I received a tax extension because of various problems. I am in the process of paying my 2005 taxes and missed the deadline because of a lengthy hospital stay.
Last year I received a lump sum payment from Social Security disability for past payment and had to pay the full amount to a private disability insurance for payments I received from them in past years. This amount is not really income because I had to turn it all over to the private company. Can it be declared healthcare payments? Is there anyway I can declare this as a medical deduction of some kind? Is there some kind of deduction I can make? All I was paid this year was a small amount of SS disability because the private insurance company quit paying. I am in the process of a lawsuit with them. I have so many medical deductions I will probably still not have to pay any additional tax but I would like to get a bigger refund than I would receive if I have to use the $18,000.
Thanks for your help.
2006-10-24 08:58:42 · 5 answers · asked by Anonymous in Business & Finance ➔ Taxes ➔ United States
I'm sorry you've been ill.
When you do file, attach a letter stating you missed the deadline cause you were in the hospital and ask them to waive any penalties for filing late.
Is soc security reporting the disab as income?
If so then you can deduct the expense but each should have occurred in the same year. If you received the pymt in 2005 but didn't pay till 2006, then you cant deduct the exp in 2005 only in 2006.
If soc security considers it a reimbursement and is not reporting it as income then you cant deduct it as expense.
It's called the matching principle in that you can only deduct related expense from related income. If that is the case then its not income either. I don't know details about soc security but the SSA can tell you how, if, where to report their pymt.
One more thing, as an individual you cant reduce your income to less than 0 so if you have no other income, additional expenses wont help unless your claiming the additional child tax credit or similar
2006-10-24 10:18:19 · answer #1 · answered by goldenboyblue 3 · 0⤊ 0⤋
first you put the lump sum payment on your SSA goes on your 1040 as Income but most if not all of it will not be taxable depending on a few circumstances, theres a worksheet in the instructions for form 1040 to figure that.
Second if it all went to an insurance company premiums are deductable, if your reimbursing them for amounts they paid,thats the same as if you paid out of your pocket. You deduct that on schedule A of your 1040. Any medical expenses that are greater than 7.5% of your wages on line 7 are deductible. If you have no wages however, it doesn't matter your taxable income will be 0. You can however look into the EIC to get some kind of refund.
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2006-10-24 10:15:13 · answer #2 · answered by Anonymous · 0⤊ 0⤋
The social security is only taxable if your income exceeds a certain amount and even then only 85% would be taxable. The payback to the company is not a medical expense and would not be deductible. If all of your income is from social security then no of it is taxable.
2006-10-24 09:22:07 · answer #3 · answered by waggy_33 6 · 0⤊ 0⤋
Social security pay isn't taxable,that includes the lump sum that you received.
2006-10-24 19:06:36 · answer #4 · answered by stellablue1959 5 · 0⤊ 1⤋
Call your local IRS office and ask them. Their information is both free and accurate. The number is in the phone book.
2006-10-24 09:14:37 · answer #5 · answered by My Evil Twin 7 · 0⤊ 1⤋