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Answers are provided by Robert S. Kaufman
Answers to Some Common Tax Questions
(Posted March 2, 2003)
Question 223: I'm retired under 60/30 & less than 62. Am I correct that my entire Railroad Retirement benefit is taxed as a contributory private pension until I reach 62? I have received my RRB 1099-R but I don't know exactly what to do with the information. Is there any place I can get a simple explanation of how to figure the Federal & State income taxes that I am liable for?
I'm 63 & retired in June 2002. What part of my Tier 1 & Tier 2 is taxable? My tax preparer is not sure how to report my Railroad Retirement payments.
Answer: Taxation of Railroad Retirement is unforturnately a complex subject as is most of the Federal Income Tax Code. The RRB sends out 1099 froms every January to each beneficiary. Those forms carry important information that are needed to correctly complete tax returns. The RRB-1099(blue & white) reports the amount of benefits paid the previous year which are treated as a Social Security benefits for tax purposes. The RRB-1099-R (green & white)reports the data needed to report the remainer of your payments which are treated as a private employer pension for tax purposes.
Question #23 & the answer I posted there gives a very good overview of how Railroad Retirement benefits are taxed. The RRB web site (www.rrb.gov) is another good souce of information including frequently asked questions & answers and booklets such as the TX-5 & the TB-85 that can be downloaded. Finally,writing, calling, or e-mailing the RRB with your questions is another option.
Answers are provided as general guidance on the subjects covered in the question and are not provided as legal advice
to the questioner or to readers. Any legal issues should be reviewed by your legal counsel to apply the
law to the particular facts of this and similar situations.
The law in this area changes frequently. Answers are believed to be correct as of the posting dates shown. The completeness
or accuracy of a particular answer may be affected by changes in the law (statutes, regulations, rulings, court decisions, etc.)
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