Entering the repayment of social security benefits in Lacerte

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 $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.

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

Method 1: Figure your tax for 2020 with the itemized deduction included on Schedule A (Form 1040), line 16.

Method 2: Figure your tax for 2020 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 2020 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.