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Common questions about individual social security benefits in Lacerte

by Intuit•1• Updated 6 days ago

Follow these steps to enter Form SSA-1099 in Lacerte:

  1. Go to Screen 14.1, SS Benefits, Alimony, Miscellaneous Inc.
  2. Enter the amount from box 5 in Social security benefits (SSA-1099, box 5) (code 2).
    • Box 5 equals box 3 less box 4.
    • This amount flows to Form 1040, line 6a.
  3. Enter any Medicare premiums paid (SSA-1099) (code 13) if applicable.
    • This amount flows to Schedule A, line 1.
  4. Enter the Voluntary federal income tax withheld (SSA-1099, box 6 / RRB-1099, box 10) if applicable.
    • In 2019 and prior, scroll down to the Tax Withheld section and enter the box 6 amount in Federal income tax withheld [A].

If you want to override the taxable social security amount that Lacerte calculates on Form 1040, line 20b, enter an amount (-1 = none) in Taxable social security & railroad retirement [O] (code 4).

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Follow these steps to enter the repayment of social security benefits:

  1. Go to Screen 14.1, SS Benefits, Alimony, Miscellaneous Inc.
  2. Hold down Ctrl+E in the Social Security Benefits (SSA-1099, box 5) field.
  3. Select Statement under the Print as section.
  4. Enter the benefits received in the Amount column.
  5. Enter the benefits repaid on another line in the Amount column.
  6. Enter a Description for both amounts.
  7. Click OK.

Follow these steps the enter the repayment as an itemized deduction:

  1. Go to Screen 25, Itemized Deductions (Sch. A).
  2. Scroll down to the State Miscellaneous Deductions (Subject to 2% AGI Limitation) section.
  3. Hold down Ctrl+E in the Other Miscellaneous deductions (2% AGI) (Ctrl+E) field.
  4. Enter "SS Repayment Excess" in the Description column.
  5. Enter the excess repayment in the Amount column.
  6. Click OK.

Below are different ways to handle the repayment of social security benefits. This information comes for the IRS Pub 915.

If your Form SSA-1099 or Form RRB-1099 shows that the total benefits you repaid (box 4) are more than the gross benefits you received (box 3), your net benefits (box 5) will be a negative figure and nontaxable. Don't use Worksheet 1 in this case.

If you received more than one form, a negative figure in box 5 of one form is used to offset a positive figure in box 5 of another form for that same year. If you have any questions about the negative figure, contact your local SSA office or RRB field office.

If your Form SSA-1099 or RRB-1099 has a negative figure in box 5 but your spouse's doesn't, subtract the amount in box 5 of your form from the amount in box 5 of your spouse's form to calculate your net benefits and figure out if your combined benefits are taxable.

If the total amount shown in box 5 of all of your Forms SSA-1099 and RRB-1099 is a negative figure, you can take an itemized deduction for the part of this negative figure that represents benefits you included in gross income in an earlier year.

If your deduction is higher than $3,000, you'll need to configure your tax in two ways:

Method 1: Figure your tax for 2023 with the itemized deduction included on Schedule A (Form 1040), line 16.

Method 2: Figure your tax for 2023 using the following steps:

  1. Figure the tax without the itemized deduction included on Schedule A (Form 1040), line 16.
  2. For each year after 1983 for which part of the negative figure represents a repayment of benefits, refigure your taxable benefits as if your total benefits for the year were reduced by that part of the negative figure. Then, refigure the tax for that year.
  3. Subtract the total of the refigured tax amounts from step 2 from the total of your actual tax amounts.
  4. Subtract the result in step 3 from the result in step 1.

Compare the tax figured in both methods 1 and 2. Your tax for 2023 is the smaller of the two amounts. If method 1 results in less tax, take the itemized deduction on Schedule A (Form 1040), line 16. If method 2 results in less tax, claim a credit for the amount from step 2c above on Schedule 3 (Form 1040), line 12d. Enter "I.R.C. 1341" on the entry line. If both methods produce the same tax, deduct the repayment on Schedule A (Form 1040), line 16.

If your deduction is $3,000 or less, it's subject to the 2% AGI limit that applies to certain miscellaneous itemized deductions. Claim it on Schedule A (Form 1040), line 23.

Lacerte will automatically calculate the taxable amount and determine the amount that is nontaxable based on form instructions. To override the automatic calculation:

  1. Go to Screen 14.1, SS Benefits, Alimony, Miscellaneous Inc.
  2. Enter the amount of Social security payments in, Social security benefits (SSA-1099, box 5) code 2 (Taxpayer) or code 25 (Spouse)
  3. Enter a '-1' in, Taxable social security & railroad retirement [O] code 4 (Taxpayer) or code 54 (Spouse)  This will indicate that the payments are nontaxable.

Lacerte does not have an entry field for social security benefits on Form 2555, because Form 2555 does not recognize SS Benefits as foreign earned income.  Per the Instructions for Form 2555,  Foreign earned income does not include the following types of income:  Pension and annuity income (including social security benefits and railroad retirement benefits treated as social security.)

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