No, you'll have to report the income on your tax return in 2024. A portion of it will be taxable most likely. When you pay the money back in 2025, you can take a deduction or credit on your 2025 return if the amount is over $3,000. When you prepare your return for 2024, you should note the tax due or refund before you enter the social security income. If the repayment is over $3,000 in 2025, you can get a credit for the increase in tax the social security income caused in 2024. So, you'll need to know how much your tax increased when you entered the social security income in 2024.
The credit in 2025 is called a Claim of Right and you report in TurboTax as follows:
- 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 can also claim the income repayment as a deduction as Other Deductions on your Schedule A, itemized deductions, instead of taking the credit.
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