I had to repay an amount for disability benefits that was included in last years income. Where do I file the overpayment?

[KO21]

How does this answer change if the payback happened in the SAME year the income was received (payback exceeds $5K)?

[Anonymous]

What if the disability payments were received in 2019 and repaid in early 2020 prior to tax filing? 

Must the taxpayer pay the taxes for 2019 and then claim a repayment on the 2020 return?

Is there a method in which the taxpayer can deduct the 2019 payments on the 2019 return given that they were repaid in early 2020 before filing the 2019 return?  

Thank you.

[DianeC958]

Yes, you must claim and pay the tax for the amount you received in 2019 and the deduct the repayment made in 2020.

[Anonymous]

DianeC958 - Thank you very much for your response.  Was hoping there was another way to handle this, but your answer is very much appreciated. 

[Sn9]

Pre 2019 ammount-541.41$ potential2019 tax deduction 541.41$ pre-2019 amt.× taxability of claim 100%

[JamesG1]

Repayments are discussed in IRS publication 525 pages 34 & 35.

You talk about amounts of repayments of less than $3,000.  Note this statement in the right hand column of page 34.

"For tax years beginning after 2017, you can no longer claim any miscellaneous itemized deductions, so if the amount repaid was $3,000 or less, you are not able to deduct it from your income in the year you repaid it."

[bxd76]

I know this is an old thread but hoping someone can clarify the response from @JamesG1 .  He writes:

"so if the amount repaid was $3,000 or less..."

What if the repayment is significantly greater than $3,000?  I received disability payments in 2020, covering years 2019 and 2020.  Then later had to repay some of that in 2020, and now being asked to repay even more of that 2019/2020 money, in March 2021.  Thank you.

[Cynthiad66]

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, 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. However, you can choose to take a credit for the year of repayment.

Taxable and Non-Taxable Income see page 34

Since you repaid the taxable amounts in 2020, the amounts repaid are entered as an itemized deduction on Schedule A or as a tax credit on Form 1040  as a Claim of Right IRC 1341, depending on the amount repaid.

To report the repayment of taxable income as an itemized deduction on Schedule A -

• Click on Federal Taxes (Personal using Home and Business)
• Click on Deductions and Credits
• Click on I'll choose what I work on
• Scroll down to Other Deductions and Credits
• On Other Deductible Expenses, click on the start or update button

• (If the repayment was greater then $3,000) On the next screen, click on No (Less Common Expenses)

  On the next screen, click on Yes (Any Other Deductions)

  On the next screen, enter the amount repaid in the box for Claim of Right repayment.  Continue with this section until it completes.

[ejblack42]

All I received was a letter from ltd stating I had repaid the overpayment. Shouldn't I get an actual tax statement? 

[savazpour02]

But what if the amount repaid was to Metlife insurance vs SSD. are they treated the same?

[DianeW777]

Yes, they would be treated the same.  If the repayment was greater than $3,000 you have the ability to take a deduction from your income.

• What is a claim of right repayment?

[LynneNLam]

I also had to pay back my long term disability company in January 2021 for funds received in 2020 after my social security disability was approved.  My SSA 1099 shows the amount for 2020 and 2021 and entered both amounts on this year 1040.

the amount paid back was over $3000.  Does the refunded amount get entered on the first page of the less common deduction section with the description and amount.  Or on the next page under claim of right repayment over $3000?  I was told the first page.   then read instructions in pub 525 and seems it should go under the claim of right repayment.  Thank you.  

[JamesG1]

Claim of right repayment over $3,000 may be reported as a deduction by following these steps.

• Go to Federal / Deductions & Credits / Your tax breaks / Other Deductions and Credits / Other Deductible Expenses.
• Click Start / Revisit to the right.
• At the screen Tell us about your other expenses, select Claim of right repayment over $3,000.

The deduction is reported on line 16 of Schedule A Itemized Deductions.

Computation of the credit option is outlined here by KristinaK.

[LynneNLam]

yes per my message i knew that.  My question was i was told to put it on the first page of Other Decutible Expenses with an explanation.  Then the second page takes you to Claim of Right over $3000.   Which place does it go?