reimbursed my LTD insurer

Forum|Forum|2 years ago
February 1, 2024
3 replies
46 views

In 2023 I received backpay for 2023 from Social Security and I had to reimburse my LTD insurer most all the said money. Where do I take the deduction for said money?

ThomasM125

Level 15

If you paid tax on the long term disability income in previous years, you can take a credit in 2023 for the taxes you paid on the income. You can only do this if the repayment was over $3,000. This is called a claim of right and you can enter it in the desktop version of TurboTax by following these steps:

Using the desktop version of TurboTax, bring up the "Forms" mode by clicking on that icon on the menu bar
Choose the 1040/1040SR Wks in the list of forms
Scroll down the 1040/1040SR Wks until you see Part II - Other Payments and Refundable Credits
Enter the amount of the credit on line 12 (D) Claim of Right, IRC 1341 credit for repayments of prior year income

You may need to amend your previous year tax return to determine the change in tax. You will see on option for this on your home page in TurboTax, under Your tax returns and documents at the bottom of the page. You will not file the amended return, you just need to remove the income that was paid back to determine the tax you paid on it. It will be the difference in tax due or refunded when you remove the income you paid back.

Income repayments of less than $3,000 can only be deducted as miscellaneous itemized deduction, which is not allowed for the 2023 tax year.

You can download your online TurboTax program to your computer so you don't have to re-enter all of your information. You will see an option for that on your left menu bar while working on your program in TurboTax. Look for the Tax Tools menu option, then Tools, then see the option on the right to Save your 2023 return to your computer.

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harddrive4x4tooAuthor

Level 2

I am not sure you understood my question. I received about $11,000 in backpay in 2023 for approximately 4 months of 2023 and immediately had to reimburse the long-term disability company almost $11,000 in 2023 because they said they overpaid me. In other words, I took the money that Social Security paid me and handed it over to the LTD company. They added that $11,000 to my W2s as income. I was told by LTD that I wouldn't have to pay taxes on that money and was wondering where in turbo tax I would take that deduction.

Mike Koselansky

AmyC

Level 15

Social security gave you money, it should be included in the income they paid you. Long term disability should not have given you another w2 with the repayment as income. They should have done nothing or given you a form saying you repaid $11,000. If you got an erroneous w2, contact the issuer to have it corrected.

Long term disability pay is sometimes taxed. If it was taxed in prior years, you can take the deduction for repaying the money since it was over $3,000 paid back. Otherwise, there is no deduction available. See your options here, What is a claim of right repayment?

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