Social Security Withdrawal Request/SSA-1099 Question

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Topic Author
CountingDown2014
Posts: 7
Joined: Fri Jan 31, 2014 5:38 am

Social Security Withdrawal Request/SSA-1099 Question

Post by CountingDown2014 »

My spouse started collecting SS retirement benefits in June 2018 but then we decided to withdraw the request in October 2018 and defer collecting these benefits until a later date. In November 2018 we received a letter from the SSA saying the withdrawal request could only be approved if all SS benefits paid are repaid and we sent SS a check the next day in the requested amount and the SSA cashed this check in the first week of December.

In January we received an SSA-1099 which only showed the amount of benefits received in 2018 but not the amount which we repaid in 2018 such that the net benefits for 2018 was the amount of benefits received and not $0. After numerous calls to the SSA and our regional office in which we were under the impression that my spouse would be receiving a corrected SSA-1099 reflecting net benefits for 2018 in the amount of $0, today we received a "Corrected" SSA-1099 which was identical to the one received in January (i.e., only reflecting benefits paid but not repaid).

After being on hold with the SSA for over an hour and being disconnected before speaking to anyone, I thought I'd ask here if anyone has dealt with this situation before and knows whether I am correct in thinking the SSA-1099 should reflect $0 2018 net benefits.

The only thing I would add is that shortly after speaking to someone in the regional office in February, my spouse received a letter from the SSA approving the withdrawal request. Perhaps it might be the SSA's view that the benefits weren't repaid until the withdrawal request was approved even though they had received their repayment back in the beginning of December but this is only speculation. And, if this were the case, presumably my spouse would be receiving a negative SSA-1099 for 2019 reflecting these repayments.

Any help anyone could provide would be greatly appreciated! Thanks very much.
fourwheelcycle
Posts: 968
Joined: Sun May 25, 2014 5:55 pm

Re: Social Security Withdrawal Request/SSA-1099 Question

Post by fourwheelcycle »

If you have documentation that SSA received your check during 2018, or that they actually cashed it during 2018, I would zero out the 1099 in your 2018 income tax submission and include a note regarding what happened. You could also include copies of their letter asking for return of your benefits and a copy of your cancelled check, or you could just say in your note that you have those items. Then wait and see if you get an inquiry from the IRS. They may accept your explanation with no further inquiries.
MrTimewise
Posts: 29
Joined: Mon Nov 10, 2014 11:35 am

Re: Social Security Withdrawal Request/SSA-1099 Question

Post by MrTimewise »

To the OP...

My spouse and I had a nearly identical problem several years ago after my spouse began receiving benefits, but then withdrew her application 9 months later. By that time she had received 8 months of benefits.

In our case, as it happened, the letter we received a month after the request to withdraw, told us to repay what she received as benefits, but the amount was incorrect. The amount was too low. (Months later, after showing the letter to the SSA in person, we all realized that someone multiplied two numbers together and the product was incorrect by over $600.) Because the amount I did re-pay did not completely negate the benefits she had received, the SSA continued to send her monthly benefit even though she had requested the payments to stop.

So in our case, even a re-issued SSA-1099 would have shown a repayment that would not have completely zero'd out the 8 months of benefits. Part of the problem was due to the incorrect multiplication mentioned above. In addition, Medicare [premiums] were being deducted from my spouse's benefits and the CMS (Centers for Medicare & Medicaid Services) was also sending invoices asking her (and me) to pay monthly Medicare insurance premiums...which we did..unnecessarily for her as those payments were already being deducted from her benefits. Everything was a mess.

We visited the SSA office in person several times and had monthly telephone conversations, trying to straighten things out. At this point my spouse's 66th birthday had occurred and she wanted to start her un-reduced retirement benefits. I would also start my spousal benefits as I, too, was now at FRA (66). But no such luck because everything was in limbo due to the incorrect repayment amount stated in the original withdrawl acknowledgement letter from the SSA.

