Policy and Systems

Section F - Tax Withholding and Railroad Retirement Annuities

U.S. Citizen Tax Withholding
1. Elected SSEB Tax Withholding
  Individuals taxed as U.S. citizens may voluntarily choose to have Federal income tax withheld from the SSEB portion of their tier I benefits. SSEB tax withholding is based on a percentage of the payment. Individuals may elect SSEB tax withholding by completing IRS Form W-4V, Voluntary Withholding Request, and sending it to the RRB.

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Section E - Taxed Under United States Citizen or Nonresident Alien Rules

The rules under which individuals are taxed impact both tax withholding and tax statement reporting. Railroad retirement annuitants are taxed under United States citizen rules or under nonresident alien rules.

For Federal income tax purposes, the "United States" consists of the 50 States and Washington, D.C.

An "unknown individual" is someone who has not provided the RRB with citizenship and residence information.

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Section D - Employee Contribution (EEC) Amount

Definition

The EEC is the amount of railroad retirement taxes paid by the railroad employee that exceeds the amount that would have been paid in social security taxes if the employee's railroad service had been covered under the Social Security Act.

The amount the employee contributes is also referred to as the employee's "investment" or "cost" in his or her pension "contract."
EEC Recovery

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Section C - Payments That are Not Taxable

Tier I, tier II, and vested dual benefits payable for the period before December 1983 are not taxable. Separation Allowance Lump-Sum Amount payments; Residual Lump-Sum payments; Lump-Sum Death Payment amounts, and excess tier II employee tax refund payments are not taxable. Over-reimbursement amounts - amounts repaid to the RRB that exceed the amounts due - are paid back to annuitants as nontaxable payment amounts.

Nontaxable payment amounts are not reported on any Federal income tax statement issued by the RRB.

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Section B - How RRA Annuity Component Payments are Taxed

Various components of RRA annuities are taxed differently. With the exception of certain Social Security Equivalent Benefit (SSEB) payments covering prior years, annuity payments are taxed in the year in which they are received by the payee, regardless of the year for which they were paid. Below is an assessment of how specific annuity components are taxed.

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Section A - Taxation of RRA Annuities under Federal Income Tax Laws

The Tier 1, Tier 2, and vested dual benefit components of regular annuity payments and special guaranty (overall minimum) formula payments have been subject to Federal income tax since January 1, 1984. Supplemental annuities have been subject to Federal income tax since November 1, 1966.

Section 14 (45 U.S.C. Section 231m) of the RRA declares railroad retirement annuities are not taxable for State income tax purposes.

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The Taxation of Railroad Retirement Act Annuities

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Part 10 - Proof of Citizenship and Residence

Citizenship is a material factor in applying tax provisions. Generally, RRB accepts a claim that an individual is a citizen of the country of birth unless there is information or evidence to the contrary.

Conclusive Evidence of U.S. Citizenship

Any of the following documents is generally conclusive evidence of U.S. citizenship for the person to whom the document is issued regardless of where the person was born.

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Part 9 - Proof of Appointment as Legal Representative

Evidence of appointment as legal representative is required of anyone filing an application for benefits in this official capacity. A legal representative can be the guardian, trustee, committee or conservator of an individual or the administrator or executor of an estate.

Proof of Court Appointment

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Part 8 - Proof of Payment of Burial Expenses

To prove the payment of all or any part of the burial expenses, you must either submit Railroad Retirement Board Form G-273a or an itemized, receipted statement or bill from the funeral director and other persons furnishing goods or services. The receipt must identify the deceased person, be signed by the funeral director or other person to whom payment was made and give all of the following information:

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