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xqs
Level 2

How can I deduct my repayment to LTD carrier?

Hello,

 

I received 2019 SSA-1099 SSDI this year. The lump sum for 3 years and created tax headache for me. I repaid $28K of the SSDI lump sum to my LTD company . My question is how can I deduct the $28k repayment for 2019 tax return?  

 

Thank you

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3 Replies
RobertG
Expert Alumni

How can I deduct my repayment to LTD carrier?

If you had to repay an amount that you included in your income in an earlier year, you may be able to deduct the amount repaid from your income for the year in which you repaid it.

 

If your long term disability was not included in income in a prior year, you would not be able to deduct it or claim a credit.

 

If you reported this income in prior years, you can claim repayments of over $3,000 on your tax return. You can deduct this kind of repayment under Internal Revenue Code section 1341 as a 'Claim of Right'. 

 

Deducting a repayment is covered in IRS publication 525 on page 34.  

 

If the amount you repaid was more than $3,000, you can deduct the repayment as an 'other itemized deduction' on Schedule A (Form 1040), line 16. You can also choose to take a tax credit for the year of repayment. Figure your tax under both methods and compare the results. Use the method (deduction or credit) that results in less tax.

 

The way to figure these amounts is shown in Publication 525.

 

To claim the credit you will need to use a TurboTax desktop edition, so you can enter it in 'Forms Mode'.

 

In the Forms mode, click on Schedule 3 line 12, and it will take you to the  'Other credits and payments smart worksheet'.  Here is where you enter your 'Claim of Right, IRC 1341 credit for repayments of prior year income'.

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xqs
Level 2

How can I deduct my repayment to LTD carrier?

Thanks  RobertG for your response. 

 

In 2019, I repaid $28,000 to the LTD carrier. How can I deduct $28K repayment for 2019?

Are there any other ways I can use if I don't use Schedule A?

In 2018, I didn't file tax return because my AGI for that year was too low to file. Do I have to file an adjustment for 2018? 

 

Thank you

xqs
Level 2

How can I deduct my repayment to LTD carrier?

Could someone please answer this?  Thank you!. 

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