ssdi back pay that was paid to ltd

[hsmom]

How do you report that the back pay from ssdi went to ltd.  Ltd did not give us any tax forms for this tax year because the overpayment was larger then what they paid.  I do not want to report the wrong numbers but do not want to be taxed on $ that we did not actually get.

[AmyC]

You paid back money from more than just 2024 and I bet it was over $3,000. This means you can make a right of claim repayment. We follow the rules from IRS Repayment over $3,000. To do this in TurboTax, follow the steps in What is a claim of right repayment?

The IRC 1341 shows as a credit on Sch 3, line 13b and carries to the 1040 line 31.

[hsmom]

Does that make me go long form/itemized?  Or can I do it with the simple form/free edition?

[RobertB4444]

What is Itd?

@hsmom 

[hsmom]

Longterm disability (employer sponsored)  

[AmyC]

Schedule 3 is not available in the free version. You would need to upgrade. You don't itemize.

[hsmom]

How do I calculate/report the income figures to report from LTD since they did not provide me with tax forms?  They only sent me a letter saying they are not sending tax forms.  

[RobertB4444]

You don't have to calculate what they paid.  Only what you paid to them.  The amount of SSDI that is reported to you that you didn't get to keep.  That is the amount that you will use.

@hsmom 

[hsmom]

We received money from ltd tho that is in addition to what ssdi pays monthly.  So ssdi sends $ and ltd pays the difference of what the benefit allowance is.  So, I am just lost.

[RobertB4444]

Is long term disability paying money to you?  Or to a facility on your behalf?

If they are paying money to you then the entire amount of SSDI that you received is taxable.  You did get the money, you just got it from the long term disability program before you received it from SSDI.  So there is no credit, you'll enter the full amount of SSDI that you received and pay taxes on that.  

If they are paying it to the facility and then you gave them the full SSDI payment to reimburse them for what they gave you then you will have the SSDI as income but you'll have the fact that you paid it back to LTD as a deduction.  It will zero out.

@hsmom 

[hsmom]

the money is paid to me.  Ssdi pays monthly, ltd pays monthly.  The ssdi this year included back pay and that was all given to ltd to pay them back as they required. I do not think that is taxable income as I already paid taxes on that income since it was from 3 tax years.  

[DianeW777]

You actually have two situations taking place. It's not difficult however if you need assistance you can reach one of our TurboTax Live experts for help by clicking the link for instruction.

1. Lump sum of SSDI | What is a lump sum Social Security payment?
2. Repayment of previously taxed income - Claim of Right - See the link provided by our Tax Expert @AmyC above.

You may want to use TurboTax Desktop if you aren't using it yet because for the 'claim of right' discussed above, to receive a credit.

Yes, you must include the full amount of your SSDI in your income to determine what is taxable to you for 2024. You can use the Lump Sum distribution method for that. This can be done in TurboTax Desktop or TurboTax Online. 

Be sure to select "lump-sum" method of reporting in this situation which is all done on the tax return for the year of receipt of the benefits.  Enter the appropriate amounts for each year when you start that section of your return.   Continue to add each year for all years listed in box 3. There is no amendment required.

1. Open your TurboTax Return > Search (upper right) > type ssa1099 > Click the Jump to.... Link (Or click the FAQ and then SSA-1099)
2. Select Yes you received benefits > Complete your SSA-1099 > Continue > Yes I received at least one lump sum payment for 2023 or earlier > Continue
3. Type a year from your SSA-1099 > Enter the amount received for that year > Continue
4. If you received a Form SSA-1099 for an earlier year enter the box 5 amount, if not enter zero or leave it blank > Continue
5. Enter the filing status for the earlier year > Continue > Select whether you lived with a spouse in the earlier year > Continue >
6. Enter the information from the earlier year return > Continue > 
7. Add another lump sum payment (another year from box 3) if applicable or Click Done
8. Continue to follow the screens until you are back at the Income Summary page

Also enter a zero if your Social Security benefits weren't taxable or there were none in the earlier year(s) (such as for a spouse). If you are using the TurboTax Desktop version review the Lump-Sum Social Security Worksheet in Forms.  You can also review 'Earlier Year Lump-Sum Worksheet' for each year.

Next follow the steps in the Claim of Right link and placed here for your convenience.

• What is a claim of right repayment?

@hsmom 

[hsmom]

I understand those things you explained , however my confusion comes from ltd.  There is income from them that I do not know how to report or where to report it.  They did not give me forms for taxes due to the repayment  to them.  The allowable benefit from ltd is higher then ssdi so we get a check from them each month still.   Does this make sense?  I'm sorry if not.  I just dont want to make any errors and I feel like if I only go off ss1099 I am missing a portion of money we were paid.

[BrittanyS]

The IRS provides the following information on determining if your long-term disability received from an employer is taxable income:

"You must report as income any amount you receive for your disability through an accident or health insurance plan paid for by your employer:

• If both you and your employer have paid the premiums for the plan, only the amount you receive for your disability that's due to your employer's payments is reported as income.
• If you pay the entire cost of a health or accident insurance plan, don't include any amounts you receive for your disability as income on your tax return.
• If you pay the premiums of a health or accident insurance plan through a cafeteria plan, and you didn't include the amount of the premium as taxable income to you, the premiums are considered paid by your employer, and the disability benefits are fully taxable.
• If the amounts are taxable, you can submit a Form W-4S, Request for Federal Income Tax Withholding From Sick Pay to the insurance company or make estimated tax payments by filing Form 1040-ES, Estimated Tax for Individuals."

For more information, see the link below:

• Is LTD taxable income?