Social Security benefits include monthly

• Retirement benefits
• Survivor benefits
• Disability benefits

They don't include supplemental security income (SSI) payments, which aren't taxable.

Equivalent Tier 1 railroad retirement benefits are part of Tier 1 benefits. They are benefits a railroad employee or beneficiary would have received under the Social Security system. They are commonly called the Social Security equivalent benefit (SSEB) portion of Tier 1 benefits. Tier 1 railroad retirement benefits are the equivalent of Social Security benefits. So, they’re treated the same way for tax purposes.

If you receive Tier 1 benefits during the year, you'll get a Form SSA-1099 or Form RRB-1099 showing the total payments you received. Box 5 of each form includes the net benefit amount that allows you to figure the taxable portion.

Taxable and Nontaxable Benefits

If the only income you received during 2012 was your Social Security or the SSEB portion of Tier 1 railroad retirement benefits, then:

• Your benefits usually aren't taxable.
• You probably don't have to file a return.

If you have other income besides your benefits, up to 85% of your Social Security or SSEB payments can be taxed. You might have to file a return even if none of your benefits are taxable. To determine if any of your benefits might be taxable, compare the base amount for your filing status with the total of:

• Half of your benefits
• All your other income, including tax-exempt interest

When making the above comparison, don’t subtract these exclusions from your other income:

• Interest from qualified U.S. Savings Bonds
• Employer-provided adoption assistance
• Foreign earned income or foreign housing
• Income earned by a bona fide resident of American Samoa or Puerto Rico

The base amounts for each filing status are:

• $25,000 if you’re single, head of household, or qualifying widow(er)
• $25,000 if you’re married filing separately and lived apart from your spouse for all of the year
• $32,000 if married filing jointly
• $0 if you’re married filing separately and lived with your spouse at any time in the current year

Up to 50% of your benefits will usually be taxable. However, up to 85% of your benefits can be taxable if either of these situations applies to you:

• The total of half of your benefits and all your other income is more than $34,000 -- $44,000 if married filing jointly.
• You’re married filing separately and lived with your spouse at any time in 2012.

To find out how much of your benefits are taxable, compare the base amount for your filing status with your provisional income. Your provisional income is the total of half of your benefits and all your other income from above. Up to 50% of the benefits you receive are taxable if your provisional income isn’t more than:

• $34,000 for single filers
• $44,000 if married filing jointly

However, up to 85% of the amount you receive is taxable if your provisional income is more than:

• $34,000 for single filers
• $44,000 if married filing jointly

To figure the taxable amount of your benefits, see the worksheet in IRS Publication 915 or IRS Form 1040 instructions.

To learn more, see:

• IRS Publication 554: Tax Guide for Seniors
• IRS Publication 915: Social Security and Equivalent Railroad Retirement Benefits
• IRS Form 1040A instructions
• IRS Form 1040 instructions