Can we take a deduction to offset a SSA lump sum distribution which is all due back to the long term disability carrier?

lewisb42258 · ‎June 1, 2019

My wife was covered under long term disability insurance. She has been paid by the carrier for several years and we have paid the takes on those payments. The lump sum amount from the SSA was a payment to catch up from the time they determined that she was ruled disabled by the SSA. These funds must all be returned to the Disability Carrier as reimbursement against what they had paid. Her LTD payment per month was greater that the SSA amount. How can it be shown on the return?

TomYoung · ‎June 1, 2019

This sort of situation is handled for income taxes under something called a "claim of rights."

You can take a current year deduction or take a credit in the current year for the taxes you "overpaid" in the prior years. In order to take a credit for the overpaid taxes in the prior years you need to be able to re-calculate those taxes assuming that you didn't receive the income for each of these years, something that's more easily done if you have TurboTax programs installed on your computer for those years and the associated tax files (.taxXXXX).

This answer here:

https://ttlc.intuit.com/questions/3661571-in-2016-i-repaid-a-salary-amount-of-3-332-reported-as-inco...

discusses a similar situation, with only one "prior year" involved.

Tom Young

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Can we take a deduction to offset a SSA lump sum distribution which is all due back to the long term disability carrier?

Retirement tax questions