Hi LDBar, thanks for participating in our event today.
Due to the long approval time for SSDI, many people find themselves in the same situation. If you received a lump sum payment that covers both last year and this year, you will get an SSA-1099 that breaks down the amount for each year. When you enter your payment in Turbotax you will enter the amount for this year and the amount for last year as separate payments and answer questions about last year's income. See this helpful article for more info. You will not need to file an amended return for last year, as you can enter the income on this year's return and determine if you owe any tax. This depends on your other income. You will owe tax if 1/2 your benefits plus all other income exceeds a certain amount. See here for details.
Its true that you may be able to deduct your Cobra payments. They are considered medical expenses. You can deduct medical expenses as an itemized deduction if the total exceeds 7.5% of your adjusted gross income. Of course, you would need to have enough itemized deductions to exceed the standard deduction in order for this to be beneficial. Itemized deductions include mortgage interest, state and local taxes, property taxes, and charitable donations in addition to your medical/dental expenses.
If you are totally and permanently disabled, or have medical expenses in excess of 7/5% of your AGI, you can withdraw from your IRA without an IRS penalty. The amount withdrawn is taxable as ordinary income. But this could potentially be offset by taking a deduction for the Cobra premiums.
I hope that helps! Feel free to post again if you have any further questions.
