Repayment of social security

[fasterhorses1959]

I collected SS for part of 2022.  I was taxed on the amount, over $14,000.00.  I then decided to delay, so I repaid the entire amount in 2023.   I received a 1099 reflecting the repayment of over $14,000.00.

I have read the IRS publication, and worked through the two alternatives provided in the publication.  Method 2 is the one that applies, and it states I enter a credit on Schedule 3, Line 13z.  I don't understand where to do that on Turbo Tax.

[KrisD15]

You can only use method two by using TurboTax Desktop since you will need to manually enter the credit on the form. It cannot be done using TurboTax Online. 

Instructions for TurboTax Desktop 

[fasterhorses1959]

Thank you.  I downloaded Turbo Tax basic from Amazon.  I am assuming that is not going to work?  

Can Turbo Tax desktop be downloaded?

[VolvoGirl]

Yes it will work.  You do have the Desktop installed program.  Did you get it installed and Activated with the 16 digit License Code?  You have the Desktop program versus the Online web version.  You can switch to the Forms mode.  

[DawnC]

You can use the TurboTax Basic from Amazon.   The Basic doesn't usually include a state tax return, so if you are in a state that requires an income tax return be filed, you will be prompted to pay for the state separately, but you can definitely use TurboTax Basic to enter the credit.   

[fasterhorses1959]

But where? 

[DawnC]

Click on Forms at the top of the screen

[DawnC]

There are two steps to taking the credit in TurboTax: figuring the credit, and applying the credit.

First, you’ll need to determine the amount of tax that was overpaid in the year you reported the income.  You can manually calculate the amount, or you can use TurboTax CD/Download to calculate it for you.  Make sure you use the same version of TurboTax that you used when you paid the taxes.

Figuring the credit

1. Sign in to your account.
2. Select the return for the year you received the money (For example, if you're repaying money you received in 2022, open your 2022 tax return).
3. Select Save As in Windows or Copy in Mac to save a copy of the return. This is the form you'll be working in for this part.
4. Select Forms in the upper-right corner.
5. Select Form 1040 from the list on the left to open the form (or Form 1040-SR, if applicable).
6. Find the Total Tax line and make a note of this number.
7. Adjust the income you originally reported by subtracting the amount you repaid. For example, if you reported $50,000 in income, but had to repay $9,000, you'll adjust the income to $41,000.
8. After you enter the updated income, TurboTax will automatically calculate your updated tax liability. To determine your Claim of Right Credit, subtract the amount of the updated tax liability from the original tax liability.

Next, you’ll apply the credit. To do this, you’ll need the current year of TurboTax CD/Download.

Applying the credit

1. Return to the current tax year (The credit can only be applied using the Forms mode in the TurboTax CD/Download product).
2. Select the Forms icon.
3. Choose 1040/1040SR Wks from the list on the left and the worksheet will appear.
4. Scroll down to the Other Credits and Payments Smart Worksheet (you can find this in a box near the end of the worksheet).
5. Enter the credit amount you calculated on Line D, Claim of Right, IRC 1341 credit for repayments of prior year income.
6. Select 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.