1

Office of Tax Policy

January 2021

Report on the Taxation of

Social Security and Railroad Retirement Benefits in 

Calendar Years 2010 through 2014

Report to Congress, the Secretary of Health and Human Services, the 

Social Security Administration, and the Railroad Retirement Board

Section 121 of the Social Security Amendments of 1983 (P.L. 98-21), directs the Secretary of the 

Treasury to transfer from the general fund of the Treasury to the Social Security and Railroad 

Retirement trust funds amounts equivalent to the tax liabilities attributable to the taxation of 

Social Security and Railroad Retirement benefits. Section 121 further provides that the Secretary 

of the Treasury shall submit annual reports concerning (1) the transfers made that year, and the 

methodology used in determining the amount of such transfers and the funds of accounts to 

which made, and (2) the anticipated operation of the transfers during the next five years. This 

report fulfills this requirement for Calendar Years 2010 through 2014.
 DEPARTMENT OF THE TREASURY

Washington, DC 20220

January 14, 2021

The Honorable Michael R. Pence

President of the Senate

Washington, DC 20510

Dear Mr. President:

Section 121 of the Social Security Amendments of 1983 (P.L. 98-21), directs the

Secretary of the Treasury to transfer from the general fund of the Treasury to the Social 

Security and Railroad Retirement trust funds amounts equivalent to the tax liabilities 

attributable to the taxation of Social Security and Railroad Retirement benefits. Section 

121 further provides that the Secretary of the Treasury shall submit annual reports 

concerning (1) the transfers made that year, and the methodology used in determining the 

amount of such transfers and the funds of accounts to which made, and (2) the anticipated 

operation of the transfers during the next five years.

Pursuant to Section 121, I am pleased to submit the “Report on the Taxation of Social 

Security and Railroad Retirement Benefits in Calendar Years 2010 through 2014.”

This report is also being transmitted to the Speaker of the House, the Secretary of the 

Department of Health and Human Services, the Commissioner of the Social Security 

Administration, and the Chairman of the Railroad Retirement Board.

Sincerely,

Frederick W. Vaughan

Principal Deputy Assistant Secretary 

Office of Legislative Affairs

cc: The Honorable Ronald L. Batory

Administrator, Federal Railroad Administration
 DEPARTMENT OF THE TREASURY

Washington, DC 20220

January 14, 2021

The Honorable Nancy P. Pelosi

Speaker of the House of Representatives

Washington, DC 20515

Dear Madam Speaker:

Section 121 of the Social Security Amendments of 1983 (P.L. 98-21), directs the 

Secretary of the Treasury to transfer from the general fund of the Treasury to the Social 

Security and Railroad Retirement trust funds amounts equivalent to the tax liabilities 

attributable to the taxation of Social Security and Railroad Retirement benefits. Section 

121 further provides that the Secretary of the Treasury shall submit annual reports 

concerning (1) the transfers made that year, and the methodology used in determining the 

amount of such transfers and the funds of accounts to which made, and (2) the anticipated 

operation of the transfers during the next five years.

Pursuant to Section 121, I am pleased to submit the “Report on the Taxation of Social 

Security and Railroad Retirement Benefits in Calendar Years 2010 through 2014.”

This report is also being transmitted to the President of the Senate, the Secretary of the 

Department of Health and Human Services, the Commissioner of the Social Security 

Administration, and the Chairman of the Railroad Retirement Board.

Sincerely,

Frederick W. Vaughan

Principal Deputy Assistant Secretary 

Office of Legislative Affairs

cc: The Honorable Ronald L. Batory

Administrator, Federal Railroad Administration
 DEPARTMENT OF THE TREASURY

Washington, DC 20220

January 14, 2021

The Honorable Alex M. Azar

Secretary

Department of Health and Human Services

200 Independence Ave., SW

Washington, DC 20201

Dear Secretary Azar:

Section 121 of the Social Security Amendments of 1983 (P.L. 98-21), directs the 

Secretary of the Treasury to transfer from the general fund of the Treasury to the Social 

Security and Railroad Retirement trust funds amounts equivalent to the tax liabilities 

attributable to the taxation of Social Security and Railroad Retirement benefits. Section 

121 further provides that the Secretary of the Treasury shall submit annual reports 

concerning (1) the transfers made that year, and the methodology used in determining the 

amount of such transfers and the funds of accounts to which made, and (2) the anticipated 

operation of the transfers during the next five years.

Pursuant to Section 121, I am pleased to submit the “Report on the Taxation of Social 

Security and Railroad Retirement Benefits in Calendar Years 2010 through 2014.”

This report is also being transmitted to the President of the Senate, the Speaker of the 

House, the Commissioner of the Social Security Administration, and the Chairman of the 

Railroad Retirement Board.

Sincerely,

Frederick W. Vaughan

Principal Deputy Assistant Secretary 

Office of Legislative Affairs

cc: The Honorable Ronald L. Batory

Administrator, Federal Railroad Administration
 DEPARTMENT OF THE TREASURY

Washington, DC 20220

January 14, 2021

The Honorable Andrew M. Saul

Commissioner

Social Security Administration

Altmeyer Building

6401 Security Blvd.

Baltimore, MD 21235

Dear Commissioner Saul:

Section 121 of the Social Security Amendments of 1983 (P.L. 98-21), directs the 

Secretary of the Treasury to transfer from the general fund of the Treasury to the Social 

Security and Railroad Retirement trust funds amounts equivalent to the tax liabilities 

attributable to the taxation of Social Security and Railroad Retirement benefits. Section 

121 further provides that the Secretary of the Treasury shall submit annual reports 

concerning (1) the transfers made that year, and the methodology used in determining the 

amount of such transfers and the funds of accounts to which made, and (2) the anticipated 

operation of the transfers during the next five years.

Pursuant to Section 121, I am pleased to submit the “Report on the Taxation of Social 

Security and Railroad Retirement Benefits in Calendar Years 2010 through 2014.”

This report is also being transmitted to the President of the Senate, the Speaker of the 

House, the Commissioner of the Social Security Administration, and the Chairman of the 

Railroad Retirement Board.

Sincerely,

Frederick W. Vaughan

Principal Deputy Assistant Secretary 

Office of Legislative Affairs

cc: The Honorable Ronald L. Batory

Administrator, Federal Railroad Administration
 DEPARTMENT OF THE TREASURY

Washington, DC 20220

January 14, 2021

Chairman Erhard R. Chorlé

Railroad Retirement Board

844 North Rush Street

Chicago, IL 60611-1275

Dear Chairman Chorlé:

Section 121 of the Social Security Amendments of 1983 (P.L. 98-21), directs the 

Secretary of the Treasury to transfer from the general fund of the Treasury to the Social 

Security and Railroad Retirement trust funds amounts equivalent to the tax liabilities 

attributable to the taxation of Social Security and Railroad Retirement benefits. Section 

121 further provides that the Secretary of the Treasury shall submit annual reports 

concerning (1) the transfers made that year, and the methodology used in determining the 

amount of such transfers and the funds of accounts to which made, and (2) the anticipated 

operation of the transfers during the next five years.

Pursuant to Section 121, I am pleased to submit the “Report on the Taxation of Social 

Security and Railroad Retirement Benefits in Calendar Years 2010 through 2014.”

