In 2015, I worked and exceeded the allowable amount for a SS recipient…so I got a bill in October 2016 and paid the $2020 of my full benefit back to SS. Clearly…my taxes for 2015 were already filed, and I DID pay taxes on my $2020 earnings.
2016 taxes were filed…no problem.
Well…in Oct 2017, SS decided I didn’t really owe them this money (they are wrong…and have sent it to their investigation unit). Anyway…a refund was immediately put back into my bank account.
So…I got my 2017 SS earnings and this $2020 is on there…again. As a repayment.
I’m less than thrilled…because it looks like I will be paying taxes on this AGAIN. I already paid on it once…on my 2015 return.
When you paid that $ back for 2015, did you revise your 2015 tax forms? (I think you’re saying no.) You would have been due a small refund on that amount. And what SS now repaid would be taxable. I think you need a CPA
@thumper1 Sounds like a matter for your accountant.
But I’m confused. Coincidentally, I was looking into this just yesterday (how much one can earn without reducing SS benefits) and I read a section from the SS website that says:
“If you are under full retirement age for the entire year, we deduct $1 from your benefit payments for every $2 you earn above the annual limit. For 2018, that limit is $17,040.”
Then this:
"Yes. If some of your retirement benefits are withheld because of your earnings, your monthly benefit will increase
starting at your full retirement age to take into account those months in which benefits were withheld.
To me, when they said “we deduct” or “benefits are withheld”, I thought that they somehow kept track of your earnings and deducted or withheld the amount from your future payments or something. If that wasn’t the case, why wouldn’t they say: “you will be required to pay back any amount you owe due to your earned income above the annual limit” or “you will be billed for …”.
So you’re telling me that they don’t do that - they send you a bill for that “deduction”?
I was looking into it because I am a retired fed employee and I am eligible to begin receiving my SS “supplement” (but still haven’t yet - I’ve been waiting three months and no payments yet), but anyway, it’s treated the same way as the real SS benefits. I might earn more than the limit this year, so I want to know how this works. The SS website is pretty vague obviously.
Hope you get that problem figured out. So frustrating.
@thumper1 Yeah, I understand that you did owe the money. I was just surprised that that’s the process for “paying back” the money. The SS website doesn’t say anything about “paying back” the money - it just says it will be deducted or withheld.
When you are overpaid as i was…you are given the option of having it withheld or of paying the total bill. In my case, my SS just covers my Medicare bill…so I elected to pay the total owed in one lump sum…so the over payment would not be deducted from my SS…and it would be enough to continue to pay my Medicare payment directly.
This all came in the mail…and I have copies of all of it. I called to clarify at the time…options were withheld from current SS payment, or pay by check or credit card.
I’m sure this won’t be a popular recommendation, but over the years I was self employed and on the receiving end of various IRS audits. I’m not a CPA. The typical audit consisted of the IRS sending me a letter asking for clarification or additional info regarding some item on my 1040, or perhaps saying I owed additional $$. The IRS letter would also say if I disputed their findings, I was to send in supporting documentation. They would give me 30 days to either send documentation and/or a check. As a note, don’t miss the 30 day deadline, their next letter comes promptly with a more harsh tone about it (LOL). Every time I would send documentation. The end result of every audit I underwent was always no change in my tax liability. Considering the amount ($2020) here, I would not report the money and wait for the IRS to send you a letter saying your 2017 1040 and the SSA-1099 don’t match, you owe additional $$, send check or explain. I would then explain.
As an additional thought, did the IRS refund the taxes with interest that you paid on the $2020 for 2015. I’m guessing not. Good luck.
No…the IRS didn’t refund me anything from 2015. I really couldn’t file an amended return for 2015…I actually did have SS income that year to the tune of…$2020.
I think for. the amount of tax I’d be saving…it’s not worth my while to call the IRS or SS…I don’t have that much time to sit on hold!
One additional thought, if you have some other questionable deductions or are not reporting large amounts of $$, I would report the $2020, and not let the inaccurate matching of your 1040 and SSA-1099 be the reason that draws IRS scrutiny.
Off the top of my head, I think if you repay the $2050 then you can deduct it on schedule A, itemized deductions in the year you repay it. Not ideal but I think that is how it is done (not sure how the new tax laws affect this)
OK, this is a pet peeve of mine. The letter that @Jugulator20 describes is not an “audit”. It is a “Notice of Proposed Adjustment” and it is a very common procedure that goes wout whenever IRS thinks there was a mistake in a return. I’ve gotten them many times and I know my son received one once, because he asked me what to do about it.
An “audit” is a different thing. It’s like the difference between getting a parking ticket and getting arrested. They are different things and one will not typically lead to the other.
With an audit the IRS sends you a notice that you are being audited - which means that they are going to fully review your tax return – and typically they ask to see all sorts of documents. They pretty much go over your tax return with a fine tooth comb at that point, not limited to whatever triggered the audit.
IRS can and will send out Notices very commonly and it really isn’t much to worry about. You just have to either pay the amount the say is owed or respond within the required time frame. Not a big deal. But getting that has nothing to do with whether TurboTax or anyone else says you are at risk – TT is simply noting if there is anything that stands out as unusual on your return, the software has no way of knowing whether the taxpayer has accurately reported all income and deductions. The Notice letters are triggered by paper such as W2s and 1099’s that don’t seem to match up, or conflicts in returns – such as when 2 divorced parents file taxes and both claim the same child as a dependent.
I do agree overall with the do-nothing approach suggested by @oldfort.
I’ve received many such letters, mostly on behalf of my parents as a consequence of doing taxes with dementia. In general, if I don’t agree with the IRS, I am pretty persistent about responding, sending supporting paperwork, and getting it resolved. Personally, given the fairly small amount, I would fill out 2017 as if they are correct, and dispute it after filing.
My experience is the letter includes a late fee and a penalty. Resolving the initial issue is one thing, getting the extra waived or reduced is a separate step. My first time, half the amount Thumper’s dealing with. So like, So What, get the ball rolling. Still a hassle.
Now I’m dealing with a much larger paperwork problem, from 2015. Notice came in 2017. Should be tax free in my favor. Our CPA sent an amended return, but meanwhile, 6 weeks later, the slowpoke IRS dunned again. Two weeks after that, another letter came, saying they got the revised, taxes, need more info. Etc.
It’s why I lean to Thumper calling or getting pro advice, see if this can be nipped in the bud. Especially as it involves two tax years.
@calmom I respectfully disagree. There are different levels of audit. The correspsondence audit (aka letter) is the lowest level. The IRS is requesting further information seeking more info about an issue, maybe two. It’s not a full blown examination of your 1040. I’ve also been subjected to a office audit where I was asked to come in to a IRS local office. Although in my case the field audit only involved a single issue, it was not a full blown examination of my 1040. A field audit is more comprehensive in scope.
@thumper1 Obviously I don’t know your tax situation, but how much tax liability can there be by not reporting the $2020, especially when you already reported it, paid taxes on it, and the chuckleheads sent the money back two years later. If I couldn’t find an answer with a Turbo Tax program, I wouldn’t report it. I’d wait for the expected letter (aka correspondence audit) when the IRS sees your 1040 and 1099 don’t match. Personally I wouldn’t call the IRS or SS. I’d take the next few months to draft my anticipated response and gather my documentation. My experiences tell me this is an incredibly minor annoyance that wouldn’t cause me to lose a night’s sleep and not worth more than the postage stamp needed to respond to the IRS. But that’s me.