I reported Social Security Income in 2015 which I repaid in 2016. SSA-1099 on Box 5 shows negative amount over $3k. How do you use TurboTax in this case?

I have a Claim of Right tax issue under IRC Section 1341 because I reported Social Security Income in 2015 which I repaid in 2016. I have a negative amount (over $3,000) on my SSA-1099 on Box 5. From the answer I received last year, I am to figure my tax in two ways, also as indicated in IRS Pub 715. How do you figure this in TurboTax? The answers I was provided with last year, 3730631 and 3730815, seem not to exist .

1431

1 Best answer

Expert Alumni

May 31, 2019 9:44:30 PM

Instructions here are specifically for your repayment because it's greater than $3000.

Repayment over $3,000: If the amount you repaid was more than $3,000, you can deduct the repayment on the same form you originally reported the income on (Form 1040). However, you can choose instead to take a tax credit for the year of repayment if you included the income under a claim of right. This means that at the time you included the income, it appeared that you had an unrestricted right to it. If you qualify for this choice, figure your tax under both methods and compare the results. Use the method (deduction or credit) that results in less tax.

When determining whether the amount you repaid was more or less than $3,000, consider the total amount being repaid on the return. Each instance of repayment is not considered separately.

Method 1. Figure your tax for 2016 claiming a deduction for the repaid amount. If you must deduct it as a miscellaneous itemized deduction, enter it on Schedule A (Form 1040), line 28.

Method 2. Figure your tax for 2016 claiming a credit for the repaid amount. Follow these steps.

Figure your tax for 2016 without deducting the repaid amount.
Refigure your tax from the earlier year (2015) without including in income the amount you repaid in 2016.
Subtract the tax in (2) from the tax shown on your return for the earlier year. This is the credit.
Subtract the answer in (3) from the tax for 2016 figured without the deduction (step 1).

If method 1 results in less tax, deduct the amount repaid.

If method 2 results in less tax, claim the credit figured in (3) above on Form 1040, line 71.

If you choose a deduction, please enter it here (Method 1):

Federal taxes - Deductions & credits - Other deductions and credits - Other deductible expense
Please answer YES to "Did you have any other deductions that are not subject to the 2% limitation?"
Please enter the amount you repaid under, "Claim of Right Repayment (Only if over $3,000).
Click the screenshot attached to enlarge and view

If you choose a credit (This can only be done in the Forms mode of the Desktop version of TurboTax), please enter it here (Method 2-only if greater than $3000):

FORMS - F1040 - Below line 70 is the Other Payments and Credits Smart worksheet
Please enter the credit in line D.
This credit should show up on F1040, line 71.

Expert Alumni

May 31, 2019 9:44:30 PM

Instructions here are specifically for your repayment because it's greater than $3000.

Repayment over $3,000: If the amount you repaid was more than $3,000, you can deduct the repayment on the same form you originally reported the income on (Form 1040). However, you can choose instead to take a tax credit for the year of repayment if you included the income under a claim of right. This means that at the time you included the income, it appeared that you had an unrestricted right to it. If you qualify for this choice, figure your tax under both methods and compare the results. Use the method (deduction or credit) that results in less tax.

When determining whether the amount you repaid was more or less than $3,000, consider the total amount being repaid on the return. Each instance of repayment is not considered separately.

Method 1. Figure your tax for 2016 claiming a deduction for the repaid amount. If you must deduct it as a miscellaneous itemized deduction, enter it on Schedule A (Form 1040), line 28.

Method 2. Figure your tax for 2016 claiming a credit for the repaid amount. Follow these steps.

Figure your tax for 2016 without deducting the repaid amount.
Refigure your tax from the earlier year (2015) without including in income the amount you repaid in 2016.
Subtract the tax in (2) from the tax shown on your return for the earlier year. This is the credit.
Subtract the answer in (3) from the tax for 2016 figured without the deduction (step 1).

If method 1 results in less tax, deduct the amount repaid.

If method 2 results in less tax, claim the credit figured in (3) above on Form 1040, line 71.

If you choose a deduction, please enter it here (Method 1):

Federal taxes - Deductions & credits - Other deductions and credits - Other deductible expense
Please answer YES to "Did you have any other deductions that are not subject to the 2% limitation?"
Please enter the amount you repaid under, "Claim of Right Repayment (Only if over $3,000).
Click the screenshot attached to enlarge and view

If you choose a credit (This can only be done in the Forms mode of the Desktop version of TurboTax), please enter it here (Method 2-only if greater than $3000):

FORMS - F1040 - Below line 70 is the Other Payments and Credits Smart worksheet
Please enter the credit in line D.
This credit should show up on F1040, line 71.

Level 2

May 31, 2019 9:44:31 PM

Thanks TurboTaxDiane! I believe I understand this much better now. However, in both "Methods" above you have the statement "Figure your tax for 2015." Do you mean 2016? Also, I did get one payment from Social Security in January 2016 and then repaid all of the 2015 and 2016 payments back. Does the negative amount shown on my 2016 SSA-1099, Box 5, still go on Form 1040, Line 20a?

Expert Alumni

May 31, 2019 9:44:35 PM

Yes, changed above. It does not need to go on line 20a. And you are welcome!

Why sign in to the Community?

I reported Social Security Income in 2015 which I repaid in 2016. SSA-1099 on Box 5 shows negative amount over $3k. How do you use TurboTax in this case?