This report is also being transmitted to the President of the Senate, the Speaker of the 

House, the Commissioner of the Social Security Administration, and the Chairman of the 

Railroad Retirement Board.

Sincerely,

Frederick W. Vaughan

Principal Deputy Assistant Secretary 

Office of Legislative Affairs

cc: The Honorable Ronald L. Batory

Administrator, Federal Railroad Administration
________________________________________________________________________

Report on the Taxation of

Social Security and Railroad Retirement Benefits

in Calendar Years 2010 through 2014 ________________________________________________________________________

Report to the Congress,

the Secretary of Health and Human Services,

the Social Security Administration,

and the Railroad Retirement Board

January 2021
i

TABLE OF CONTENTS

INTRODUCTION AND SUMMARY................................................................................1

CHAPTER 1: METHODOLOGY AND ESTIMATES OF THE TAX LIABILITY 

ATTRIBUTABLE TO THE TAXATION OF BENEFITS FOR CALENDAR 

YEARS 2010 THROUGH 2014..................................................................6

I. Methodology for Estimating Tax Liability..................................................6

II. Estimates of Tax Liability Attributable to the 

Taxation of Benefits in Calendar Years 2010 through 2014 .......................7

CHAPTER 2: METHODOLOGY FOR ESTIMATING TRANSFERS AND 

CALCULATING ADJUSTMENTS TO TRANSFERS FOR LIABILITY IN 

CALENDAR YEARS 2010 THROUGH 2014 .........................................14

I. Methodology for Estimating Quarterly Transfer Amounts ......................14

II. Methodology for Adjustments to Transfers of Estimated Amounts..........15

III. Transfers of Estimated Amounts and Adjustments to Transfers 

for Liability in Calendar Years 2010 through 2014...................................16

CHAPTER 3: FORECAST OF TRANSFERS TO TRUST FUNDS FOR CALENDAR 

YEARS 2015 THROUGH 2019................................................................18

I. Forecasting Methodology ..........................................................................18

II. Forecasts of Transfers to the Trust Funds..................................................18
1

INTRODUCTION AND SUMMARY

I. Introduction

Since January of 1984, the Treasury Department has been required to estimate the 

individual income tax liabilities attributable to the inclusion of Social Security (Federal Old 

Age and Survivors and Federal Disability Insurance) and Railroad Social Security 

Equivalent benefits in adjusted gross income (AGI) for each liability year. These estimated 

tax liabilities are transferred from the general fund to the Federal Old Age and Survivors 

Insurance (FOASI), Federal Disability Insurance (FDI), and Railroad Social Security 

Equivalent Benefit Account (SSEBA) trust funds on a quarterly basis. Since 1994, transfers 

have also been made to the Federal Hospital Insurance (Medicare) trust fund (FHI). Both 

the taxation of benefits and the transfers to the trust funds are required by the Social Security 

Amendments of 1983 (SSA 83) (P.L. 98-21), as amended by the Railroad Retirement 

Solvency Act of 1983 (P.L. 98-76), the Consolidated Budget Reconciliation Act of 1985 

(P.L. 99-272), and the Omnibus Budget and Reconciliation Act of 1993 (OBRA 93) (P.L.

103-66). P.L. 98-21 also requires that correcting adjustments be made to the amounts 

transferred to the trust funds if the estimates of the tax liability attributable to the benefits are 

subsequently shown to differ from final amounts.

In addition, P.L. 98-21 requiresthe Treasury Department to submit annual reports to 

the Congress, the Secretary of Health and Human Services, and the Railroad Retirement 

Board containing both a description of the methodology used to estimate the transfers to the 

trust funds and a forecast of transfers over the five subsequent years. The Treasury 

Department's Office of Tax Analysis (OTA) is responsible for estimating the original 

transfers to the trust funds, calculating the correcting adjustments when final amounts of 

liability become available, and preparing these mandated reports. This report covers a five

year period, and describes (1) the original liability estimates and transfers to the trust funds 

for calendar years 2010 through 2014, (2) the necessary correcting adjustments to the 

transfers for those same calendar years, and (3) the forecast of liability and transfers for 

calendar years 2015 through 2019.

To determine if any benefits were taxable in calendar years 2010 through 2014,

taxpayers were required to add both tax-exempt interest income and one-half of Social 

Security and Railroad Social Security Equivalent benefits to AGI. This augmented AGI is

referred to as provisional income. If provisional income exceeded thresholds of $25,000 for 

single filers and $32,000 for joint filers, taxpayers were required to include in AGI the lesser 

of:

(1) one-half of the taxpayer’s Social Security or Railroad Social Security 

Equivalent benefits 

or 

(2) one-half of the excess of provisional income over the thresholds.
2

If provisional income exceeded $34,000 for single filers and $44,000 for joint filers, 

taxpayers were required to include in AGI the lesser of:

(1) 85 percent of the taxpayer's Social Security or Railroad Social Security 

Equivalent benefit 

or

(2) the sum of 

(a) the smaller of 

(i) the amount included under the lower thresholds or 

(ii) $4,500 (for single filers) or $6,000 (for joint filers)

Plus

(b) 85 percent of the excess of the recipient's provisional income over the 

applicable second provisional income threshold.

None of the provisional income thresholds are indexed for inflation. Certain married 

beneficiaries not filing joint returns had a provisional income threshold of zero. The AGI of 

these individuals included the lesser of 85 percent of the beneficiary's Social Security or 

Railroad Social Security Equivalent benefit or 85 percent of the recipient's provisional

income. Overall, for the highest income beneficiaries, a maximum of 85 percent of Social 

Security or Railroad Social Security Equivalent benefits was includable in AGI.

Taken together, SSA 83 and OBRA 93 specify the rules for determining the amount 

of Social Security and Railroad Social Security Equivalent benefits includable in AGI and 

the transfers of tax liability attributable to those benefits to the FOASI, FDI, SSEBA and FHI 

trust funds. The first thresholds were enacted under SSA 83, which directed that the 

resulting increase in tax liability be transferred to the trust funds from which the benefits are 

paid (FOASI, FDI, and SSEBA). The inclusion rules apply to benefits received after 

December 31, 1983, in taxable years ending after that date. The second thresholds were 

enacted under OBRA 93, which directed that the additional tax liability resulting from such 

inclusion (in excess of any liability resulting from the first inclusion thresholds) be 

transferred to the FHI trust fund. The OBRA 93 inclusion rules apply to taxable years 

beginning after December 31, 1993.

For example, assume a non-married taxpayer with income of $26,000 (including any 

tax exempt interest, but excluding any Social Security or Railroad Social Security Equivalent

benefits). Further assume this taxpayer has $4,000 in FOASI benefits. This taxpayer has 

$28,000 in provisional income ($26,000 plus one-half $4,000), above the first inclusion 

threshold, but below the second threshold. Therefore, this taxpayer must include the lesser

of one-half of his or her FOASI benefit ($2,000) or one-half the excess of provisional income 

over the first threshold (one-half of $28,000 minus $25,000, or $1,500). Thus, this taxpayer 

must include $1,500 of FOASI benefits in AGI, and the tax on this amount would be 

transferred to the FOASI trust fund.
3

Now assume that this taxpayer’s income is $36,000 (again including any tax exempt 

interest, but excluding any Social Security or Railroad Social Security Equivalent benefits). 

