A client's Disability status was approved by Social Security in 2024. She received a 2024 form SSA-1099 which included payments for 2023 & 2022. When she filed returns in 2022 and 2023 she paid the 10% penalty on her early IRA withdrawals since she was only 40 years old. Can I now amend her 2022 and 2023 tax returns to claim the form 5329 disability exception to recoup the 10% penalties she paid those years since she wasn't yet deemed disabled then? Thank you.
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Yes, I've amended to remove 10% penalty and they went through without any issues. -
After you perform those adjustments, the taxation of the large amount of Soc Sec income received in 2024 can be recalculated based upon the income associated with the pre-2024 Soc Sec benefits.
There is a lot of number crunching involved, but any decent tax prep software should handle it for you. ALL of the retroactive / current Soc Sec benefits will appear only on the 2024 tax return, but you can often lower the taxable amounts by doing the calculations.Comment
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Thank you both very much for your wisdom. Greatly appreciated !Comment
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