Disability Payments

[Steve M]

Client has received disability from private insurer for 3 years. Social security decided that she is truly disabled and now paid her in one year all disability payments going back 3 years. She had to pay back insurance company an amount equal to the social security payment. I can't remember how to account for this on tax return. Seems like there were several options, but can't find any info on it. Can anyone help?

SteveM

[taxtrio]

Deduction for repayment of amounts under a claim of right if over 3,000.00 Claimed as Misc Itemized Deductions Not Subject to the 2% limitation. Page 4-23 Taxbook. Also see Tab 3. page 3-21 "repayments". For detail.

I'm sure it's also explained in Pub 17.

You have a choice of Sch A, or Refigure tax from the earlier year without the income that was later repaid. Subtract the regfigured tax from the tax shown on the original return. Enter the result on line 70, form 1040and enter IRC 1341 next to line 70.

Taxtrio

[Steve M]

Deduction for repayment of amounts under a claim of right if over 3,000.00 Claimed as Misc Itemized Deductions Not Subject to the 2% limitation. Page 4-23 Taxbook. Also see Tab 3. page 3-21 "repayments". For detail.

I'm sure it's also explained in Pub 17.

You have a choice of Sch A, or Refigure tax from the earlier year without the income that was later repaid. Subtract the regfigured tax from the tax shown on the original return. Enter the result on line 70, form 1040and enter IRC 1341 next to line 70.

Taxtrio

[Steve M]

Thanks, now that you identified it, it comes back to me. Really appreciate the help.

SteveM