As before, assume that this taxpayer has $4,000 in FOASI benefits. This taxpayer’s 

provisional income is now $38,000, above the second inclusion threshold of $32,000. If the 

second set of inclusion rules had not been enacted, the taxpayer would include the lesser of 

one-half of his or her FOASI benefit ($2,000) or one-half the excess of provisional income 

over the first threshold (one-half of $38,000 minus $25,000, or $6,500). However, under the 

second set of inclusion rules, the taxpayer must include the lesser of 85 percent of his or her 

FOASI benefit ($3,400) or the sum of the smaller of the amount included due to the first 

thresholds ($2,000) or $4,500, plus 85 percent of the excess of provisional income over the 

second threshold (85 percent of $38,000 minus $32,000, or $5,100). Since $3,400 is less than 

$2,000 plus $5,100, the taxpayer must include $3,400 in AGI. The tax on the additional 

amount attributable to the second set of inclusion rules, $1,400 ($3,400 total minus $2,000 

attributable to the first set of inclusion rules) would be transferred to the FHI trust fund while 

the tax on the total amount less the tax on the additional amount would be transferred to the 

FOASI trust fund.

To summarize, the Office of Tax Analysis estimates the income tax liability 

attributable to the partial inclusion of FOASI, FDI and SSEBA benefits in adjusted gross 

income and estimates the amounts to be transferred to the corresponding trust funds plus the 

FHI trust fund.1

 Subsequently, OTA makes adjustments to correct the amounts put into each 

fund. Throughout the report, some tables will show benefits and/or tax liability by income 

source (FOASI, FDI or SSEBA benefits) while others will show the amounts transferred to 

the various trust funds (FOASI, FDI, SSEBA or FHI).

II. Summary

The Summary Table shows OTA’s original tax liability estimates by benefit source 

and the transfers made to the trust funds based on those estimates, the adjusting transfers 

subsequently made, and the resulting net amounts transferred to each trust fund for each 

calendar year. For example, for calendar year 2010, OTA initially estimated that the tax 

liability attributable to partial inclusion of Social Security and Railroad Social Security 

Equivalent benefits was $38,380 million. Of this amount, $35,401 million was attributable 

to the inclusion of FOASI benefits, $2,720 million was attributable to the inclusion of FDI 

benefits, and $259 million was attributable to the inclusion of SSEBA benefits. 

Based on these estimates, transfers of $21,931 million, $1,848 million, $14,442

million, and $159 million were made from the general fund to the FOASI, FDI, FHI, and 

SSEBA trust funds, respectively. OTA subsequently determined that the amount of tax 

liability calculated from actual 2010 tax return data was $4,004 million lessthan the amount 

originally transferred. Transfers to the FOASI, FDI, and FHI trust funds were overstated by 

$2,350 million, $703 million, and $974 million respectively, while transfers to the SSEBA 

trust fund were understated by $23 million. Correcting adjustments to the FOASI, FDI, and 

SSEBA trust funds were made in October 2013. Correcting adjustments to the FHI trust 

fund were made in January 2014. The resulting net amount transferred for calendar year 

2010 liability was $34,376 million. Of this amount, $19,581 was transferred to the FOASI 
4

trust fund, $1,145 million was transferred to the FDI trust fund, $13,468 was transferred to 

the FHI trust fund, and $182 million was transferred to the SSEBA trust fund. 

This report provides the detail supporting the tax liability and transfer amounts. 

Chapter 1 presents OTA’s methodology for estimating the tax liability attributable to the 

inclusion of benefits in AGI and presents a comparison of estimates to actual amounts of 

income tax liability calculated from tax return data for calendar years 2010 through 2014.

Chapter 2 presents the methodologies for estimating the initial amounts to be transferred to 

the trust funds and the subsequent correcting adjustments. The chapter also presents those

initial transfer amounts and the correcting adjustments for 2010 through 2014 liabilities. 

Chapter 3 presents the forecast of transfers of estimated amounts to the trust funds for 

calendar years 2015 through 2019.
5

2010 2011 2012 2013 2014

Original Liability Estimate Attributable To

FOASI Benefits 35,401 36,657 41,362 42,178 46,706

FDI Benefits 2,720 2,977 3,043 2,924 2,688

SSEBA Benefits 259 263 308 337 399

Total Original Liability Estimates 38,380 39,897 44,713 45,439 49,793

Original Transfers Made To

FOASI Trust Fund 21,931 22,109 25,764 25,224 27,773

FDI Trust Fund 1,848 1,935 1,994 1,960 1,676

FHI Trust Fund 14,442 15,693 16,761 18,056 20,094

SSEBA Trust Fund 159 160 194 199 250

Total Original Transfers 38,380 39,897 44,713 45,439 49,793

Subsequent Correcting Adjustments Made To

FOASI Trust Fund Transfers -2,350 -1,069 -2,536 981 1,185

FDI Trust Fund Transfers -703 -733 -714 -650 -329

FHI Trust Fund Transfers -974 -1,150 -598 527 590

SSEBA Trust Fund Transfers 23 32 17 31 1

Total Trust Fund Transfers -4,004 -2,920 -3,831 889 1,447

Net Amounts Transferred To

FOASI Trust Fund 19,581 21,040 23,228 26,205 28,958

FDI Trust Fund 1,145 1,202 1,280 1,310 1,347

FHI Trust Fund 13,468 14,543 16,163 18,583 20,684

SSEBA Trust Fund 182 192 211 230 251

Total Net Amounts 34,376 36,977 40,882 46,328 51,240

Department of the Treasury

Office of Tax Analysis

Summary Table

Calendar Years; Millions of Dollars
6

CHAPTER 1: METHODOLOGY AND ESTIMATES OF THE TAX 

LIABILITY ATTRIBUTABLE TO THE TAXATION OF BENEFITS FOR 

CALENDAR YEARS 2010 THROUGH 2014

I. Methodology for Estimating Tax Liability

The Office of Tax Analysis (OTA) is responsible for estimating the annual tax 

liability attributable to the partial inclusion of Social Security and Railroad Social Security 

Equivalent benefits in AGI, making quarterly transfers from the general fund to the trust 

funds based on these estimates, and calculating correcting adjustments to amounts initially 

transferred. OTA provides this information to the Treasury Department's Bureau of the 

Fiscal Service, which has the authority to transfer funds between the general revenue fund 

and the trust funds as necessary.

