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02 February 2009

Looks like I owe the IRS $20.000 for becoming disabled. [More:] Because Social Security took 4 years to decide my case, they owed me 4 years of benefits which they paid in a lump sum in 2008. Since 2004, my private disability company paid me a monthly benefit to cover the time waiting for Social Security with the expectation that I would repay the overpayment once I received the lump sum.

However, I did not receive the bill from my private insurance company until last week (2009), so I cannot apply my payment as a deduction for 2008, and therefore because the lump sum is over the IRS maximum for Social Security benefits, I will have to pay taxes on virtally the entire amount. Of course, I don't have this, because I sent it to my private insurance company.

The real kicker: although I can apply the payment toward 2009 benefit income, just by themselves they won't be taxable anyway. Finally, my private insurance company included the benefits paid to my exwife for our son in my overpayment. Ordinarily, that benefit is not taxable but because my private insurance company includes this in my overpayment, it was reported as income and I paid taxes on it anyway, despite that my exwife receives it, and if anyone were to pay taxes on it, it would be her.
Oh well, I will just set up another repayment plan that extends far beyond my current life expectancy.
posted by Ardiril 02 February | 12:06
The US tax system is obscene. You have my sympathies, Ardiril.
posted by Meatbomb 02 February | 12:10
BTW, I currently owe the hospital $5400 under Medicare, which if my private health insurance were primary, would be $0. Nationalized healthcare will bankrupt this country.
posted by Ardiril 02 February | 12:12
It's not just the IRS, meatbomb, it'as the entire federal bureaucracy. I will be greatly surprised if Obama can make any significant changes in such an entrenched system.
posted by Ardiril 02 February | 12:20
I have nothing that will help so I'll just say: that sucks.
posted by arse_hat 02 February | 12:51
That's messed up. Way messed up. I'm sorry.
posted by Stewriffic 02 February | 13:34
That is just completely dicked up. :(
posted by sperose 02 February | 13:53
That sounds like the divorce laws are messed up. She's getting money (income) but doesn't have to pay taxes on it? I don't understand.
posted by Melismata 02 February | 13:54
Insane, dude. Insane.
posted by BoringPostcards 02 February | 14:30
I have to give my private insurance company credit -- this is, btw, the disability insurance you get through your employer. With no hassles at all, they paid the 80% of my salary through the 4 1/2 years while SocSec decided my case. Only after SocSec decided that I was disbled did the problems begin, and most of those problems are due to the time it takes SocSec to do anything. Medicare is also proving to be similarly unmanageable.

I think the biggest problem in the whole system, private and government, is that people are surviving disabilities longer. The system was designed around claimants dying before anyone had to make a decision; SocSec didn't have to pay a dime, and Big Insurance wrote off a couple thousand dollars at most. Now however we're talking people surviving and claiming close to $100,000 in retroactive payments. You read that right, almost 6 figures.

My advice: once you realize that your disability could be permanant or even very long term, start leaarning all you can.
posted by Ardiril 02 February | 15:35
See if you can finagle a cabinet nomination, now that you qualify. That seems to make tax problems go away.
posted by trinity8-director 02 February | 17:22
This is unjust. Are you sure about this interpretation? You should see a good accountant.
posted by grouse 03 February | 00:54
I Can Haz Massive Immunosuppression! || Ozzie Osborne dies!