Can I adjust for SSDI payments received From SS that I immediately passed thru to my insurance company when received?

[wmspellman]

Since Fed Taxes on those payments have already been paid via the insurance Co's w-2's issued in those prior years?  

[Vanessa A]

Did you get the W2 from the insurance company in 2022 or 2021?

Were you paying premiums the reason you paid the money to the insurance company or were you repaying them for the payments they made to you?

If you were paying insurance premiums, these would be deductible only if you are itemizing your return instead of taking the standard deduction. 

If you were repaying money they paid you, and you received a w2 from them for 2022, you would need to contact them to have the w2 corrected.  That may be the simplest method.

If you cannot get the corrected W2, then you can take the following steps to report the repayment

• Federal
• Deductions and Credits
• Show more next to Less Common Deductions
• Start next to Other Deductible Expenses
• Walk through to enter your repayments.

Doing it this way will work if you are itemizing your expenses.  If you are taking the standard deduction, then you will need to follow these instructions from Champ Hal_Al to enter the deduction directly in forms mode.  You will need to use the desktop version of TurboTax to do this. 

" All entries that seem like you should be able to enter on Form 1040 or Schedules 1 through 3 have to be entered on TurboTax's 1040 Worksheet. Scroll way down to Other Credits and Payments Smart Worksheet. Select item D, claim of right under IRC 1341 for repayments. It ends up on line 13 of schedule 3."  Repayments

[wmspellman]

Yes - W-2's were received for both years.

Contract premiums were paid by the company.  The reason why the SS payment passed through and was made to the Insurance company  was dependent upon the terms of the insurance contract.  All SSDI payments were to be sent to the company upon receipt by the insured  to offset  Ins  Co's monthly coverage payments while SSDI application is being processed,  Therefore it appears federal Taxes were already paid upon receipt of the W-2 in those prior  respective years , and paying on the SSA-1099 lump sum this year wouldn't make sense this year  as historical W-2's were issued and the payment was only "passed through"  Does that help? And Thank you.

[AbrahamT]

You may also view Pub 915 HERE  pg 15 under this section "Repayment of benefits received in an earlier year". on how to handle this SSA lump sum repayment for prior years.  

Good luck.

[wmspellman]

Thank you Abraham.

Will I be able to make this adjustment on the web-based Premier version or will I need to get the desk top (CD) version?

[DianeW777 · Accepted solution]

You have two possible situations for your tax return, which are repayment of previously taxed benefits and a lump sum of social security payments, if the social security payments include more than one year (shown on your SSA-1099 an amount for each year).

1. The lump-sum election has always worked correctly in TurboTax. Have all tax returns available for each year included in the lump sum payment.  This can be handled on your tax return for 2022. The Form SSA-1099 should show a total amount in the box labeled 'Description of the amount in box 3'. Worksheet 4 is included after Worksheet 2 is completed for each year. 
   1. Be sure to select "lump-sum" method of reporting in this situation which is all done on the tax return for the year of receipt of the benefits.  Enter the appropriate amounts for each year when you start that section of your return.   Continue to add each year for all years listed in box 3. There is no amendment required. 
   2. Also enter a zero if your Social Security benefits weren't taxable or there were none in the earlier year (such as for a spouse). If you are using the TurboTax CD/Download version review the Lump-Sum Social Security Worksheet in Forms.  You can also review 'Earlier Year Lump-Sum Worksheet' for each year. 
2. Claim of Right - Repayments of $3,000 or more that was taxable income in an earlier year.  You can choose one of two options. 
   1. Taking the Income Reduction in TurboTax (most common)
      1. Login to your TurboTax account or open your tax return.
      2. Click on Federal Taxes and then Deductions & Credits.
      3. Locate the section Other Deductions and Credits (you may first need to select on show all tax breaks if working online or I’ll choose what I work on if working in the installed desktop.)
      4. Click Start (or Revisit) beside Other Deductible Expenses.
      5. A number of questions will appear on the upcoming screens. You are looking for the one that reads Claim of right repayment over $3,000. Click yes when you see this screen. (Be sure to ignore the similar question, repayments of $3,000 or less.)
      6. Enter the amount of the repayment in the box Claim of right repayment over $3,000 and click Continue. 
   2. Taking the Credit in TurboTax: There are two components to taking the credit in TurboTax. 
      1. The first part entails determining the amount of the tax that was overpaid in the year the income was received. 
      2. This requires using the TurboTax Desktop product (or another method) to determine what the tax liability would have been without the income. 
         1. In the Forms mode switch to Forms mode by clicking on Forms icon in the program (upper right).
         2. In the list of forms on the left click on 1040/1040RSR Wks above the Form 1040 itself.
         3. Scroll down to Other Credits and Payments Smart Worksheet (near the bottom) and enter the amount that you have computed on Line D Claim of Right, IRC 1341 credit for repayments of prior year income.
         4.  Click on the Step-by-Step or Easy Step icon in the upper right corner to return to the interview mode and finish working on your tax return.

For TurboTax Online review this link: How to Preview My Online Return Before Filing or for TurboTax Desktop you can simply switch to Forms to see review your return.

@wmspellman 

[wmspellman]

Many Thanks DianneW PERFECT!