OTA estimated the amount of tax liability attributable to the inclusion of Social 

Security benefits in AGI for each of the years 2010 through 2014 using results from OTA’s 

Individual Income Tax Model (ITM).2, 3

 The ITM is OTA’s primary tool for preparing 

revenue estimates and analyzing taxpayer behavior. For this application, the ITM was used 

to account fully for changes in all individual income tax provisions resulting from the

inclusion of benefits in AGI. That is, in addition to the direct effect on tax liability of 

including benefit income, the use of deductions and credits, as well as the calculations of 

alternative minimum tax liabilities, can be affected by the inclusion of benefits in AGI.4

The ITM is built on a stratified random sample of a base-year’s individual income tax 

returns contained in the Internal Revenue Service’s Statistics of Income (SOI) file. A file of 

information returns including Forms SSA-1099 (which show total Social Security benefits 

paid to a beneficiary) and Forms RRB-1099 (which show Railroad Social Security 

Equivalent benefits paid to a beneficiary) are matched to the tax returns in the SOI file to 

determine the total benefits received by each individual on the tax return. The information 

returns are also used to impute to the ITM benefits paid to individuals who are not required 

to file a tax return and are thus not in the SOI sample. The Social Security Administration 

and the Railroad Retirement Board provide information on the total amounts of benefits paid 

to all recipients in the base year. Using the total amounts, the sample observations are then 

weighted to produce results that are representative of the entire population of taxpayers and 

non-filers. Records on the ITM are extrapolated to future years in accordance with the 

Administration’s macroeconomic forecast in use at the time of the extrapolation. In general, 

the ITM is extrapolated twice per calendar year: once as part of the production of the 

Administration’s budget, submitted to Congress each February, and once as part of the 

production of the Administration’s mid-session review, submitted to Congress each summer. 

As part of each extrapolation, total Social Security and Railroad Social Security Equivalent 

benefits are projected to grow at the rates indicated in benefits forecasts provided by the 

Social Security Administration and the Railroad Retirement Board. 

The base year for the ITM extrapolation is updated approximately every three years. 

The estimates for calendar year 2010 through 2013 were made using a 2007-based ITM. 

That is, OTA extrapolated sample tax returns, SSA-1099 forms and RRB-1099 forms for tax 
7

year 2007. The estimates for calendar year 2014 were made using a 2010-based ITM.

The ITM uses the tax and information return data and extrapolations to estimate the 

amount of Social Security and Railroad Social Security Equivalent benefits included in AGI 

and the Federal income tax liability attributable to the inclusion of those benefits for all of 

the filing units in the model. To do this, each tax unit’s liability is estimated with and 

without the inclusion of benefitsreceived by that tax unit. The difference between those two 

levels of income tax liability equals the tax liability attributable to the inclusion of benefits. 

The ITM results are used to calculate both the percentage of total benefits included in AGI 

and the average effective marginal tax rates applicable to the taxable benefits. Final 

estimates of tax liability attributable to the partial inclusion of benefits are produced using a 

spreadsheet-based model. This model blendsthe estimates of the percent of benefits in AGI 

and the average effective marginal tax rates with more recent tax return information (not 

available when the ITM is extrapolated) and the most current tax collection information.

The Social Security Amendments of 1983 require adjustments to the trust funds if 

actual tax return data subsequently reveal that the initial transfers were incorrect. To 

determine if adjustments are required, it is necessary to determine the actual tax liability 

attributable to the inclusion of benefits in AGI. To calculate this actual tax liability, the IRS 

created data files based on Form 1040 records for calendar years 2010 through 2014. All 

filers who reported taxable Social Security or Railroad Social Security Equivalent benefits 

on their Form 1040 were included in these data files (as opposed to the data used to 

determine the original transfer estimates, which are sample data). The methodology for 

determining the adjustments to the estimated transfers is discussed in Chapter 2, Section II.

II. Estimates of Tax Liability Attributable to the Taxation of Benefits in 

Calendar Years 2010 through 2014

Tables 1.A through 1.E compare the assumptions and parameters used to determine 

the estimates of tax liability with the parameters calculated from actual tax return and benefit 

data for calendar years 2010 through 2014. As noted above, the parameters used in the 

estimates are determined from a base year of SOI sample data, other data sources, and an 

extrapolation algorithm while the parameters used to calculate actual liabilities are based on 

IRS population data.

For example, the top section of Table 1.A shows that OTA estimated that $202,545

million of $709,074 million in total benefits (28.56 percent) would be included in AGI for 

calendar year 2010. The estimated tax liability attributable to those benefits was $38,380

million, for an average effective marginal tax rate of 18.95 percent. The bottom section of 

the table shows that, based on calendar year 2010 tax return and benefits data, $186,091

million of $707,352 million in total benefits (26.31 percent) were included in AGI. The 

actual tax liability attributable to those benefits was $34,376 million, for an average effective 

marginal tax rate of 18.47 percent.

Continuing the example, the total liability estimate for calendar year 2010 was the 

sum of the estimates of the tax liability attributable to the partial inclusion of FOASI, FDI, 
8

and SSEBA benefits. The top section of Table 1.A shows that OTA estimated that $184,245

million of $578,028 million in FOASI benefits (31.87 percent) would be included in AGI.

The estimated tax liability attributable to those benefits was $35,401 million, for an average 

effective marginal tax rate of 19.21 percent. The bottom section of the table shows that, 

based on calendar year 2010 tax return and benefits data, $173,214 million of $576,824

million in FOASI benefits (30.03 percent) were included in AGI. The actual tax liability 

attributable to those benefits was $32,260 million, for an average effective marginal tax rate 

of 18.62 percent.

In 2010, the estimated inclusion rates for benefits in AGI and average effective 

marginal tax rates for FDI beneficiaries are lower than those for FOASI recipients. The top 

section of Table 1.A shows that OTA estimated that $16,757 million of $124,759 million in 

FDI benefits (13.43 percent) would be included in AGI. The estimated tax liability 

attributable to those benefits was $2,720 million, for an average effective marginal tax rate of 

16.23 percent. The bottom section of the table shows that, based on calendar year 2010 tax 

return and benefits data, $11,173 million of $124,176 million in FDI benefits (9.00 percent) 

were included in AGI. The actual tax liability attributable to those benefits was $1,831

million, for an average effective marginal tax rate of 16.39 percent.

The estimated inclusion rates for benefits in AGI for Railroad SSEBA beneficiaries 

are slightly lower than for FOASI beneficiaries but higher than for FDI recipients. The top 

section of Table 1.A shows that OTA estimated that $1,543 million of $6,286 million in 

SSEBA benefits (24.54 percent) would be included in AGI. The estimated tax liability 

attributable to those included benefits was $259 million, for an average effective marginal 

tax rate of 16.79 percent. The bottom section of the table shows that, based on calendar year 

2010 tax return and benefits data, $1,704 million of $6,352 million in SSEBA benefits (26.83

percent) were included in AGI. The actual tax liability attributable to included SSEBA 

benefits was $285 million, for an average effective marginal tax rate of 16.72 percent.
9

Tax Liabilities Average Effective

Total Benefits Percent of on Benefits Marginal Tax Rate

Benefits Includable Total Benefits Includable on Benefits

Benefit Source Paid /2 in AGI /2 Includable in AGI In AGI /2 Includable In AGI

Federal Old-Age and Survivors Insurance 578,028 184,245 31.87% 35,401 19.21%

Federal Disability Insurance 124,759 16,757 13.43% 2,720 16.23%

Railroad Social Security Equivalent Benefits 6,286 1,543 24.54% 259 16.79%

 Total 709,074 202,545 28.56% 38,380 18.95%

Federal Old-Age and Survivors Insurance 576,824 173,214 30.03% 32,260 18.62%

Federal Disability Insurance 124,176 11,173 9.00% 1,831 16.39%

Railroad Social Security Equivalent Benefits 6,352 1,704 26.83% 285 16.72%

 Total 707,352 186,091 26.31% 34,376 18.47%

Department of the Treasury

 Office of Tax Analysis

1/ Estimated tax liabilities were updated on a semi-annual basis to conform with updates to the Administration's macroeconomic forecast.

