AboutCarole Dunton Expertise Preparation of individual income tax returns including social security, pensions, lump sum distributions, sale of personal residence, stock and mutual fund sales, distributions from individual retirement accounts, moving expenses and itemized deductions.
General knowledge of schedule C for small sole proprietorships.
No experience in corporate, estate, partnership or large business returns.
Experience 9 years as tax preparer for major national firm.
Question Hi Carole. My question is regarding SSD. My husband is on Social Security. He was receiving long-term disability payments through his employer's insurance carrier. When his disability was declared, we received SSD retroactive but we had to reimburse the insurance carrier all but $1,400. We received the SS statement that says we had an "income" of about $20,000 from social security. How do I show it being paid back? The LTD was not taxable because we had paid premiums on the policy. Or...must we declare the payment from social security as income?
Other info...I am employed fulltime. We itemize due to mortgage interest, a home equity loan and medical bills. No other dependents.
I purchased H&R Block Tax Cut CD's but I don't know if it deals with this issue or not. Wanted to do some fact-finding first.
Thanks!
Answer Hi,
Since the long-term disability payments were not taxable you can't deduct the payback. Include the SSD with your other income. Whether or not any of it is taxable depends on the amount of your other income. Whether or not you itemize has no affect on the amount that is taxable.
If half of the SSD plus your other income exceeds $32,000 (if married filing jointly) then up to 85% of the SSD will be taxable. The exact amount can be determined by using a worksheet in IRS Publication 915.
Since part of the benefits received in 2004 were for an earlier year, the taxablel portion may be reduced. See IRS Publication 915 for details.
