of household, or $32,000 when filing married filing jointly, $0 if you are filing married filing separately.

Some additional information:  There are 11 states that tax Social Security—Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, and Vermont  These states offer varying degrees of income exemptions, but two mirror the federal tax 

[rjs]

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@db_sedwxtfzc wrote:

use the amount showing in Box 3 as Benefits Paid on the Form 1099-SSA.

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The amount you have to enter in TurboTax (or any other tax software), or on line 6a of Form 1040, is the amount from SSA-1099 box 5, not box 3. Usually they are the same, but if there is a repaid amount in box 4, box 5 will be box 3 minus box 4. The SSA-1099 entry screen in TurboTax specifically tells you to enter the amount from box 5.

[Questionasker]

1. Thanks for the added clarification "...Form 1099-SSA is an IRS form, which follows a cash basis; and does not care what is due you until you actually receive it (again on a cash basis)". which provides further explanation about what rjs already answered for me in my simple example.

2. Regarding your statement "...benefits notices can be confusing, and sometimes appear contradictory." I agree with that.  I see differences between the on-line "Benefit Verification Letter" and the mailed "Notice of Award."  The differences are not regarding any issues you mentioned, but regarding what the exact gross benefit amount is for a new spousal benefit that is to start for November and why there are certain differences from what would be expected.  After calling SS and writing them and waiting for responses I'm sure I'll get to the bottom of it by asking them to show their calculations and to answer a couple of other specific questions.  So in the meantime their benefits notices are pieces to the puzzle but more is needed to understand the full picture! 

(Keep in mind I am doing year end tax planning, to determine 2023 taxable income to a very exact threshold.)