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Arthur Rubin
Arthur Rubin, Tax Preparer
Category: Social Security
Satisfied Customers: 1270
Experience:  Over 20 years experience in tax preparation, including some multi-national Social Security applications.
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I have permit totally disability from workers compensation.

Resolved Question:

I have permit totally disability from workers compensation. After a year or so after I got w/c, I got approved for social security. At 0 benfits, because I was all ready receiving 80% from w/c. I do have Medicare. Which at first I had to pay quartley. I have received no checks or any money from social security, ever. But, I received a SSA 1099 showing my earings in box 3, but showing the same amount in box 3 explations, being offset by workers compensation. So I didn't report any social security income for my 2011 taxes, as I did not receive any. Well, I am being mail audited by the irs. They claim the ss should be taxed at 85% because I did have other income over 25,000 from my wife. So why do i have to pay taxes on money i neither received or have access to????
Submitted: 1 year ago.
Category: Social Security
Expert:  Arthur Rubin replied 1 year ago.

Arthur Rubin :

I see your problem. You shouldn't pay any taxes on money which you never received, had access to, or was paid on your behalf to a third party. I would like to know what numbers are in box 4 and box 5 of the SSA-1099.

Arthur Rubin :

Please bear with me. Due to the structure of this web site, I will not be informed of your reply unless I'm logged in at the time.

Customer: Box 4 has nothing in it. Box 5 is the same amount as box 3.
Customer: box 4 has nothing in it. Box 5 is the same amount as box 3
Arthur Rubin :

I don't think I answered your question. If the disability pension and social security disability offset each other, either your disability pension is non-taxable as being refunded, or the social security is non-taxable as being refunded. I think the latter is correct, but I cannot figure out how to report it on the tax form. The former would be easier to report, so, if the IRS insists that SS income is taxable, then the other pension would be non-taxable.

Customer: It is not a disability pension. It is workers compensation. Which is non taxable. I don't even have to report this income to the irs. But sence ss says my workers comp. is already paying me at 80% then my ss benefit is 0. So why do I get a ssa-1099 with amount in box 3 and nothing in box 4 and the same amount in box 5. And in box 3 explanation the total amount in box 3 is offset by workers comp . I have received no compensation from ss
Arthur Rubin :

Some "offsets" are taxable, and some are not. Yours clearly is not, but I don't know how to convince the IRS. I'm not a CPA, a lawyer, or an EA, so I'm not authorized to represent taxpayers before the IRS. If you were my client, I would probably have line 20a have the full amount from box 5 of the SSA-1099, and 0 for line 20b, with an attached worksheet showing:

Arthur Rubin :

Line 20a : (amount from box 5)
less amount offset because of workers comp payments: (amount from explanation in box 3)
Total social security payment subject to tax: $0
...
and then possibly a copy of the social security taxable calculation worksheet.

Arthur Rubin, Tax Preparer
Category: Social Security
Satisfied Customers: 1270
Experience: Over 20 years experience in tax preparation, including some multi-national Social Security applications.
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