U.S. Tax Court Rules Social Security Disability Benefits Must Be Included in Gross Income

The U.S. Tax Court, in a memorandum decision, held that the taxpayer was required to include Social Security disability benefits received in 2022 in his gross income, even though he later repaid those benefits. The taxpayer, a retired individual, received Social Security disability benefits in 2022, which he did not report on his tax return. The IRS determined that 85 percent of those benefits should have been included in the taxpayer’s gross income under IRC §86. The taxpayer argued that the benefits should be excluded because he was required to repay them in subsequent years after the Social Security Administration ...