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R. Klein, EA
R. Klein, EA, Accountant
Category: Social Security
Satisfied Customers: 3375
Experience:  Tax & Social Security Benefits specialist
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In 2015 I had planned to retire. I became very sick and

Customer Question

In 2015 I had planned to retire. I became very sick and ended up staying at my employer. I was 64 and wanted to keep the insurance I had. I got paid (most of my pay=but not all). In order to keep the insurance I had to go back to work after short term disability. I had called social security and told them that I wanted to pay back my overpayment. they told me that I had to wait until my employer updated my w2 wih tolal waged earned. I will have to pay about 19,000 back to social security. I have no problem with that. the problem is that my income rose by 21,000 and now I have to pay between 3,500 to 4,000 dollars in income tax for money I am returning. I no longer work full time for 2016 and my income will be very low. How do I get that tax based on social security income back?
Submitted: 1 year ago.
Category: Social Security
Expert:  R. Klein, EA replied 1 year ago.

Hello and thank you for your tax question today.

When you pay SSA back for benefits you received and were taxed on, you may take a deduction against other income in the year of the payback.

If you pay the money back in 2016, you will show this repayment next year when you file the 2016 return.

There are two basic ways to put this on your return, depending on the final amount that is repaid. One way is to reduce your taxable income by the amount of the repayment, subject to a "floor" amount; the other is to get a credit for the actual taxes paid in the past. Your tax advisor (or your new tax advisor!) should know how this works.

One way or another, you will only pay the tax on the benefits you actually get paid and keep.

I hope this clarifies the issue. If you need further assistance, please feel free to ask me. Otherwise, please take a moment to rate my answer as it is how the experts are compensated for assisting you today.

Have a great week!