If you had to repay an amount of Social Security Benefits that you included in your income in an earlier year, you may be able to deduct the amount repaid from your income for the year in which you repaid it.

Per IRS Publication 915 Social Security and Equivalent Railroad Retirement Benefits, page 5:

Repayment of benefits. Any repayment of benefits you made during 2023 must be subtracted from the gross benefits you received in 2023. It doesn’t matter whether the repayment was for a benefit you received in 2023 or in an earlier year. If you repaid more than the gross benefits you received in 2023, see Repayments More Than Gross Benefits, later.

Your gross benefits are shown in box 3 of Form SSA-1099 or Form RRB-1099. Your repayments are shown in box 4. The amount in box 5 shows your net benefits for 2023 (box 3 minus box 4). Use the amount in box 5 to figure whether any of your benefits are taxable.

Page 15:

Repayments More Than Gross Benefits

In some situations, your Form SSA-1099 or Form RRB-1099 will show that the total benefits you repaid (box 4) are more than the gross benefits (box 3) you received. If this occurred, your net benefits in box 5 will be a negative figure (a figure in parentheses) and none of your benefits will be taxable. Don’t use Worksheet 1 in this case. If you receive 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 this negative figure, contact your local SSA office or your local RRB field office.

Joint return. If you and your spouse file a joint return, and 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. You do this to get your net benefits when figuring if your combined benefits are taxable.

Repayment of benefits received in an earlier year. If the total amount shown in box 5 of all of your Forms SSA-1099 and RRB-1099 is a negative figure, you may be able to deduct part of this negative figure that represents benefits you included in gross income in an earlier year, if the figure is more than $3,000. If the figure is $3,000 or less, it is a miscellaneous itemized deduction and can no longer be deducted.

Deduction more than $3,000. If this deduction is more than $3,000, you should figure your tax two ways.

1. Figure your tax for 2023 with the itemized deduction included on Schedule A (Form 1040), line 16.
2. Figure your tax for 2023 in the following steps.
   a. Figure the tax without the itemized deduction included on Schedule A (Form 1040), line 16.
   b. 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.
   c. Subtract the total of the refigured tax amounts in (b) from the total of your actual tax amounts.
   d. Subtract the result in (c) from the result in (a).

Compare the tax figured in 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.

To enter the credit into the TaxAct program, go to our Repayment of Income - General IRC Credit FAQ.

Note that any link in the information above is updated each year automatically and will take you to the most recent version of the webpage or document at the time it is accessed.