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January 2, 2024
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Taxability of Social Security overpayment of $9000 that is being repaid over several years

  • January 2, 2024
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Social Security overpayment of $9000 being repaid over several years. Can I deduct the overpayment each year since the total being repaid is more than $3000?

    1 reply

    Employee
    January 2, 2024
    MRG202Author
    January 3, 2024

    Thank you!

    AmyC
    Employee
    January 8, 2024

    It depends. If you receive Social Security, your form 1099-SSA will show your total received along with the amount of overpayment such that only the net benefit amount is actually reported in box 5, explained here. This allows you to type in the form as received with no extra hoops to jump through.

     

    However, if you paid back more than received, your box 5 is a negative number. This is where the $3,000 comes into play for each year. For amounts over $3,000 there are two ways to figure a deduction. To determine the best method for you:

     

    1. See Turbo Tax article What is a Claim of Right Repayment. which covers repayment for one year. If you repaid over multiple years, you will need to do the same for each year.
    2. See Pub 525 for examples of how to figure the credit. You will want to determine which is better for you, the credit or the deduction. If the credit is best, you will need to download the desktop version and move your .data file so you can pick right up where you left off. 

    See also:  How to download TurboTax Desktop software from TurboTax.com

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