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Stop, Look & Listen: Railroad Retirement Benefits Q&A

Answers are provided by Robert S. Kaufman

Taxation of Occupational Disability Annuity

(Posted November 25, 2006)

Question 613: I retired from the railroad with occupational disability at the age of 58 with more than 30 years of service. When will (if at all) I be able to claim my retirement as Social Security for federal income tax purposes?

Answer: When you can begin to claim a portion of your disability annuity as "Social Security" for federal income tax purposes depends on when Social Security would have started to pay you benefits if your rail work had be credited under that program.

With an Occupational Disability from Railroad Retirement, your condition might be severe enough to qualify for a "Period of Disability" at Social Security. If so, a portion of your Tier 1 benefit would be considered as a Social Security Disability benefit for federal income tax purposes.

The Railroad Retirement Board automatically reviews all disability applications to see if the worker's condition meets the Social Security standards. You should receive a letter informing you of their decision.

If you do not qualify for a Period of Disability, then you must wait until the year you turn 62. At that time, a portion of your Tier 1 benefit will start to be counted as Social Security, and you should receive separate IRS 1099 forms in January of the following year. Your Railroad Retirement benefit will be divided into two parts for federal income tax purposes: Social Security Equivalent Benefit and Industry Pension benefit.

If you have any questions about a Period of Disability decision in your case, you should contact the Railroad Retirement Board.

Important notice:

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.) that occur after the date on which a particular Q&A is posted.

Copyright 1997-2017 Robert S. Kaufman
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