Part of negative amount that represents benefits included in gross inc. prior year

[OtisMozzetti]

This question is out of IRS Publication 915, page 15, which deals with Soc. Sec. benefits.

If repayments exceed benefits received during the current year, then there is a negative figure on SSA-1099 (or RRB-1099) box 5 for net benefits. If so, you can take an itemized deduction "for the part of this negative figure that represents benefits you included in gross income in an earlier year".

My question, despite my belief that I am rather good with computations, is what part of such a negative figure represents benefits that were included in gross income during an earlier year?

In addition, one of the options, if the amount involved is more than $3000, is to refigure the tax for the earlier year with the benefits received reduced by the part of the benefits which were represented by the repayment. (see item 2 b. in Publ. 915, page 15)

The IRS does not furnish an example of the above computation, nor any worksheet, at least not in Publication #915.

[DaveO]

Is there a detail of the benefits repaid by year? In those earlier years were part of the benefits taxable? I would say the deduciton would be limited to the taxable amount.

I haven't had to figure this one before. It's usually the other way with the SS taken to repay the private disability insurance.

[OtisMozzetti]

disability benefits approved retroactively after a year or two or more

I would say the deduction would be limited to the taxable amount.

I haven't had to figure this one before. It's usually the other way with the SS taken to repay the private disability insurance.

Dave,

Thank you for replying at all to what does seem a messy topic. The issue would come up when Social Security approves disability benefits after an adjudication process that lasted a year or two or more.

[DaveO]

That's correct, these have all been disability cases. Sorry I don't have more insight on the problem. I do have a client that SS is seeking repayment of benefits from. If the waiver of repayment is denied I might have to deal with this one myself.