And then April rolled around so tax forms were due. So I filed for an extension, assuming that within the following 4 - 6 months somehow, some way, the corrected SSA-1099 would be issued and I could properly file my taxes. But as the extension time was nearly over, I gave up and contacted my US Senator's office asking for help.

In less than 4 weeks, I finally got a corrected SSA-1099. But just days before the corrected SSA-1099 was issued, I had to filed my taxes. So I wrote in our 1040 form the true SSA-1099 amount as it should have been...$0. (By this time, the SSA had also accepted another payment from me for the proper amount to bring the benefits/re-payment balance to $0.)

A year passed and we received a letter from the IRS saying that we had underpaid our taxes by the exact amount, according to the IRS, due to all the original benefits sent to my spouse (plus, a fine). They had no records of any returned amount. So I filed with the IRS every doucument I could find to prove we had completely repaid the SSA benefits. Included with these documents was a new letter from the SSA showing that all benefits had been repaid. About a month later, we received another letter from the IRS, stating, in effect,'"Never mind."

Everything worked out in the end, but the whole ordeal did take over 2 years to make things right.

So, my advice to you is to contact one of your US senators immediately and work with his/her office. Also, file an extension for your US taxes (and state taxes, too, if necessary).

Don't wait.

(Oh, yeah, I also had to ask for help from my senator just a month ago to get the SSA to acknowledge that I had income in 2017 (it is now 2019) from a W2 (my only income source) from the same company I have worked at for 40 years. But that is a story for another day. :D )
Last edited by MrTimewise on Thu Mar 28, 2019 12:13 pm, edited 1 time in total.
Topic Author
CountingDown2014
Posts: 7
Joined: Fri Jan 31, 2014 5:38 am

Re: Social Security Withdrawal Request/SSA-1099 Question

Post by CountingDown2014 »

Thank you both for your responses. At this point I am inclined to file my taxes showing $0 net SS benefits and include an explanation of what happened as well as a copy of our check payable to the SSA dated 11/23/18 with the reverse side showing it was deposited by them on 12/3/18. The thing I find very frustrating with the withdrawal process is that the SSA makes it appear to be discretionary such that the withdrawal request could be disapproved by them even after all benefits have been repaid as opposed to being automatic once all benefits have been repaid. I really don't want to be in a situation where I file my taxes and then the IRS comes back and challenges the $0 net benefits and then I have to pay interest and penalties. On the other hand, I don't want to have to show a positive net benefit number and then deal with the situation of having negative net benefits for 2019 since I really don't have much confidence the SSA will get that right.

MrTimewise - And I thought my situation was bad! But it looks like you didn't receive your SSA approval letter until the next tax year as well so at least it looks like there is some precedent for my position.

Thanks again.
Jazzysoon
Posts: 126
Joined: Tue Jan 09, 2018 3:05 pm

Re: Social Security Withdrawal Request/SSA-1099 Question

Post by Jazzysoon »

OP - My timing was somewhat similar to yours and I filed my Withdrawal request in person at SS office. I was told 45 days for approval which in my case they said would pretty much be guaranteed. I didn't want it to cross tax years. In December with no final approval letter yet, twice I went to local ss office but they would not take a check because without formal approval letter couldn't apply it correctly. I finally got my Approval for withdrawal letter in early March. So mine is crossing tax years and there are 2 ways to deal with it in 2019 taxes. I need to do more research to make sure it's a net 0 on taxes paid. It's made a mess as this year I really need to watch my AGI for ACA (which I think won't be impacted, just something else to worry about). As soon as I finish my 2018 taxes, I'll start my 2019 modeling.

