I am beginning to think that allocating the distribution over 3 years was the dumbest thing I could have ever done. Could I go back in time amend my 2020 and 2021 returns and get rid of taking the credit over 3 years? I am going to end up paying way more in taxes now than I would have had I not done this. My husband became disabled in 2020 and had received LTD until July 2023 when he became eligible for Social Security Disability. They gave him a retro active which was paid back to LTD company and I offset the repayment using the other credits for repayments over $3,000, but that was only the repayments for 2020 and 2021. The amount they offset his LTD for 2022, they included in his tax statement as well as social security so our income is over stated for that reason as well bc it’s included in social security as well and I can’t get the LTD to correct the statement to match what money we received from them. So between that and the carry over of the distribution it put our income over the limitation and we owe $7,320 just for the insurance. In 2020, if I hadn’t allocated the money over 3 years I would have owed around $3k, but did get a refund of $3.5k from taxes I had withheld from the distribution, but I credited it to my 2021 taxes, thinking it would cover at least my 2021 taxes I would owe on $33k portion of the distribution and was wrong and owed additional $3k on top of that, and now this year I owe another $10k because of the $7k health part (I made estimated payments of $3k towards the amount I assumed I would owe bc our income didn’t change and actually became less in 2022. However I read that you can’t make adjustments for social security overpayments on amended returns, not as if it would change my 2020 income much other than the overpayment amount I was taxed on for 2020 bc it was reported as LTD benefits would not have been taxable. If I did amend my 2020 return though and went back to owing for that year how bad would they penalize me given I would have owed half or less than amount I paid for 2021 taxes. Would the IRS, combine the two years to offset the amount I would for 2020 with the amount I would have got back for 2021? I am sorry, but our actual income for 2022 was $32k in social security benefits and $16k in LTD benefits that they reported as $33k, but $48k was the actual amount we brought in and to have to pay have $15k for health insurance for market place insurance, $664 for supplemental Medicare once my husband went on that, and $1,056 for my sons insurance through our states Chip plan seems unfair. Health insurance should not cost over $1k a month for any person.
Wondering if I should take the time to amend my returns or if it would be a waste of my time bc of some other convoluted misleading Tax regulation?
Appreciate your opinion.
