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Lane
Lane, JD,CFP, MBA, CRPS
Category: Social Security
Satisfied Customers: 21082
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial, Social Security & Tax advice since 1986
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Can social security administration go retroactive? They

Customer Question

Can social security administration go retroactive? They determined our medicare and Part B insurance cost for 2019 based on tax return of Year 2016, Now they wrote us a letter that that they will no longer deduct our prescription drug coverage income related monthly adjustment amount from your monthly benefits. They will deduct our current Medicare Part B (medical lnsurance) premium from our monthly Social Security payments beginning February 2020. They write that they "will also deduct $1,951.20 for past due Medicare Part B (medical insurance) premiums.We will also deduct $468.00 for past- due Medicare prescription drug coverage income- related monthly adjustments amounts.We will withhold your monthly payments until you have paid all of the past -due Medicare amounts you owe"
JA: Which tax year is the deduction for?
Customer: for 2019 and the used tax return of 2016.And now the calculate for 2020. Our income in 2017 and 2018 was higher and they want to get the difference
JA: Anything else you want the Accountant to know before I connect you?
Customer: We paid all they charged us in time. We did not past due. I think I need attorney to find out if they can go retroactive.
Submitted: 9 days ago.
Category: Social Security
Expert:  Lane replied 9 days ago.

Hi. My name's Lane.

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· I hold a Law Degree, a BBA, an MBA (Finance Specialization), and & CFP and CRPS designations as well,

· I've been providing tax, corporate law & accounting, and Social Security advice to clients on three continents since 1986.

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Bear with me a sec while I explain ... (By the way … Please understand that any phone consult offers come from the web site site automatically … Not from me … They WILL stop.)

Expert:  Lane replied 9 days ago.

It's important to know that the IRMAA surcharge for a year generally is set using the MAGI reported on the tax return filed for two years previously.

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This is becasue IRS does not complete processing of returns for a given tax year until the year after that year, becasue of those who file for extensions don't even file until October.

So this year's 2019 tax return will be used to set premiums paid in 2021, etc., etc., again, because the return filed two years previously generally is the most recent available to Social Security for setting the premiums.
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When income falls to a level much lower than reported on the tax return filed for two years previously, it may be unfair to incur surcharges due to income that no longer exists. In that case it is possible to ask to have the IRMAA income amount adjusted downwards.
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Do this by submitting Form SSA-44, “Medicare Income-Related Monthly Adjustment Amount Life-Changing Event," to the Social Security Administration.

Customer: replied 9 days ago.
they could not year 2019 tax return because it is due on on April 2020. They used Yr 2016 for 2019 calculations of 2019 payments. Then they obtained taxes for Years 2017 and 2018
where we had higher income and now the re-calculated the payments and are going to substruct money from our social security benefit until the difference is paid off. We had tax extension and may be they obtained our tax returns later. They contacted us recently. Do they have right to go retroactive?
Expert:  Lane replied 9 days ago.

Yes, again they MUST go retroactive becasue of availability as I mentioned above. The EARLIEST they can get a return from IRS is two yeas.

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See this:

https://www.irahelp.com/slottreport/cost-medicare-premiums-and-your-ira

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(just regarads income from IRA's, but a good overview of the whole issue)

Customer: replied 9 days ago.
If I understood you properly it is normal that they use Tax return for 2016 for calculation payment for Medicare and Part B medical insurance. Then they will be able to use nTax return for 2017 for 2020 payments how they wrote us first but
now they want to charge us for underpayment in 2019, which was not our fault. We are ready to pay higher cost based on tax return for Years 2017 and 2018 for payments we have in Yr 2020 but why they charge us the difference between payments based on tax return for Yr. 2016 and later years.
Expert:  Lane replied 9 days ago.

The cost, for every year, are based on the taxes from two years previous.

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Then there's ALWAYS the fact that they go back and audit ALL past years, to make sure that enough was being paid.

Customer: replied 9 days ago.
We have higher income because we sold stocks and had capital gains. First letter they sent showed payments for 2020 based onTax return for 2017 which we excepted. But now they want us to reimburse the difference between payments based on 2017 and /or 2018 taxes and payments based on 2016 tax return. May we object it or Form SSA-44 is the only way?
Customer: replied 9 days ago.
I rated you the highest:5 but I could not get back to the place where I was able to do it
Expert:  Lane replied 9 days ago.

The SSA-44 is the only way, and those only work for years where the income has truly gone back down below the IRMAA thresholds

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Maybe some context would help. Social Security (and it's various component such as Medicare) are part of out Social Insurance here in the U.S, benefiting those who simply HAVE nothing else the most.

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Higher medicare premiums for those that actually HAVE IRA's, and other assets to sell, etc. is one of the ways (like it or not - I don't really care for the system) they spread the wealth.

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So once you have a year where income is TRULY below the threshold (and yes that means including stock sales, IRA distributions, decent pensions, etc.) you can use the SSA-44 to get it back down