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Category: Tax
Satisfied Customers: 9730
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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My wife went out on long term disability through

Customer Question

My wife went out on long term disability through a group plan from her employer. The insurance carrier required her to file for Social Security Disabilty. She received a W2 from the insurance company for $32,945.50 for 2015. The Social Security Disability was approved and she received a lump sum payment of $14,112.00 in December 2015. The insurance carrier required us return an overpayment of $15,973.76 to them. My question is if the entire amount of $32,945.50 is taxable, can we deduct the overpayment amount? If so, where/how would it be entered?
Submitted: 6 months ago.
Category: Tax
Expert:  Lane replied 6 months ago.
Hi,...Yes you do this through what's called the claim of right doctrine (IRC §1341)....You'll have to go back and create a tax return that DOESN'T include the amount that was paid back (not to file but just to calculate the different tax liability)....Then on the tax return for the year you paid it back you take the DIFFERENCE between (1) the tax liability on the return that was actually filed that year, and (2) the return you calculated without that income being there, as a tax credit....You do this on line 73 of the current tax return (check box d, and say "see statement") then on the=at statement say "pursuant to IRC §1341."
Expert:  Lane replied 6 months ago.
I hope this has helped....Please let me know if you have any questions at all....If this HAS helped, and you DON’T have other questions … I'd appreciate a positive rating (using the faces or stars on your screen, and then clicking “submit That’s the only way JustAnswer will credit us for the work here....Thank you!Lane……I hold a law degree (JD, Juris Doctorate), with concentration in Tax Law, Estate law & Corporate law, an MBA, with specialization in finance & tax, as well as CFP® and CRPS designations. - I’ve been providing financial, Social Security/Medicare, estate, corporate & tax advice since 1986.
Expert:  Lane replied 6 months ago.
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