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Retirement tax questions
There are 2 methods, a Deduction or a Credit.
You may take a deduction for the repayment if that repayment is 3,000 or more. This is reported on Schedule A, so you need to Itemize Deductions.
You may take a credit which is basically "recapturing" the tax it cost you in those previous years on this year's tax return. This is a bit complicated. You need to recompute those previous year returns as if you never received that social security payment amount and compare the "new" tax liability to the old. (This is only a MOCK return to get the figures, you DO NOT amend or refile)
This difference is your credit.
The credit needs to be manually entered onto the tax form, so this method may only be used with TurboTax Desktop.
Here is a link for further instructions
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