rck9876[at]yahoo.com wrote:
- quote -

Yes, except that 85% of $16,500 (2007) = 14025, not 14015.
Taxable is 28390 not 28380.
- quote -

Your lucky they only deducted for the attorney's feet. If they
had included his whole body, they would have deducted much more.


- quote -

Medicare premiums may be included on Schedule A as a medical
expense. As you apid the attorney to obtain taxable income, it is
a misc. itemized deduction subject to the 2% limitation.
- quote -

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

My wife was injured at work in 2005 and was receiving worker comp
benefits from 2005 to mid 2008. In 2008, workers comp cut off her
benefits. She applied for social security disability the year before,
and she started receiving social security disability in August 2008
after worker comp cut off her benefits. She received a SSA 1099 for
2008, both box 3 and box 5 include her 2008 social security disability
and the worker comp benefits that she received since 2005. The total
amount was about $52,000. Because of my 2008 income, if we include
the $52,000 as total benefits, it would be taxed at 85% (52000 x 85% =
$44,200). My wife only received her worker comp monthly payments from
January through June in 2008 and social security monthly payments from
August through December in 2008. She did not receive any lump sum
payments from Social Security. From what I read, I am guessing that
Social Security must have made my wife's disability benefits
retroactive to 2005 and reimbursed her old company's workers comp
directly for their 2005 - 2008 payments to my wife, therefore all her
prevous workers comp payments became taxable. This just doesn't make
sense to me since suddenly all her workers comp benefits became
taxable (before they were tax free in previous years) but she did not
receive anything additional in 2008, but I think that's what they
did. I read pub 915. On page 11, it says that if the benefits were
lump sum payments that include previous years payments, we can
calculate the taxable amounts by using her previous years' adjusted
gross income. We got married in 2007 and started filing jointly.
Using worksheet 1, 2 and 4 per pub 915, here's what I calculated

SSA1099 box 3 descriptions

$16,500 paid in 2008 for 2007
$16,000 paid in 2008 for 2006
$2,600 paid in 2008 for 2005
(total for previous years = $35,100, so 2008 w/c and ss benefits =
52,000 - 35,100 = $16,900)

worksheet 1 - line 19 taxable = 52000 x 85% = $44,200 (adj gross
income filing jointly higher than the limit of $32,000)
worksheet 2 - 2005 wife filed single status, adj gross income was
$17,000 (excluded worker comp benefits - not taxable), below $25,000
limit, so line 21 taxable amount is 0
worksheet 2 - 2006 wife filed single status, adj gross income was
$4000 (exclude workers comp benefits), below limit, so line 21 taxable
amount is 0
worksheet 2 - 2007 married filing jointly, adj gross $60,000 (exclude
workers comp benefits), higher than limit, so line 21 taxable amount
is $16,500 paid in 2008 for 2007 x 85% = $14,025
worksheet 4 - 2008 married filing jointly, 2008 taxable amount is
$16,900 of benefits per above x 0.85 = $14,365. Adding 2005 ($0),
2006 ($0) and 2007 ($14,015) taxable benefits, the total taxable
benefits would be $14,365 + $14,015 = $28,380

So on form 1040, I would put "LSE" on the left of line 20a, write in
$52,000 total on SSA 1099 box 3 on line 20a and $28,380 taxable amount
(per worksheet 4) on line 21b. As I understand, no addition tax form
is needed to attach to form 1040, but we'll have to keep the
worksheets and SSA 1099 for recordkeeping.

Another question is per the SSA1099, social security deducted $600 for
Medicare B premiums and $700 for attorney feet. I assume that I can
include the $500 medicare B premiums in medical expenses (7.5% limit)
and $700 attorney fee in misc deductions (2% limit) on schedule A?
Although neither would help since our medical expenses and misc
deductions would not meet the threshold because the additional social
security disablility income that we will have to add on form 1040.
But I am just curious of whether they are reportable.

Please let me know if my calculations are correct. We appreciate your
help in advance.




..

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >