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Retirement tax questions
The negative amount in box 5 of your SSA-1099 can only be claimed as an itemized deduction. Since the amount is less than $3,000, it is a miscellaneous itemized deduction subject to the 2% of AGI limitation. That means that the repayment and any other miscellaneous itemized deductions that you have are added together, and 2% of your Adjusted Gross Income (AGI) is subtracted from the total. Only what remains, if anything, is deductible. In addition, since the repayment is an itemized deduction, it will not affect your tax unless your total itemized deductions are more than your standard deduction.
If you have enough itemized deductions to make your total itemized deductions more than your standard deduction, you would have to upgrade to TurboTax Deluxe. You cannot claim itemized deductions in Free Edition. The deduction for the negative Social Security benefits will not appear on Form 1040. It will be on Schedule A, line 23.
Here's how to enter a repayment of $3,000 or less in TurboTax.
- Click the Federal Taxes tab.
- Click Deductions & Credits.
- Click "I'll choose what I work on" or "Jump to a full list."
- On the screen "Your 2016 Deductions & Credits," scroll all the way down to the last section, "Other Deductions and Credits."
- Click the Start, Update, or Revisit button for Other Deductible Expenses.
- The first screen asks if you paid generation-skipping taxes. If you didn't, click No.
- The next screen asks if you had any "Less Common Expenses," one of which is a repayment of $3,000 or less. Click Yes.
- On the next screen enter a short description, such as "Repaid Social Security," and the amount. Click Continue.
- The next screen, "Any Other Deductions?," asks if have any deductions that are not subject to the 2% of AGI limitation. Click No.
If you are filing a joint return and your spouse has an SSA-1099 with a positive amount in box 5, your negative amount will offset your spouse's positive amount. If the net combined amount is positive, you will report the reduced net amount as income instead of claiming a deduction for the amount you repaid.