There is no place for you to claim a deduction on your social security income. Changing this number absolutely will raise red flags. That is why I am saying that you need to prepare your argument. You will receive a letter from the IRS asking why you changed the amount on the 1099. You will reply that you didn't receive those funds and that they were paid to the disability insurance. Then it will be up to the IRS as to whether you are allowed to take the deduction.
If you prefer not to wait for the letter then the alternative is to change the amount on the 1099 and then attach form 8275 to your tax return. If you do this you will have to mail in the return. You can attach any documents showing the fact that the disability insurance received the money and not you and see if the IRS allows the deduction.
If they do not you will have to pay the amount that is showing on the return right now plus penalties and interest. If they do then you will not owe anything.
@ththshmhjh
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