Publication 575 - Pension And Annuity Income - 2004 Page 5
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Length of service award plans for bona fide volun-
recovery of employee contributions from the tier 2 benefits
teer firefighters and emergency medical personnel.
and the NSSEB part of the tier 1 benefits. (NSSEB and tier
An exception applies if the total amount paid to a
2 benefits, less certain repayments, are combined into one
volunteer exceeds $3,000 for any year of service.
amount called the Contributory Amount Paid on Form
RRB-1099-R.) Vested dual benefits and supplemental an-
nuity benefits are fully taxable. See Taxation of Periodic
Payments, later, for information on how to report your
Disability Pensions
benefits and how to recover the employee contributions tax
free. Form RRB-1099-R is used for U.S. citizens, resident
If you retired on disability, you generally must include in
aliens, and nonresident aliens.
income any disability pension you receive under a plan that
is paid for by your employer. You must report your taxable
Nonresident aliens. A nonresident alien is an individual
disability payments as wages on line 7 of Form 1040 or
who is not a citizen or a resident of the United States.
Form 1040A until you reach minimum retirement age.
Nonresident aliens are subject to mandatory U.S. tax with-
Minimum retirement age generally is the age at which you
holding unless exempt under a tax treaty between the
can first receive a pension or annuity if you are not dis-
United States and their country of legal residency. A tax
abled.
treaty exemption may reduce or eliminate tax withholding
You may be entitled to a tax credit if you were
from railroad retirement benefits. See Tax withholding,
TIP
permanently and totally disabled when you re-
later for more information.
tired. For information on this credit, see Publica-
If you are a nonresident alien and your tax withholding
tion 524.
rate changed or your country of legal residence changed
Beginning on the day after you reach minimum retire-
during the year, you may receive more than one Form
ment age, payments you receive are taxable as a pension
RRB-1099-R. To determine your total benefits paid or
or annuity. Report the payments on Form 1040, lines 16a
repaid and total tax withheld for the year, you should add
and 16b or on Form 1040A, lines 12a and 12b.
the amounts shown on all Forms RRB-1099-R you re-
ceived for that year. For information on filing requirements
Disability payments for injuries incurred as a di-
for aliens, see Publication 519, U.S. Tax Guide for Aliens.
TIP
rect result of a terrorist attack directed against the
For information on tax treaties between the United States
United States (or its allies), are not included in
and other countries that may reduce or eliminate U.S. tax
income. For more information about payments to survivors
on your benefits, see Publication 901, U.S. Tax Treaties.
of terrorist attacks, see Publication 3920, Tax Relief for
Victims of Terrorist Attacks.
Tax withholding. For payments received under the first
category, get Form W-4V, Voluntary Withholding Request,
Railroad Retirement
from the IRS and file it with the RRB to request or change
your income tax withholding. For payments received under
Benefits paid under the Railroad Retirement Act fall into
the second category, use Form RRB W-4P, Withholding
two categories. These categories are treated differently for
Certificate for Railroad Retirement Payments, to elect,
income tax purposes.
revoke, or change your income tax withholding. If you are a
The first category is the amount of tier 1 railroad retire-
nonresident alien or a U.S. citizen living abroad, you
ment benefits that equals the social security benefit that a
should provide Form RRB-1001, Nonresident Question-
railroad employee or beneficiary would have been entitled
naire, to the RRB to furnish citizenship and residency
to receive under the social security system. This part of the
information and to claim any treaty exemption from U.S.
tier 1 benefit is the social security equivalent benefit
tax withholding.
(SSEB) and you treat it for tax purposes like social security
benefits. If you received or repaid the SSEB portion of tier 1
Help from the RRB. To request an RRB form or to get
benefits during 2004, you will receive Form RRB-1099,
help with questions about an RRB benefit, you should
Payments by the Railroad Retirement Board (or Form
contact your nearest RRB field office if you reside in the
RRB-1042S, Statement for Nonresident Aliens of Pay-
United States (call 1-800-808-0772 for the nearest field
ments by the Railroad Retirement Board, if you are a
office) or U.S. consulate/embassy (if you reside outside the
nonresident alien) from the U.S. Railroad Retirement
United States). You can visit the RRB on the Internet at
Board (RRB).
For more information about the tax treatment of the
SSEB portion of tier 1 benefits and Forms RRB-1099 and
Form RRB-1099-R. The following discussion explains the
RRB-1042S, see Publication 915.
items shown on Form RRB-1099-R. The amounts shown
on this form are before any deduction for:
The second category contains the rest of the tier 1
railroad retirement benefits, called the non-social security
•
Federal income tax withholding,
equivalent benefit (NSSEB). It also contains any tier 2
•
benefit, vested dual benefit (VDB), and supplemental an-
Medicare premiums,
nuity benefit. Treat this category of benefits, shown on
•
Legal process garnishment payments,
Form RRB-1099-R, as an amount received from a qualified
•
employee plan. This allows for the tax-free (nontaxable)
Legal process assignment payments,
Page 5
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