Can I reduce Social Security overpayment due to taxes I already paid on the benefits?

You're smart to self-report instead of waiting for them to catch it. I was in a similar situation with a $12,000 overpayment due to unreported workers comp. Unfortunately, SSA doesn't consider the tax issue when calculating overpayments - they want the FULL amount back, regardless of what you paid in taxes. What you CAN do is claim those repayments as a deduction on your taxes in the year you repay. Look up Form 1040, Schedule A for itemized deductions - there's a specific place for SS repayments. Not ideal, but better than nothing.

OMG Social Secrity is SUCH a nightmare with overpayment stuff!!! My cousin had this happen and they wanted like $30k back and she almost had a nervous breakdown. They don't care about the tax thing AT ALL just want there money back. Good luck!!!

I'm a benefits counselor, and this is a common misconception. You're correct that you paid taxes on money you now have to repay, but there IS a remedy - just not through SSA. Social Security doesn't have the authority to reduce overpayments due to tax considerations. They're required by law to recover the full amount. However, the IRS has a provision for this situation. When you repay Social Security benefits in a year after you received them, you have two options: 1) If you repay less than $3,000, you can take an itemized deduction on Schedule A of Form 1040 2) If you repay more than $3,000, you can use the "claim of right" doctrine, which might result in a larger tax benefit. See IRS Publication 525. As for when to handle this with SSA, immediately request a "reconsideration" if you disagree with any portion of their overpayment calculation. Simultaneously, request a "waiver of overpayment recovery" if you believe you weren't at fault and repayment would cause financial hardship. Even if denied, this buys you time. Finally, you can negotiate a reduced settlement or payment plan, but this is typically only after reconsideration and waiver attempts.

You absolutely cannot reduce the overpayment based on taxes paid, I went through this whole process last year. But they WILL let you set up a payment plan. In my case I'm only paying back $50 a month out of my SSDI check because that's all I can afford. Just make sure to request a waiver form (SSA-632) and fill out all your financial information accurately.

Let me add something important - timing matters here. You have 60 days from receiving an official overpayment notice to request reconsideration, and you can request a waiver at any time. But here's a strategy: request both immediately, and also ask for "continuing benefits" while your reconsideration is pending. This prevents them from starting collection until a decision is made. And yes, the tax situation is handled through IRS, not SSA. Keep ALL documentation of your repayments for your tax preparer. Also, getting through to SSA on the phone to discuss this can be nearly impossible these days. If you're having trouble reaching a representative, I recommend using Claimyr (claimyr.com). They have a service that gets you through to an agent quickly instead of waiting on hold for hours. I used their service when dealing with my overpayment situation and it saved me so much time and frustration. You can see how it works in their video demo: https://youtu.be/Z-BRbJw3puU

I went through an overpayment nightmare last year. Whatever you do, DON'T ignore their letters or miss deadlines! The moment you get the official notice, file for reconsideration AND waiver. Even if you're self-reporting, wait for their official calculation before filing anything. And keep copies of EVERYTHING you send them. I learned this the hard way when they claimed they never received my waiver request.

Honestly, the fact that you're self-reporting before they catch you is going to work in your favor. When I had my overpayment, the SSA agent told me they consider "fault" when determining waivers, and voluntary disclosure shows good faith. Definitely emphasize that when you talk to them.

To directly answer your question about when to make tax arguments: this isn't something you negotiate with SSA at all. They simply don't have the regulatory authority to reduce overpayments due to tax consequences - only Congress could change that. Instead: 1. Handle the overpayment process with SSA (reconsideration, waiver, or payment plan) 2. Keep meticulous records of all repayments 3. Address the tax remedy separately with IRS when you file taxes for the year(s) you make repayments For a repayment of $17,500, the tax benefit could be significant, especially if you use the claim of right provision rather than an itemized deduction. This would absolutely require consultation with a tax professional who understands Social Security repayments.

my aunt had this happen she just called and cried to the lady and they reduced what she had to pay back. worth a try lol