The table compares the parameters used in the final estimates of tax liability with the parameters derived from actual tax return and benefits data.

Rounding of results may prevent exact matching of total. Benefits paid to non-resident aliens are not included in the FOASI or FDI benefits paid figures.

2/ Benefits amounts and tax liabilities in millions of dollars, excluding benefits paid to non-resident aliens.

3/ The total benefits paid data are estimates provided by the Social Security Administration and the Railroad Retirement Board; the other data are

estimated from the Office of Tax Analysis Individual Income Tax Model.

4/ The total benefits paid data are derived from the 2014 Annual Statistical Supplement to the Social Security Bulletin and information supplied

by the Railroad Retirement Board; the Benefits in AGI and tax liability data are derived from the Internal Revenue Service's Individual Masterfile.

Actual Parameters /4

Table 1.A

Comparison of Parameters Used to Estimate Tax Liability Attributable to the

Partial Inclusion of Benefits in AGI with Parameters Calculated from Actual Amounts

Calendar Year 2010 /1

Estimate Parameters /3
10

Tax Liabilities Average Effective

Total Benefits Percent of on Benefits Marginal Tax Rate

Benefits Includable Total Benefits Includable on Benefits

Benefit Source Paid /2 in AGI /2 Includable in AGI In AGI /2 Includable In AGI

Federal Old-Age and Survivors Insurance 598,971 181,564 30.31% 36,657 20.19%

Federal Disability Insurance 129,623 18,109 13.97% 2,977 16.44%

Railroad Social Security Equivalent Benefits 6,316 1,516 24.00% 263 17.35%

 Total 734,910 201,189 27.38% 39,897 19.83%

Federal Old-Age and Survivors Insurance 595,578 184,806 31.03% 34,750 18.80%

Federal Disability Insurance 128,919 11,777 9.13% 1,926 16.35%

Railroad Social Security Equivalent Benefits 6,392 1,801 28.18% 301 16.71%

 Total 730,889 198,384 27.14% 36,977 18.64%

Department of the Treasury

 Office of Tax Analysis

1/ Estimated tax liabilities were updated on a semi-annual basis to conform with updates to the Administration's macroeconomic forecast.

The table compares the parameters used in the final estimates of tax liability with the parameters derived from actual tax return and benefits data.

Rounding of results may prevent exact matching of total. Benefits paid to non-resident aliens are not included in the FOASI or FDI benefits paid figures.

2/ Benefits amounts and tax liabilities in millions of dollars, excluding benefits paid to non-resident aliens.

3/ The total benefits paid data are estimates provided by the Social Security Administration and the Railroad Retirement Board; the other data are

estimated from the Office of Tax Analysis Individual Income Tax Model.

4/ The total benefits paid data are derived from the 2014 Annual Statistical Supplement to the Social Security Bulletin and information supplied

by the Railroad Retirement Board; the Benefits in AGI and tax liability data are derived from the Internal Revenue Service's Individual Masterfile.

Table 1.B

Comparison of Parameters Used to Estimate Tax Liability Attributable to the

Partial Inclusion of Benefits in AGI with Parameters Calculated from Actual Amounts

Calendar Year 2011 /1

Estimate Parameters /3

Actual Parameters /4
11

Tax Liabilities Average Effective

Total Benefits Percent of on Benefits Marginal Tax Rate

Benefits Includable Total Benefits Includable on Benefits

Benefit Source Paid /2 in AGI /2 Includable in AGI In AGI /2 Includable In AGI

Federal Old-Age and Survivors Insurance 642,411 217,785 33.90% 41,362 18.99%

Federal Disability Insurance 138,590 19,608 14.15% 3,043 15.52%

Railroad Social Security Equivalent Benefits 6,571 1,878 28.57% 308 16.40%

 Total 787,573 239,272 30.38% 44,713 18.69%

Federal Old-Age and Survivors Insurance 637,286 204,196 32.04% 38,493 18.85%

Federal Disability Insurance 136,861 12,556 9.17% 2,056 16.37%

Railroad Social Security Equivalent Benefits 6,661 1,991 29.89% 333 16.73%

 Total 780,808 218,743 28.01% 40,882 18.69%

Department of the Treasury

 Office of Tax Analysis

1/ Estimated tax liabilities were updated on a semi-annual basis to conform with updates to the Administration's macroeconomic forecast.

The table compares the parameters used in the final estimates of tax liability with the parameters derived from actual tax return and benefits data.

Rounding of results may prevent exact matching of total. Benefits paid to non-resident aliens are not included in the FOASI or FDI benefits paid figures.

2/ Benefits amounts and tax liabilities in millions of dollars, excluding benefits paid to non-resident aliens.

3/ The total benefits paid data are estimates provided by the Social Security Administration and the Railroad Retirement Board; the other data are

estimated from the Office of Tax Analysis Individual Income Tax Model.

4/ The total benefits paid data are derived from the 2014 Annual Statistical Supplement to the Social Security Bulletin and information supplied

by the Railroad Retirement Board; the Benefits in AGI and tax liability data are derived from the Internal Revenue Service's Individual Masterfile.

Actual Parameters /4

Table 1.C

Comparison of Parameters Used to Estimate Tax Liability Attributable to the

Partial Inclusion of Benefits in AGI with Parameters Calculated from Actual Amounts

Calendar Year 2012 /1

Estimate Parameters /3
12

Tax Liabilities Average Effective

Total Benefits Percent of on Benefits Marginal Tax Rate

Benefits Includable Total Benefits Includable on Benefits

Benefit Source Paid /2 in AGI /2 Includable in AGI In AGI /2 Includable In AGI

Federal Old-Age and Survivors Insurance 675,994 220,244 32.58% 42,178 19.15%

Federal Disability Insurance 141,648 18,500 13.06% 2,924 15.81%

Railroad Social Security Equivalent Benefits 6,760 1,970 29.15% 337 17.10%

 Total 824,403 240,714 29.20% 45,439 18.88%

Federal Old-Age and Survivors Insurance 671,479 221,773 33.03% 43,840 19.77%

Federal Disability Insurance 140,055 12,762 9.11% 2,119 16.60%

Railroad Social Security Equivalent Benefits 6,799 2,146 31.56% 369 17.20%

 Total 818,332 236,681 28.92% 46,328 19.57%

Department of the Treasury

 Office of Tax Analysis

1/ Estimated tax liabilities were updated on a semi-annual basis to conform with updates to the Administration's macroeconomic forecast.

The table compares the parameters used in the final estimates of tax liability with the parameters derived from actual tax return and benefits data.

Rounding of results may prevent exact matching of total. Benefits paid to non-resident aliens are not included in the FOASI or FDI benefits paid figures.

2/ Benefits amounts and tax liabilities in millions of dollars, excluding benefits paid to non-resident aliens.

3/ The total benefits paid data are estimates provided by the Social Security Administration and the Railroad Retirement Board; the other data are

estimated from the Office of Tax Analysis Individual Income Tax Model.

