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How can I apply for refund of social security benefits taxes…

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How can I apply for refund of social security benefits taxes witheld in 2016 due to repayment of benefits in 2017? My box 4 for 2017 SSA 1099 is less than box 3.

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How to recoup taxes paid on social security benefits withheld in 2016 that had a repayment back in 2017? My ssa 1099 2017 Box 4 is less than box 3

Submitted: 3 months ago.Category: Tax
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3/28/2018
Tax Professional: Lev, Tax Advisor replied 3 months ago
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 33,122
Experience: Taxes, Immigration, Labor Relations
Verified

There might be several situations - please verify which is applied to you...

- federal income taxes withheld from social security benefits in 2016 - that amount is on form SSA-1099 box 6 - you will report that amount on form 1040 line 64 - and it is credited toward your 2016 tax liability - and if overpaid - you should be entitled for a refund.

- if a part of your social security benefits was taxable on 2016 tax return - that amount is reported on form 1040 line 20b - AND you paid back all or part of that amount in 2017 - that is qualified as repayment.

If you had to repay an amount that you included in your income in an earlier year, you may be able to deduct the amount repaid from your income for the year in which you repaid it.

Your gross benefits are shown in box 3 of Form SSA-1099.

Your repayments are shown in box 4.

The amount in box 5 shows your net benefits for 2017 (box 3 minus box 4).

Use the amount in box 5 to figure whether any of your benefits are taxable.

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Customer reply replied 3 months ago
thank you but all the info. you gave me I am already aware of by reading my SSA -1099. I am trying to get info. into exactly what steps I need to take, i.e., which form, which line in order to get back a refund of the total amount of taxes I had withheld from benefits I received during 2016 as I had to pay back the entire benefit. 2016 SSA 1099 Box 3 Benefits is 10101.60 Box 4 is $6544 and box 5 is $3557. but....I had $507 taxes withheld from benefits during 2016 so am assuming I can get back with rule claim of right but is confusing on line and on IRS website. Please advise...
Tax Professional: Lev, Tax Advisor replied 3 months ago

You wrote - I had $507 taxes withheld from benefits during 2016

I assume - that amount was reported on form SSA-1099 box 6.

Can you verify if my assumption is correct before we are moving forward?

If not - please specify from where you got this amount.

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Customer reply replied 3 months ago
that is correct. I am assuming since I had to pay back all the benefits I should be able to get a refund on the taxes.
Tax Professional: Lev, Tax Advisor replied 3 months ago

The issue is that tax liability is determined separately for each tax year.

so income received in 2016 is reported on 2016 tax return.

if you had repayment in 2017 - that will affect your 2017 tax return - but will NOT affect 2016 tax return.

.

So we have income tax withheld from your social security benefits during 2016.

That amount was reported on 2016 form SSA-1099 box 6.

So on your 2016 tax return - THAT amount is credited toward your tax liability on form 1040 line 64.

https://www.irs.gov/pub/irs-prior/f1040--2016.pdf

that is the place where that amount is used.

You may not claim that amount on your 2017 tax return.

Please verify if that amount was included there and properly credited.

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Customer reply replied 3 months ago
my question is this: Since I had to pay back all of my benefits that were taken in 2015 and 2016 and paid taxes on these benefits upfront and they were declared on line 64 in both years, I thought I should get the taxes refunded back to me for those years since I had to pay back the money, is this not the case? Declaring them on line 64 means that I got that money and kept it which was not the case due to repay. Please advise.
Tax Professional: Lev, Tax Advisor replied 3 months ago

When you reported withheld amount on form 1040 line 64 in corresponding years - that means that amount was credited toward your tax liability for THAT tax year - and either you paid less or your refund was larger.

That is done.

If you did not have that withholding - you would pay larger amount with your tax return for THAT tax year.

Or if you got refund - it woudl be less without that withholding.

You may not credit the same amount again.

.

Repayment was in 2017 - so we will deal with repayment on your 2017 tax return.

So far - on 2017 tax return - you simply report LESS social security benefits because of that repayment.

If you had withholding on your 2017 form SSA-1099 - you will use THAT withholding as a credit on line 64.

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Customer reply replied 3 months ago
am signing off for the evening. Will try and touch base tomorrow, thanks, Lev
Tax Professional: Lev, Tax Advisor replied 3 months ago

I appreciate if you take a moment to rate the answer.

Experts are ONLY credited when answers are rated positively.
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Customer reply replied 3 months ago
Lev: only have about an hour online so wanted to continue: Here is my basic question and I may be mistaken but: If I got paid 9 months worth of social security benefits in 2015 with taxes withheld on each month and declared them on line 64 along with my wages BUT.....in 2016, I had to pay them all back, am I not entitled to get the taxes refunded since they were declared based on being part of my gross income at the time for 2015 but then why paid taxes on money I had to pay back in 2016?
Tax Professional: Lev, Tax Advisor replied 3 months ago

You may not combine taxable income and income tax withheld - these are separate transactions.

We are talking ONLY about withholding.

Because you already CREDITED the amount of tax withheld on your 2015 tax return - and either received a refund or reduced your 2015 tax liability because of that - you are not entitled to any additional refund.

