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Social Security benefits, withholding, and taxes...

I'm 65 and unemployed. After four months, I applied for SS benefits. I just got my first check this week, which had 10% federal tax withholding(at my request). (let's say, for example, that the benefit received was $1700 with $170 withheld, so the amount received was $1530)

I just received an offer of employment which fouls up the SS benefits. One option that SS has is to return all money received to date. The net effect is that the monthly benefit will be higher when I apply for retirement at 66.

Must I return the entire $1700 or do I return $1530 and the IRS returns $170 to SS. I assume that I'll have to return the entire $1700 and let the IRS keep the $170 until I file my tax return. What will my 1099 show me next year? Zero benefit, yet $170 withheld???

Reply to
NadCixelsyd
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You return the gross benefit. Box 3 of your SSA-1099 will have the gross benefits paid to you. Box 4 will have the gross benefits you repaid. Box

5 will have your net benefits (zero). Box 6 will have the income tax withheld. You include the amount in Box 6 with all of your other tax withholding.

Call the SSA to obtain the necessary forms to arrange repayment to reset your future benefit.

Reply to
Alan

I should have added that my reply assumes that you repay the full amount in 2010 such that the amount in Box 5 of the 2010 SSA-1099 is zero. If on the other hand, you don't get around to repaying in 2010 but repay in

2011, then you may have to include some 2010 SSA benefits in your 2010 taxable gross income. There's a worksheet in the Forms 1040 and 1040A instructions for computing taxable SSA benefits. If you have no taxable 2010 benefits, then any repayment in 2011 does not require any tax adjustment for 2011. If you wind up with 2010 taxable SSA benefits and repay in 2011, you either take an itemized deduction or a tax credit (assumes your repayment exceeds $3000) on your 2011 tax return to recover any taxes you paid on 2010 benefits. On page 15 of IRS Pub 915, you will find the methodology for computing either an itemized deduction or a tax credit if you repay more than you receive in a year.
Reply to
Alan

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