4/ The total benefits paid data are derived from the 2014 Annual Statistical Supplement to the Social Security Bulletin and information supplied

by the Railroad Retirement Board; the Benefits in AGI and tax liability data are derived from the Internal Revenue Service's Individual Masterfile.

Actual Parameters /4

Table 1.D

Comparison of Parameters Used to Estimate Tax Liability Attributable to the

Partial Inclusion of Benefits in AGI with Parameters Calculated from Actual Amounts

Calendar Year 2013 /1

Estimate Parameters /3
13

Tax Liabilities Average Effective

Total Benefits Percent of on Benefits Marginal Tax Rate

Benefits Includable Total Benefits Includable on Benefits

Benefit Source Paid /2 in AGI /2 Includable in AGI In AGI /2 Includable In AGI

Federal Old-Age and Survivors Insurance 713,079 241,224 33.83% 46,706 19.36%

Federal Disability Insurance 143,947 16,305 11.33% 2,688 16.49%

Railroad Social Security Equivalent Benefits 6,881 2,340 34.01% 399 17.05%

 Total 863,907 259,869 30.08% 49,793 19.16%

Federal Old-Age and Survivors Insurance 706,100 241,572 34.21% 48,645 20.14%

Federal Disability Insurance 141,606 13,078 9.24% 2,189 16.74%

Railroad Social Security Equivalent Benefits 6,933 2,315 33.40% 406 17.54%

 Total 854,638 256,965 30.07% 51,240 19.94%

Department of the Treasury

 Office of Tax Analysis

1/ Estimated tax liabilities were updated on a semi-annual basis to conform with updates to the Administration's macroeconomic forecast.

The table compares the parameters used in the final estimates of tax liability with the parameters derived from actual tax return and benefits data.

Rounding of results may prevent exact matching of total. Benefits paid to non-resident aliens are not included in the FOASI or FDI benefits paid figures.

2/ Benefits amounts and tax liabilities in millions of dollars, excluding benefits paid to non-resident aliens.

3/ The total benefits paid data are estimates provided by the Social Security Administration and the Railroad Retirement Board; the other data are

estimated from the Office of Tax Analysis Individual Income Tax Model.

4/ The total benefits paid data are derived from the 2014 Annual Statistical Supplement to the Social Security Bulletin and information supplied

by the Railroad Retirement Board; the Benefits in AGI and tax liability data are derived from the Internal Revenue Service's Individual Masterfile.

Table 1.E

Comparison of Parameters Used to Estimate Tax Liability Attributable to the

Partial Inclusion of Benefits in AGI with Parameters Calculated from Actual Amounts

Calendar Year 2014 /1

Estimate Parameters /3

Actual Parameters /4
14

CHAPTER 2: METHODOLOGY FOR ESTIMATING TRANSFERS AND 

CALCULATING ADJUSTMENTS TO TRANSFERS FOR LIABLITY IN 

CALENDAR YEARS 2010 THROUGH 2014

I. Methodology for Estimating Quarterly Transfer Amounts

Taken together, SSA 83 and OBRA 93 specify the rules for determining the amount 

of Social Security and Railroad Social Security Equivalent benefits includable in AGI and 

the transfers of tax liability attributable to those benefits to the FOASI, FDI, SSEBA and FHI 

trust funds. The first thresholds were enacted under SSA 83, which directed the resulting 

increase in tax liability be transferred to the trust funds from which the benefits are paid 

(FOASI, FDI, and SSEBA). The second thresholds were enacted under OBRA 93, which

directed that the additional tax liability resulting from such inclusion (in excess of any 

liability resulting from the first inclusion thresholds) be transferred to the FHI trust fund.

OTA uses the ITM to separate the total liability amounts described in Chapter 1 into 

amounts attributable to the SSA 83 inclusion rules and the additional amounts attributable to 

the OBRA 93 inclusion rules. To do this, OTA creates an intermediate set of liability 

estimates which assume that only the first inclusion thresholds enacted under SSA 83 are in 

place. These intermediate estimates are the pre-OBRA 93 liability estimates and equal the 

amounts to be transferred to the FOASI, FDI and SSEBA trust funds. The difference 

between these estimates and the total liability estimates shown in Chapter 1 equal the 

additional amounts attributable to the OBRA 93 inclusion rules (the post-OBRA 93 liability 

amounts) and are transferred to the FHI trust fund. 

Separate methods were used to transfer the pre-OBRA 93 and post-OBRA 93 

amounts due to differences in statutory requirements. With respect to pre-OBRA 93 

transfers, statutory requirements dictate that liability should be transferred no less than 

quarterly as it accrues. Therefore, the transfers are made on the first day of the calendar 

quarters beginning with the months of January, April, July, and October. As noted in 

Chapter 1, Section I, the ITM generally is re-extrapolated twice per year, thus for a given 

liability year, the total amounts transferable to the FOASI, FDI, or SSEBA trust funds are the 

amounts of liability estimated from the most recent forecast of estimated annual liability

(based on the most recent extrapolation), less any amounts of liability already transferred for 

that year (which were based on prior extrapolations). This net difference is divided over the 

remaining quarters still available for transfers.

With respect to post-OBRA 93 transfers, statutory requirements dictate that liability 

should be transferred quarterly as it is collected. Therefore, that calendar year liability is

transferred in five installments, representing four quarterly estimated payments and one final 

payment of liability. Transfers to the FHI trust fund are made on the fifteenth day of the 

quarter beginning with the months April, June, September, and January. The total April 15 

transfer to the FHI trust fund always contains two installments – one estimated payment for 

the current year’s liability and one final payment for the prior year’s liability. As with the 

pre-OBRA 93 transfers, the total amount transferable to the FHI trust fund for a given 

liability year is the amount of liability estimated from the most recent forecast of estimated 
15

annual liability (again based on the most recent extrapolation), less any amounts of liability 

already transferred for that year (which were based on prior extrapolations). This net 

difference is divided over the remaining installments still available for transfers.

II. Methodology for Adjustments to Transfers of Estimated Amounts

The Social Security Amendments of 1983 require adjustments to the trust funds if 

actual tax return data subsequently reveal that the initial transfers differ from totals based on 

final liabilities. To calculate the actual tax liability for each of the calendar years 2010

through 2014 resulting from the partial taxation of Social Security and Railroad Social 

Security Equivalent benefits, the IRS created data files for each year based on Form 1040 

records. All filers who report taxable Social Security or Railroad Social Security Equivalent 

benefits on their Form 1040 are included in these data files. Although the Form 1040 

provides information on the total amount of benefits includable in taxable income, it does not 

indicate whether the filer received FOASI, FDI, or SSEBA benefits. Such information is 

needed to allocate revenues accurately to the trust funds. To obtain this information, the 

Form 1040 records belonging to those beneficiaries who reported taxable benefits are 

matched to Form SSA-1099 records provided by the Social Security Administration and 

Form RRB-1099 records provided by the Railroad Retirement Board.5 

Using this matched file of Form 1040, Form SSA-1099 and RRB-1099 records, the 

IRS calculates the tax liability attributable to the taxation of Social Security and Railroad 

Social Security Equivalent benefits, for both pre-OBRA 93 and post-OBRA 93 liability. For 

each taxpayer, the total tax liability attributable to the taxation of benefits is calculated as the 

difference between tax liability with and without benefits included in AGI. The pre-OBRA 

93 tax liability is calculated as the difference between tax liability with benefits includable 

under pre-OBRA 93 law and with no included benefits. The post-OBRA 93 tax liability is 

the difference between the total tax liability and the pre-OBRA 93 tax liability. The total

difference taken over all taxpayers equals the tax liability attributable to the taxation of 

benefits.

