Taxable as a Social Security Benefit

The portion of the tier 1 component of a railroad retirement annuity that is equivalent to what the Social Security Administration would pay if  railroad service were covered under the Social Security Act is treated the same as a social security benefit for Federal income tax purposes.  Special guaranty amounts paid to some railroad retirement beneficiaries  are also treated like social security benefits for Federal income tax purposes. The portions of a railroad retirement annuity that are taxable the same as social security benefits are generally referred to as social security equivalent benefits (SSEB). 

To find out whether any of your social security equivalent benefits are taxable, you must compare the base amount for your filing status with the total of:

1.  All your taxable income, including taxable pensions, wages, interest, and dividends,
2. Your tax-exempt interest income, and
3. One-half of your social security equivalent benefits.

Your base amount is:

• $25,000 if you are single, head of household, or qualifying widow(er),
• $25,000 if you are married filing separately and lived apart from your spouse at all times during the year, 
• $32,000 if you are married filing jointly, or
• $ -0- if you are married filing separately and lived with your spouse at any time during the year. 

If your taxable income and tax-exempt interest income, plus one-half of the amount of your social security equivalent benefits, is more than your base amount, some of your benefits may be taxable.

You can choose to have taxes withheld from the SSEB portion of your railroad retirement annuity by filing IRS Form W-4V. File the completed form at any Railroad Retirement Board (RRB) office. Forms W-4V are available from IRS offices. The RRB will not withhold taxes from the SSEB portion of your annuity unless you file Form W-4V.

Taxes on the Non-Social Security Equivalent Benefit Portion of Tier 1, Tier 2 Benefits, Vested Dual Benefits, and Supplemental Annuity Payments

The non-social security equivalent benefit (NSSEB) portion of tier 1 benefits, tier 2 benefits, vested dual benefits, and supplemental annuity payments are considered taxable income regardless of the amount of any other income you may have. These portions of your annuity are subject to Federal income tax withholding. If you file Form RRB W-4P to have taxes withheld based on your marital status and tax withholding allowances, we will withhold taxes from these portions of your annuity only. We will not withhold taxes from the SSEB portion of your annuity unless you also file Form W-4V.

Railroad retirement annuities are not taxable by states in accordance with section 14 of the Railroad Retirement Act (45 U.S.C. § 231m). The RRB will not withhold state income taxes from railroad retirement payments.

Head of Household

Generally, you may claim head of household filing status on your tax return if you are unmarried and pay more than 50 percent of the costs of keeping up a home for the year for yourself and your dependent(s) or other qualifying individuals. You can claim 1 withholding allowance on line E on pages 6 and 7 of the Personal Allowance Worksheet if you file as head of household on your tax return.

Purpose of Form RRB W- 4P

Complete Form RRB W-4P only if you are a United States citizen or a legal resident for U.S. tax purposes. Complete Form RRB W-4P to request that:

 You are not required to file a Form RRB W- 4P. If you do not file Form RRB W- 4P to request tax withholding, we will withhold taxes only if the combined taxable NSSEB, tier 2, vested dual benefit, and supplemental annuity components of your monthly railroad retirement annuity exceed $1,241.33.  If you exceed this amount and do not file a Form RRB W- 4P, we will withhold taxes as if you were married and claimed three allowances.

File Form RRB W- 4P no earlier than 6 months before the date your annuity is subject to tax withholding. We will adjust your withholding according to your RRB W- 4P request. Your request remains in effect until you change or cancel it with a new Form RRB W- 4P. You may file a new Form RRB W- 4P at any time. The adjustment to your payment will serve as your notification that your request is in effect.

How to Complete Form RRB W- 4P
Complete items 1 through 6 and item 11. If you answer "yes" to item 6, also complete items 7 through 10, as appropriate.

Item 6, Withholding or No Withholding Election:
Fill in the "YES" box if you want Federal income tax withheld from your railroad retirement payments. Go to item 7.

Note: Beneficiaries who are United States citizens residing outside the United States, may not elect no withholding of taxes from their railroad retirement payments.  If the "NO" box is completed, the RRB will withhold taxes as if married and claiming three allowances.

Item 7, Marital Status for Tax Withholding Purposes:
Fill in your marital status for tax withholding purposes.

Item 8, Withholding Allowance for Tax Withholding Purposes:
Enter the number of withholding allowances you claim in item 8. Use the worksheets on pages 6 and 7 to figure the number of your allowances.  Generally, the more allowances you claim, the less tax is withheld. If you have more than one pension or annuity or if your spouse also has a pension or annuity, you may claim all of your allowances on one Form RRB W-4P or you may claim some on each Form RRB W-4P, but you may NOT claim the same allowances more than once.  Your withholding will usually be more accurate if you claim all allowances on the Form RRB W-4P for the largest payment and claim zero on all other Forms RRB W-4P.

Note: The worksheets are only guides. They will give only approximate withholding allowance information.

Item 9, Additional Dollar Amount for Tax Withholding Purposes:
Answer "Yes" if you want an additional dollar amount withheld from your monthly benefits. This additional amount, which is computed on line 1 of the Multiple Pensions/More Than One Income Worksheet on pages 6 and 7 will be added to any tax withholding amount computed based on the marital status and number of allowances you have entered in items 7 and 8 of Form RRB W- 4P. Go to item 10.

Item 10, Additional Dollar Withholding Amount:
Enter the additional dollar amount you want withheld from each annuity payment. This includes all accrual payments regardless of the amount of the accrual. Use the amount from line 1 of the Multiple Pensions/More Than One Income Worksheet Than One Income Worksheet Than One Income Worksheet on pages 6 and 7. Show whole dollars. Do  not show cents. Go to item 11.

Item 11, Signature and Date
Sign your name and enter the current date.  The form must be signed to be valid. It should be signed by the person who is responsible for signing any U.S. income tax return filed on the social security account number entered in item 3. 

Accrual Payments
Each payment you receive will be taxed based on what you claim on your RRB W- 4P. This includes accrual payments. We will also withhold any additional withholding you request in item 10. If the additional amount is more than the accrual payment, we will withhold the entire accrual payment. If the additional amount is less than the accrual, we will withhold the entire additional amount. Even if the additional amount is more than the accrual payment, we cannot withhold any portion of your SSEB, unless IRS Form W- 4V is filed with the RRB.

Statement of Annuity Payments and Taxes Withheld
No later than January 31 following the tax year, you will receive a statement showing the total annuity payments made to you during the preceding calendar year. This statement will also show the total amount of any taxes withheld from your payments. Use this statement to complete any income tax return you must file with the Internal Revenue Service for the tax year.

Tax Refunds

The time needed to complete Form RRB W- 4P will vary depending on individual circumstances. The estimated average time is: