Yes. You can claim a reimbursement deduction for any income that you were previously taxed on that you have to pay back. So go ahead and enter the 1099-SA just as you received it. The system will ask you about lump sum payments that you received and you will tell it all about the extra social security you received for 2022 and 2023. Then you will need to enter your income from 2022 and 2023 to see how much of the lump sum is taxable.
Then you can claim a deduction for the full amount that you repaid that was taxed in prior years. Make sure that you check your prior year returns to see what the amounts that were paid to you were. If it was the full $40,000 then you get a credit for that amount. If you paid tax on a lesser amount then you can take a credit for that. Enter it as a miscellaneous income amount in a negative number in the miscellaneous income section at the very bottom of the wages and income section of your federal return.
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