After comparing the IRS liability calculations with the OTA liability estimates, OTA 

calculates adjustments to the original transfers. These adjustment amounts are equal to the 

difference between the IRS liability calculations and OTA’s original liability estimates. The 

adjustment amounts are included as an adjustment to the estimated liability transfers 

described in Section I. Thus, the net transfer for a quarter reflects the transfer for the current 

period liability and any amounts attributable to adjustments of prior period liability.

Adjustments are generally made in the first quarter after they are known.
16

III. Transfers of Estimated Amounts and Adjustments to Transfers for 

Liability in Calendar Years 2010 through 2014

Table 2 shows the estimated liability amounts transferred to the FOASI, FDI, FHI 

and SSEBA trust funds in calendar yearsfrom 2010 through 2014. For example, in calendar 

year 2010, estimated transfers of $21,931 million, $1,848 million, and $159 million were 

made to the FOASI, FDI, and SSEBA trust funds, respectively, and estimated transfers of 

$14,440 million were made to the FHI trust fund. Amounts were transferred quarterly to the 

FOASI, FDI and SSEBA trust funds between January 1 and October 1 of 2010. Amounts 

were transferred quarterly to the FHI trust fund between April 15th of 2010 and April 15th of 

2011. 

Table 2 also shows the IRS calculations of final trust fund amounts, and the resulting 

adjustments to the FOASI, FDI, FHI, and SSEBA trust funds due to the reconciliation of 

OTA estimates and IRS calculations. For example, as a result of the reconciliation of 

estimated and actual 2010 tax liability, adjustments of -$2,350 million, -$703 million, -$974

million, and $23 million were made, for the FOASI, FDI, FHI, and SSEBA trust funds, 

respectively. The final column of Table 2 shows the quarter in which each adjustment was 

made.
17

OTA IRS

Estimated Calculated Adjustment Adjustment

Year and Trust Fund Transfers Transfers Amount Date

CY 2010 Liability

FOASI 21,931 19,581 -2,350 October 1, 2013

FDI 1,848 1,145 -703 October 1, 2013

FHI 14,442 13,468 -974 January 15, 2014

SSEBA 159 182 23 October 1, 2013

 Total 38,380 34,376 -4,004

CY 2011 Liability

FOASI 22,109 21,040 -1,069 January 1, 2015

FDI 1,935 1,202 -733 January 1, 2015

FHI 15,693 14,543 -1,150 January 15, 2015

SSEBA 160 192 32 January 1, 2015

 Total 39,897 36,977 -2,920

CY 2012 Liability

FOASI 25,764 23,228 -2,536 January 1, 2016

FDI 1,994 1,280 -714 January 1, 2016

FHI 16,761 16,163 -598 January 15, 2016

SSEBA 194 211 17 January 1, 2016

 Total 44,713 40,882 -3,831

CY 2013 Liability

FOASI 25,224 26,205 981 July 1, 2018

FDI 1,960 1,310 -650 July 1, 2018

FHI 18,056 18,583 527 September 15, 2018

SSEBA 199 230 31 July 1, 2018

 Total 45,439 46,328 889

CY 2014 Liability

FOASI 27,773 28,958 1,185 October 1, 2018

FDI 1,676 1,347 -329 October 1, 2018

FHI 20,094 20,684 590 January 15, 2019

SSEBA 250 251 1 October 1, 2018

 Total 49,793 51,240 1,447

Department of the Treasury

 Office of Tax Analysis

1/ Amounts in millions of dollars.

Table 2

Comparison of OTA Estimated Transfers, IRS Calculated Transfers, and

Corresponding Adjustments for Calendar Years 2010 through 2014 /1
18

CHAPTER 3: FORECAST OF TRANSFERS TO TRUST FUNDS FOR 

CALENDAR YEARS 2015 TO 2019

I. Forecasting Methodology

The Social Security Amendments of 1983 require that the annual report include a

forecast of transfers to the trust funds for the next five years. The forecast years are currently 

calendar years 2015 to 2019, since no correcting adjustments have been made to those years’ 

liability transfers. This forecast was produced using the same methods that were used to 

produce the estimates of calendar year 2010 through 2014 liability and trust fund transfers, 

described in Chapters 1 and 2. The calendar year forecasts for 2015 and 2016 were made 

using the 2010-based ITM described in Chapter 1. The calendar year forecasts for 2017

through 2019 were produced using results from an ITM based on 2014 SOI data and 

imputations. As noted in Chapter 1, OTA’s Individual Tax Model consists of a sample of 

individual income tax returns matched to Form SSA-1099 and RRB-1099 information 

returns. The sample data are weighted to simulate the overall tax filing population and 

extrapolated to future years using a forecast of macroeconomic variables provided by the 

Administration and total benefit payments forecasts provided by the Social Security 

Administration and Railroad Retirement Board. 

II. Forecast of Transfers to the Trust Funds 

Table 3 presents the estimates of liability incurred for calendar years 2015 through 

2019 and the amounts transferred to the trust funds. The transfers of estimated liability for 

calendar years 2015 through 2018 have been completed. The transfers of estimated liability 

for calendar year 2019 will be completed in April 2020 when the final estimated transfer to 

the FHI fund is made. The transfers for calendar years 2015, 2016 and 2018 include 

adjustments for prior years’ liabilities. The transfers of calendar year 2015 FOASI, FDI, and 

SSEBA liability include adjustments for calendar year 2011 liabilities. The transfer of 

calendar year 2015 FHI liability includes an adjustment for calendar year 2012 liability. The 

transfers of calendar year 2016 FOASI, FDI, and SSEBA liability include adjustments for 

calendar year 2012 liabilities. The transfers of calendar year 2018 FOASI, FDI, FHI and 

SSEBA liability include adjustments for calendar years 2013 and 2014 liabilities.

