Messy lump sum SSI Disability payment with private insurance

[norcalea]

Hi,

I do a couple of messy lump sum SSI disabiity payments every year and thankfully SSI lump sum

election is actually well done in ATX relative to other programs. For this year's client the money was already paid and taxed through private disability insurance. In addition to calculating the lump sum election issue I need to account for the fact that this money was all repaid to the insurer and has already been taxed. The instructions (from the insurer) say I have a choice to take that money repaid but already taxed in previous years and deduct it on schedule A, which really wont help my client much or to calculate repayment via I.R.C. section 1341 and reclaim the tax paid on line 71, and that I should do what yields the best outcome for my client.

When I read the repayment rules in the IRS publication it says that this can only be done for years with at least 3000 of income in question. One of my years is just under that. Do you think I can place the year in questions dollar amount on schedule A and then take the Section 1341 for the other years that qualify?

Thanks for any feedback.

[kcjenkins]

Yes, each year can be done individually.

[norcalea]

Thank you so much for confirming this! I love this board.