- 5 - benefits exceeds $44,000 must include up to a maximum of 85 percent of their Social Security benefits in their gross income. See sec. 86(a), (b), and (c). Respondent determined that 85 percent of the Social Security benefits petitioner received for 1996 and 85 percent of the benefits he received for 1997 are includable in his gross income for each respective tax year. Petitioners do not dispute that 85 percent of the Social Security benefits petitioner received for each year is taxable, nor do they dispute that petitioner received worker’s compensation benefits from a private insurer in the amounts by which his Social Security benefits were offset. Petitioners, however, argue that the Social Security Administration never paid the benefits reported as worker’s compensation offset, and thus those amounts should not be included in petitioners’ gross income. Section 86(d)(3) clearly provides that such offsets are Social Security benefits for purposes of determining gross income; if * * * any social security benefit is reduced by reason of the receipt of a benefit under a workmen’s compensation act, the term “social security benefit” includes that portion of such benefit received under the workmen’s compensation act which equals such reduction. Section 86 was added to the Internal Revenue Code by the Social Security Amendments Act of 1983, Pub. L. 98-21, sec. 121, 97 Stat. 80. The House report states in relevant part:Page: Previous 1 2 3 4 5 6 7 8 Next
Last modified: May 25, 2011