In total, for liability incurred in calendar years 2015 through 2019, OTA forecasts 

that $167,289 million, $8,757 million, $118,247 million, and $1,358 million will be

transferred from general revenues to the FOASI, FDI, FHI, and SSEBA trust funds. The 

adjustments for prior period liabilities total -$1,439 million for FOASI, -$2,426 million for 

FDI, $591 million for FHI, and $81 million for SSEBA. The net transfer to the trust funds 

after adjustments for prior period liabilities is estimated to be $292,926 million.
19

Totals

Trust Fund 2015 2016 2017 2018 2019 2015-2019

FOASI

Estimated Transfer /1 31,432 33,960 35,670 32,105 34,662 167,829

Prior Year Adjustment /2 -1,069 -2,536 0 2,166 0 -1,439

Net Transfer 30,363 31,424 35,670 34,271 34,662 166,390

FDI

Estimated Transfer /1 1,800 1,904 1,969 1,505 1,579 8,757

Prior Year Adjustment /2 -733 -714 0 -979 0 -2,426

Net Transfer 1,067 1,190 1,969 526 1,579 6,331

FHI

Estimated Transfer /1 22,617 23,390 24,888 22,529 24,823 118,247

Prior Year Adjustment /2 -598 0 0 1,117 0 519

Net Transfer 22,019 23,390 24,888 23,646 24,823 118,766

SSEBA

Estimated Transfer /1 263 281 292 255 267 1,358

Prior Year Adjustment /2 32 17 0 32 0 81

Net Transfer 295 298 292 287 267 1,439

Totals

Estimated Transfer /1 56,112 59,535 62,819 56,394 61,331 296,191

Prior Year Adjustment /2 -2,368 -3,233 0 2,336 0 -3,265

Net Transfer 53,744 56,302 62,819 58,730 61,331 292,926

Department of the Treasury

Office of Tax Analysis

Notes:

1/ Estimated Transfers are amounts transfered to the trust funds for liability incurred in the year indicated. Note that the final

two estimated liabilty transfers to the FHI trust fund for a given year occur in January and April of the following year.

2/ Prior Year Adjustments are amounts transferred to or from the trust funds that correct the original estimated liabilities transferred

for prior years. Because the final two estimated liability transfers to the FHI trust fund for a given year occur in January and April

of the following year, a Prior Year Adjustment to a given year's FHI estimated transfer may occur in the next calendar year.

Adjustments to the FOASI, FDI and SSEBA transfers for CY 2015 liability were to correct estimates of liability incurred

in CY 2011. The adjustments were made with the January 2015 transfer. The adjustment to the FHI transfer for CY 2015

was to correct estimates of liability incurred in CY 2012. The adjustment was made with the January 2016 transfer.

Adjustments to the FOASI, FDI and SSEBA transfers for CY 2016 liability were to correct estimates of liability incurred

in CY 2012. The adjustments were made with the January 2016 transfer.

Adjustments to the FOASI, FDI, FHI and SSEBA transfers for CY 2018 liability were to correct estimates of liability incurred

in CY 2013 and CY 2014. The adjustments attributable to CY 2013 FOASI, FDI and SSEBA liabilities were made with the

July 2018 transfer. The adjustments attributable to CY 2014 FOASI, FDI, and SSEBA liabilities were made with the October 

2018 transfer. The adjustment attributable to CY 2013 FHI liability was made with the September 2018 transfer. The 

adjustment attributable to CY 2014 FHI liability was made with the January 2019 transfer.

Calendar Years; Millions of Dollars

Table 3

Forecast of Transfers, Net of Adjustments, to the FOASI, FDI, FHI and SSEB Trust Funds

for Calendar Years 2015 through 2019
20

BIBLIOGRAPHY

Cilke, James C. “The Treasury Individual Income Tax Simulation Model.” mimeo. Department of 

the Treasury. Office of Tax Analysis. April 1994.

Social Security Administration. 2002 Annual Statistical Supplement to the Social Security Bulletin. 

Washington, D.C.: Government Printing Office, December 2002.

U.S. Department of the Treasury. Office of Tax Analysis. Report on the Taxation of Social Security 

and Railroad Retirement Benefits in Calendar Year 1984. March 1987.

U.S. Department of the Treasury. Office of Tax Analysis. Report on the Taxation of Social Security 

and Railroad Retirement Benefits in Calendar Year 1985. August 1987.

U.S. Department of the Treasury. Office of Tax Analysis. Report on the Taxation of Social Security 

and Railroad Retirement Benefits in Calendar Year 1986. February 1989. 

U.S. Department of the Treasury. Office of Tax Analysis. Report on the Taxation of Social Security 

and Railroad Retirement Benefits in Calendar Years 1987 and 1988. March 1991. 

U.S. Department of the Treasury. Office of Tax Analysis. Report on the Taxation of Social Security 

and Railroad Retirement Benefits in Calendar Year 1989. March 1992.

U.S. Department of the Treasury. Office of Tax Analysis. Report on the Taxation of Social Security 

and Railroad Retirement Benefits in Calendar Year 1990. January 1993.

U.S. Department of the Treasury. Office of Tax Analysis. Report on the Taxation of Social Security 

and Railroad Retirement Benefits in Calendar Year 1991. September 1994.

U.S. Department of the Treasury. Office of Tax Analysis. Report on the Taxation of Social Security 

and Railroad Retirement Benefits in Calendar Year 1992. January 1997.

U.S. Department of the Treasury. Office of Tax Analysis. Report on the Taxation of Social Security 

and Railroad Retirement Benefits in Calendar Year 1993. July 1998.

U.S. Department of the Treasury. Office of Tax Analysis. Report on the Taxation of Social Security 

and Railroad Retirement Benefits in Calendar Years 1994, 1995, and 1996. January 2001.

U.S. Department of the Treasury. Office of Tax Analysis. Report on the Taxation of Social Security 

and Railroad Retirement Benefits in Calendar Years 1997 through 2004. January 2009.

U.S. Department of the Treasury. Office of Tax Analysis. Report on the Taxation of Social Security 

and Railroad Retirement Benefits in Calendar Years 2005 through 2009. February 2014.
21

ENDNOTES

1. Liability estimates and the associated transfers are updated semi-annually (in December and May) to 

conform with updates to the Administration’s macroeconomic forecast. All transfers are made using 

the most recently created forecast.

2. A detailed description of the Individual Income Tax Model can be found in Cilke (1994).

3. OTA does not estimate the liability attributable to the receipt of FOASI and FDI benefits by nonresident aliens. Prior to calendar year 1995, one-half of any Social Security benefit received by a 

non-resident alien was subject to a 30 percent tax rate, and this amount was automatically withheld 

by the Social Security Administration. For calendar years 1995 and after, the portion of benefits 

subject to withholding is raised to 85 percent (P.L. 103-465).

Each month, the Social Security Administration sends a certification of the amount withheld to the 

Treasury Department's Bureau of the Fiscal Service. The withheld amount is transferred to general 

revenues and then back to the FOASI and FDI trust funds. Since the Social Security Administration 

has information on the actual amounts withheld, OTA does not estimate these withheld amounts.

Similarly, the Railroad Retirement Board automatically withholds taxes on Railroad Social Security 

Equivalent benefits received by non-resident aliens. However, a different procedure is used to 

transfer these amounts to the SSEBA. OTA includes an estimate of the withheld amounts in its initial 

estimates of transfers to the trust funds and subsequently verifies these estimates with the Railroad 

Retirement Board.

The tables in this report do not include FOASI or FDI benefits received by non-resident aliens or the 

taxes attributable to these benefits. However, the tables do show the Railroad Social Security 

Equivalent benefits received by non-resident aliens.

4. For example, as AGI increases, the amount of deductible medical, casualty and certain miscellaneous 

expenses may change. Similarly, the increased income tax liability resulting from the inclusion of 

benefits in AGI may enable some taxpayers to use tax credits that otherwise might not be usable in 

that year due to insufficient income tax liability.

5. The Form SSA-1099 records provided to the IRS distinguish between retirement and disability 

benefits, even though the Form SSA-1099s sent to taxpayers do not include this information.