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When you are entering your social security income, on the next page you will be asked if you received a lump-sum payment in 2016 for 2015 or prior years. Turbo Tax will ask you which year, the amount for that year, etc.
Please take a look at the following information:
https://ttlc.intuit.com/replies/4767454
As far as the repayment of your disability income goes:
The Claim of Right allows you to take a deduction (or credit) for repayment of income that was taxable in a prior year. If you don’t itemize, that won't be helpful to you!
IF you pay back less than $3000, the repayments are deductible on Schedule A (subject to the limitation of 2% of your Adjusted Gross Income.)
To report the repayment:
If you paid more than $3000 and prefer to take a deduction on your Schedule A:
IF you pay back more than $3000, you have the option of taking a tax credit in 2016 (the year of the repayment).
To calculate and claim the credit
you would need to use TurboTax CD/Download, because the amount has to be
entered in Line 73, box d of your Form 1040. Per IRS
instructions from the Pub 17:
"If you are claiming a credit for repayment
of amounts you included in your
income in an earlier year because it appeared
you had a right to the income, include
the credit on line 73. Check box d
and enter “I.R.C. 1341” in the space
next to that box. See Pub. 525 for details
about this credit."
Click on this link:
https://www.irs.gov/pub/irs-pdf/p525.pdf
Go to page 34 and start reading at repayments. It seems that you
have to recalculate what your tax would have been if the income you repaid
wasn't included when you originally filed. Then take the
difference between 1) the taxes you actually paid with the income included and
2) the taxes you would have paid if the income hadn't included the repayment
amount.
Enter the difference as a credit on Line 73, check box d and indicate I.R.C.
1341.
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