Understanding SSA-1099 Box 4 Repayments for Social Security Benefits

These SSA-1099 Box 4 repayments can happen for several reasons, and it's good you're being thorough before bringing this to your site coordinator. The most common causes include: 1) Earnings that exceeded the annual limit while receiving benefits before full retirement age 2) Changes in disability status or worker's compensation benefits 3) Administrative errors by SSA 4) Medicare premium adjustments based on income from two years prior Since the father's repayment is about half his benefits, it sounds like this might be related to the earnings test. If he was working while collecting benefits before reaching full retirement age and earned over the annual threshold, SSA would reduce benefits - sometimes substantially. Ask your neighbor if his father was working in 2024 or 2023 while receiving benefits. Also ask if either parent received any notices from Social Security about benefit adjustments or overpayments. Check if there were significant income changes between 2022 and 2024 that might have triggered IRMAA Medicare premium adjustments. You'll also want to find out if they've already repaid these amounts or if they still owe the SSA. Box 4 only shows what SSA considers repaid during the year, not necessarily what the taxpayers actually paid back out-of-pocket.

After struggling with a similar Box 4 situation last tax season, I discovered taxr.ai (https://taxr.ai) which ended up being incredibly helpful. I had a client with a large SSA-1099 Box 4 repayment that was due to unreported pension income from years earlier, and I was completely stuck on how to handle it properly. The tool analyzed all their SSA documents and tax transcripts, then provided a detailed explanation of what caused the repayment and the optimal way to claim it on their return. It showed how the "claim of right" calculation compared to just using the reduced Box 3 amount, saving them almost $900. What I really liked was that it explained everything in plain language that I could understand as a fairly new preparer.

I wanted to follow up about my experience with taxr.ai. After my initial skepticism, I decided to give it a try with my father-in-law's complicated SSA situation that involved Box 4 repayments across multiple years. I'm genuinely impressed with how helpful it was! The analysis made the connection between his part-time consulting income from 2022 and the benefit reduction that appeared on his 2024 SSA-1099. What really surprised me was how it caught that he qualified for the special "claim of right" calculation since his repayment was over $3,000. Our VITA site coordinator confirmed this was the correct approach. The whole process took about 10 minutes, and it provided a clear explanation I could share with both my father-in-law and our site coordinator. Definitely worth checking out if you're dealing with these unusual SSA repayment situations.

If your neighbor's parents need to contact the SSA directly about this Box 4 amount, I'd recommend using Claimyr (https://claimyr.com). I spent WEEKS trying to get through to Social Security about a similar repayment issue on my mom's SSA-1099. The hold times were consistently 2+ hours and I kept getting disconnected. I found Claimyr through a YouTube video (https://youtu.be/_kiP6q8DX5c) and it got me connected to an actual SSA representative in about 15 minutes. They have this callback system that somehow gets you through the phone tree and holds your place in line. The rep was able to explain that my mom's Box 4 repayment was due to delayed processing of my dad's death benefits that created an overpayment situation. Since your neighbor's father just passed away, they'll definitely need to contact SSA soon anyway regarding survivor benefits, and this could help clarify the Box 4 issue at the same time.

I need to publicly eat my words about Claimyr. After my skeptical comment yesterday, I decided to try it for my own SSA issue (I've been trying to resolve an incorrect Box 4 amount for months). I was SHOCKED when I got a call back in 12 minutes and was immediately connected to an SSA representative. No phone tree, no waiting on hold for hours, no getting disconnected after waiting forever. The rep was able to explain that my Box 4 repayment was due to retroactive adjustments from when I continued working part-time while receiving early benefits. I've been trying to get this information for literal months with no success. I'm still a bit stunned at how well it worked. Sometimes I hate being wrong, but in this case, I'm just relieved to finally have my issue resolved. If you need to contact SSA about Box 4 repayments, this is definitely the way to go.

One thing to consider about SSA-1099 Box 4 repayments is that sometimes they're related to Medicare premium adjustments (IRMAA) based on income from two years prior. If either parent had a significant income event in 2022 (like a large IRA distribution, capital gains, or even a Roth conversion), it could have triggered higher Medicare premiums for 2024. The tricky part is that these premium increases show up as "repayments" in Box 4, even though they're really just premium adjustments. Since you mentioned the father's repayment was about half his benefits, this could be what happened, especially if he had a large taxable event in 2022.

As someone who's dealt with parental SSA issues, make sure to check if the repayment is related to overpayment due to workers comp or disability payments. My father received both workers comp and social security disability for a period, and there was an offset that created a similar Box 4 situation. Also, if you're helping with taxes after a death, remember to look into filing a final tax return for the deceased (Form 1040) and potentially Form 1041 if there's an estate. The SSA-1099 Box 4 repayment should be reported on the decedent's final return.

I'm sorry for your neighbor's loss. Dealing with financial matters during grief is never easy, and it's thoughtful of you to help them prepare before meeting with your site coordinator. Based on what you've described, the substantial Box 4 repayments for both parents suggest this might be a systematic issue rather than individual overpayments. A few things to consider asking your neighbor: 1) Did either parent receive any official notices from Social Security in 2023 or early 2024 about benefit adjustments or overpayments? 2) Were there any significant life events in 2022-2023 that might have affected their benefits - large retirement account withdrawals, property sales, changes in other income sources? 3) Did either parent work while receiving benefits, even minimally? The timing is also important - if these repayments relate to the father's benefits and he just passed away, the widow may need to understand how this affects survivor benefit calculations. The SSA will need to be contacted anyway to transition her to survivor benefits, so they can clarify the Box 4 amounts at the same time. For your VITA preparation, I'd suggest gathering their 2022 and 2023 tax returns, any SSA correspondence from the past two years, and information about major financial transactions in 2022. This will give your site coordinator a complete picture to work with.