What Is an SSA-4926-SM and How Does It Differ From an SSA-1099?
Learn how the SSA-4926-SM differs from the SSA-1099, why it's issued, and its role in tax filing to better understand your Social Security records.
The Social Security Administration (SSA) provides various forms to beneficiaries, each serving a specific purpose. Among them, the SSA-4926-SM and SSA-1099 are often confused, but they have distinct functions related to Social Security benefits and taxes.
Why This Statement Is Issued
The SSA-4926-SM is sent annually to Social Security beneficiaries, detailing their benefit payments for the upcoming year. It notifies recipients of changes in their monthly amount, including cost-of-living adjustments (COLA), Medicare premium deductions, and other modifications.
A key reason for this statement is to inform beneficiaries of COLA increases, which are based on inflation data from the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). If inflation rises, benefits adjust accordingly. For example, a 3.2% COLA would increase a $1,800 monthly benefit to $1,857.60.
The statement also reflects Medicare Part B and Part D premium deductions. In 2024, the standard Medicare Part B premium is $174.70 per month, with higher-income beneficiaries paying more under the Income-Related Monthly Adjustment Amount (IRMAA). The SSA-4926-SM provides a breakdown of these deductions, helping recipients understand their net benefit.
Key Details on the Document
The SSA-4926-SM outlines the gross monthly benefit, deductions, and other relevant changes affecting payments.
Payment Amount
The statement specifies the gross monthly benefit before deductions, based on the recipient’s earnings history and the Social Security benefit formula. This amount may change due to COLA adjustments or recalculations based on additional earnings.
If a beneficiary works while receiving Social Security, their benefit may be adjusted under the annual earnings test. In 2024, those below full retirement age who earn more than $22,320 will see benefits reduced by $1 for every $2 earned above this threshold. The SSA-4926-SM provides the base benefit amount before any reductions.
Withholding Entries
The document details deductions from the gross benefit, including federal income tax withholding and Medicare premiums.
Beneficiaries who elect to have federal income tax withheld will see this reflected on the SSA-4926-SM. The IRS allows withholding rates of 7%, 10%, 12%, or 22%. For example, a retiree receiving $2,000 per month who opts for a 10% withholding rate will have $200 deducted, leaving a net payment of $1,800.
Medicare premiums are another common deduction. Higher-income beneficiaries subject to IRMAA will see increased premiums deducted, which the SSA-4926-SM will specify.
Additional Notes
The statement may include details on overpayment recovery or benefit status changes.
If a recipient was overpaid, the SSA may withhold a portion of future payments to recover the excess. The SSA-4926-SM will indicate the repayment schedule and deduction amount. Beneficiaries disputing an overpayment can request a waiver or appeal, but deductions continue unless the SSA approves the request.
If a recipient transitions from disability benefits (SSDI) to retirement benefits upon reaching full retirement age, the SSA-4926-SM will reflect this change. While the payment amount may remain the same, the classification of benefits shifts, affecting tax treatment and program eligibility.
Distinction From SSA-1099
While both the SSA-4926-SM and SSA-1099 come from the Social Security Administration, they serve different purposes. The SSA-4926-SM is a forward-looking document detailing expected payments for the upcoming year, while the SSA-1099 summarizes benefits received in the prior year for tax purposes.
The SSA-4926-SM arrives before the new year, helping recipients anticipate changes in their benefits. The SSA-1099, issued in January, reports total benefits received and any federal tax withholdings.
The SSA-1099 is particularly important for retirees with other income sources, such as pensions or 401(k) withdrawals. Social Security benefits may be taxable depending on a recipient’s combined income—adjusted gross income (AGI) plus nontaxable interest and half of Social Security benefits. If combined income exceeds $25,000 for individuals or $32,000 for married couples filing jointly, up to 50% of benefits may be taxable. If income surpasses $34,000 for individuals or $44,000 for joint filers, up to 85% of benefits could be subject to taxation.
Tax Filing Relevance
Properly reporting Social Security income on a tax return requires understanding how benefits interact with other taxable earnings. The IRS determines taxability based on adjusted gross income, tax-exempt interest, and half of Social Security benefits. Errors in this calculation can lead to underpayment penalties or unexpected tax liabilities.
For retirees with tax-deferred accounts like traditional IRAs or 401(k)s, withdrawals increase taxable income, potentially making more Social Security benefits taxable. Roth conversions, where funds are transferred from a traditional IRA to a Roth IRA and taxed upfront, can help manage taxable income in future years. Spreading conversions over multiple years can reduce the impact on Social Security taxability.
State taxation of Social Security benefits varies. While most states do not tax these payments, some—such as Colorado, Connecticut, and Vermont—apply their own formulas. Some states offer exemptions based on age or income, making it important to check local tax laws.