How can I get credited for the extra taxes I paid since Social Security overpaid me?

by Elizabeth W. Kidd, CPA | Jul 29, 2019

Social Security overpaid me $12,000 in 2018, which I repaid in 2019. How can I be credited for the extra taxes I paid in 2018? Should I expect a tax form at the end of 2019 from Social Security showing that I paid $12,000?

Your form SSA1099 for 2019 will show the amount you repaid in Box 4 and will net that in Box 5 against the amount you received for 2019. This reduces the amount of tax for 2019 on Social Security income.

If this number is less than zero (a negative number), it can be used to offset other Social Security reported on the return.

If the amount in the combined Box 5 is a negative number higher than $3,000, you can claim a credit in 2019 for the additional taxes paid in 2018. To do so, you would compute your tax for 2018 as if the amount of Social Security subject to tax was the amount received less the amount repaid. The difference can be claimed as a tax credit on your 2019 return on Schedule 5, Form 1040. Check Box D and enter IRC 1341 in the space next to the box.

Alternatively, if the combined Box 5 number is a negative number higher than $3,000, you could claim it as an itemized deduction.

If the combined Box 5 number is a negative number lower than $3,000, there is no current way to recoup any additional taxes paid.

The information above comes from IRS publications issued for use in preparing 2018 returns. They are available on the IRS website. Your tax adviser can perform various scenarios to determine the best alternative for you.  

This answer gives no assurance that the numbers used will remain the same for 2019 and beyond. If you have overpayments for multiple years, the general process would be similar but more complicated.

For more resources, check out PICPA’s Money & Life Tips, Ask a CPA, or CPA Locator.

Answered by: Elizabeth W. Kidd, CPA, is a retired accounting instructor in Erie, Pa.

The responses are based on the limited information provided by the questioner and apply the laws and regulations at the time of posting. Other options could arise as rules and regulations may change over time, including but not limited to the passage of the Tax Cuts and Jobs Act of 2017. They are intended to provide general information, not specific accounting or tax advice; they are not intended or written to be used and cannot be used for the purpose of avoiding or evading taxes or penalties under the IRS code or regulations. Views expressed do not imply an opinion of the PICPA, its officers, directors, employees, or members.
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