Whether Social Security disability benefits are taxed depends on your total income. You will avoid taxes if your total income—which is determined by adding one-half of your disability benefits to all other sources of income, including tax-exempt interest—is below the threshold set by the Internal Revenue Service (IRS). If you are single, the threshold amount is currently $25,000. If you are married and file jointly, it is $32,000. if your doing 2022 you'll receive a tax form SSA-1099 early in 2023. the gross amount that needs to be reported is in box 5. but whether it's taxable depends on the above.

now as to repayment to the insurance company

I want to make sure I understand your situation. Amounts paid by an insurer attributable to premiums paid by an employer and not included on your w-2 are taxable. whereas payments attributable to premiums paid by the taxpayer including after-tax to an employer-sponsored plan and employer-paid premiums included in your w-2 should not have been taxable.

if not taxable- there is no deduction available for the repayment.

if the disability benefits from the insurance company were taxable then if the amount was $3,000 or more you have the option of taking either an itemized deduction (schedule A) for the repayment. you must be able to itemize for there to be a benefit. if so it's listed on line 16 as section 1341 repayment. the other option which is usually the best is to refigure your taxes for each year you paid taxes on the benefits by excluding them and adding up the reduction in taxes, the total is taken as a tax credit on schedule 3 line 13z and listed as sec 1341 repayment credit. you may need the help of a pro to recalculate your taxes for the prior years.

John1461Author

I had been receiving 70% of my pay from my Long Term Disability Insurance Company for my disability. Once Social Security Disability approved my disability, they sent me back pay for all the months that my Long Term Disability Insurance Company had covered me. I had to send that check to my Long Term Disability Insurance Company. The months that I collected from my Long Term Disability Insurance Company, I paid taxes and filed as income. I am assuming that my Long Term Disability Insurance Company will send me some form (do you know the form?) that will show that I paid back the backpay that Social Security Disability paid. Where in Turbo Tax can I add this information because I am sure this with be atypical and not asked in the TT questions? Thank you so much for any guidance.