For me at the time, filing for SS (knowing I could undo it within 12m) made sense, but now that I know what a mess the withdrawal process is I may have made a different decision.
Topic Author
CountingDown2014
Posts: 7
Joined: Fri Jan 31, 2014 5:38 am

Re: Social Security Withdrawal Request/SSA-1099 Question

Post by CountingDown2014 »

Jazzysoon - I received two letters from the SSA. The first (received in November 2018) was in response to my spouse's withdrawal request and said the request could only be approved if all benefits in a certain dollar amount were repaid (which occurred in early December 2018). The second (received in February 2019) formally approved the withdrawal request.

As for 2019 ACA modeling, if you report the benefits received in 2018 in 2018 but report the benefits repaid in 2019, wouldn't that reduce your 2019 AGI? Yes, it is a mess straddling years!
Jazzysoon
Posts: 126
Joined: Tue Jan 09, 2018 3:05 pm

Re: Social Security Withdrawal Request/SSA-1099 Question

Post by Jazzysoon »

OP - I received the same 2 letters as your spouse. I was told that my first letter in Nov timeframe was a confirmation they received my request and a Re-REMINDER I had to pay it back if approved. My formal approval was not receive til next calendar year in March. For me they would not take a check for repayment based on first letter even tho I explained I wanted to pay it back by 12/31 and it was way past 45d estimate.

From what I can tell I won't be getting a SSA-1099 with a Negative amount. Sounds like I deal more with the tax difference and take that as a credit in following year. Below is a link with some more info (it's a little old but I think logic for more than $3,000 SSA paid still applies) 1040 line 71 credit.

https://ttlc.intuit.com/questions/29490 ... quent-year
Topic Author
CountingDown2014
Posts: 7
Joined: Fri Jan 31, 2014 5:38 am

Re: Social Security Withdrawal Request/SSA-1099 Question

Post by CountingDown2014 »

Jazzysoon - The first letter the SSA sent in November 2018 said that if my spouse wanted to withdraw the SS claim, a check in the specified amount of benefits paid should be sent to the SSA in the envelope provided. And since that letter stated that "We can approve the withdrawal only if you repay all the money paid from the claim", it seemed to me that the delivery of the check was a condition precedent to the SSA approval. Perhaps we didn't get quite the same letters. In any event, the turbotax link you provided was helpful for a repayment made in a subsequent tax year, but I think since my check was cashed in 2018, I am going to cross my fingers and claim $0 2018 net benefits with an explanation to the IRS.
Jazzysoon
Posts: 126
Joined: Tue Jan 09, 2018 3:05 pm

Re: Social Security Withdrawal Request/SSA-1099 Question

Post by Jazzysoon »

CountingDown2014 - You are right, we did get different letters, weird that it should be different for different people with same situation. Seems like you should be fine with keeping it all in 2018 with an explanation like you say to IRS. Good Luck.
Topic Author
CountingDown2014
Posts: 7
Joined: Fri Jan 31, 2014 5:38 am

Re: Social Security Withdrawal Request/SSA-1099 Question

Post by CountingDown2014 »

Yes, Jazzysoon, that is weird. But since the SSA person I was dealing with at the local office kept insisting that the corrected SSA-1099 would be coming from the IRS and not the SSA, it shouldn't surprise me.

As I finalized our return for filing by Turbotax, it appears that there's no way to provide an explanation of the 1099-SSA discrepancy or upload any documents (such as the SSA letter or a copy of our check to the SSA) and Turbotax seems to suggest that these would be ignored anyway during the initial IRS review. So it looks like I am going to have to wait until an IRS audit to address the discrepancy...
Topic Author
CountingDown2014
Posts: 7
Joined: Fri Jan 31, 2014 5:38 am

Re: Social Security Withdrawal Request/SSA-1099 Question

Post by CountingDown2014 »

Just an update - today out of the blue we received a second corrected SSA-1099 finally showing zero net benefits for 2018. At least I have the peace of mind knowing that when the IRS does audit our return for the discrepancy between the prior SSA-1099 and our return, we'll be able to provide this document to hopefully resolve the issue.
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