Remember - that was a voluntary withholding - and if you were not asked for that withholding - your refund woudl be LESS in 2015.

So that withholding were already included into your 2015 tax refund.

When you are asking to refund that amount again - that would be double - and the IRS would not agree with such position.

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Customer reply replied 3 months ago
I was credited the amt of tax withheld in 2015 but since it was based on me declaring $6535 of ss benefits added to my gross wages for 2015 but then had to pay all back in 2016, wouldn't I get back the difference between original AG tax due and the amended AGI tax amt due less ss repayment? So I paid taxes on money that was returned, correct?
Customer reply replied 3 months ago
Lev: this is what I am questioning for my situation........Section 1341 Repayment - Claim of Right/Social Security Repayment
If the taxpayer had to repay more than $3,000 that was included in their income in an earlier year because at the time they thought they had an un-restricted right to it, the taxpayer may be able to deduct the amount they repaid or take a credit against their tax in the year that they repaid it. When a repayment occurs the taxpayer may (subject to the dollar limitations discussed below), (1) reduce their income in the current year, (2) deduct the amount repaid as a miscellaneous deduction on Schedule A, Form 1040 in the year in which it is repaid, or (3) take a refundable credit against tax on Form 1040, Line 73, for the year that repayment occurs. You cannot amend the prior year return. See: "Repayments" in Publication 17 - Your Federal Income Taxes.The manner in which the repayment is deemed a reduction in income, a miscellaneous itemized deduction or a tax credit depends upon the amount of the repayment and the type of income that was included in the previous year.If the amount repaid was $3,000 or less, a Claim of Right under IRC Section 1341 does not apply. In some cases, the amount repaid is deducted in the year of repayment on the same form or schedule on which it was previously included. This effectively reduces the income of the taxpayer in the current year by the amount which they repaid. For example, if in the prior year it had been included as self-employment income on Schedule C, the repayment is deducted on Schedule C by reducing income in the year it was repaid. See: "Repayments" in Publication 17 - Your Federal Income Taxes.However, if the income was previously reported as wages, taxable unemployment compensation, or other nonbusiness ordinary income, it cannot be used to reduce current wages, taxable unemployment or other nonbusiness income. Instead it is deducted on Schedule A, subject to the 2% of adjusted gross income limitation. See: "Repayments" in Publication 17 - Your Federal Income Taxes.When dealing with the repayment of Social Security Benefits or Railroad Retirement Benefits, only the repayment amount that exceeds the gross benefits received in the current year are considered. Specifically, on the SSA-1099, Box 3 will reflect the Gross Benefits, Box 4 will reflect the repayment amounts, and Box 5 will reflect the net benefit that the taxpayer received. It is the amount in SSA-1099, Box 5 (or 1099-RRA, Box 5) that a taxpayer uses to determine the taxable amount of social security benefits (railroad retirement Benefits). See: Pub 915 - Social Security and Equivalent Railroad Retirement Benefits.If a taxpayer receives an overpayment of social security (or railroad retirement) benefits in a previous year, and then repays the social security (or railroad retirement) benefits in the current year, any repayment of benefits that are made (SSA-1099, Box 4) will be subtracted from the gross benefits that the taxpayer received in the current year (SSA-1099, Box 3) and reported on Form SSA-1099, Box 5. If the amount repaid is more than the gross benefits that were received in the current year a negative amount will be shown in Box 5 of the total Form SSA-1099 and RRB-1099. This negative figure represents benefits that were included in gross income in an earlier year.If this negative amount is $3000 or less, it is considered a miscellaneous itemized deduction, subject to the 2% of adjusted gross income limitation and will be claimed on Schedule A (Form 1040), line 23. See: Pub 915 - Social Security and Equivalent Railroad Retirement Benefits and "Repayment of Benefits" in Publication 17 - Your Federal Income Taxes. This is done from the main menu of the 1040 return. Select Itemized Deductions Menu, 2% Deductions, Other Miscellaneous Deductions (subject to 2%), then select F10 and select 'NEW' and enter as a description such as 'SOCIAL SECURITY REPAYMENT EXCEEDING GROSS BENEFITS' and the amount.
Tax Professional: Lev, Tax Advisor replied 3 months ago

since it was based on me declaring $6535 of ss benefits added to my gross wages for 2015

That is not correct assumption - is was NOT based on whether your social security benefits are taxable or not.

That was simply a voluntarily withholding you requested.

That make NO difference why you requested such withholding.

So I paid taxes on money that was returned, correct?

The issue with social security benefits paid back is not related to that because they were paid back in a different tax year.

That is not taxes on your social security benefits.

These are withholding - it is not correctly to say that is your tax liability.

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Customer reply replied 3 months ago
Lev: I am going to sign out, this is a simple question that we don't seem to communicate well as after all these emails I still don't understand and $52 is out of my budget. Thanks anyway. End conversation
Tax Professional: Lev, Tax Advisor replied 3 months ago

I feel that I provided a detailed explanation and all your questions were addressed.

If I tell you simply what you wish to hear, this would not be fair to you.

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