The story you're about to read is true:About 7 years ago, my dad had a terrible accident that left him in the hospital for four months, out of work for many more and to this day still paralized on the right side of his body and with slurred speech.He also can only work about 20 hours a week, it used to be even less.So, while he was in the hospital, during his outpatient therapy, and before he could go back to work, he and my mom collected benefits from social security. My dad's doctors filled out all the proper disability forms, kept social security updated on his condition and reported back to them when he started working again and how often he was able to work.Over the course of four or five years, my parents collected what they thought were the correct benefits from social security. Then, about a year and a half ago, they get a call from social security saying that they got too much money and social security would appreciate it if my parents could send them a check for $30,000 (the amount of the apparent oversight).My parents hired a lawyer and proved that they had done everything in accordance with proper procedure. Finally, socical security agreed. In writing, they admitted that my parents had done on the proper paperwork, reported correct earnings and work-ability for my dad, etc. But, they said my parents should have known for themselves that they were getting too much money.In other words, my parents were right, but who cares. We'd like our thirty grand please.My parents, taking a "that's life" attitude, are going to pay it back (over time hopefully, although some may come out of their retirement savings.).One sticking point, however. When told social security wanted all the money back, my mom asked if they would be reimbursed for the taxes they paid on the income they were "returning." The woman at social security says they never had that question before, but no, they wouldn't be reimburesed for the taxes they paid on the $30,000.My question, is there anything my parents can do to get the taxes back on the $30,000 without a mountain of paperwork and without being blacklisted by either social security or the IRS? (the last thing they want to do is "rock the boat")Any advice would be much appreciated. Thank you in advance.
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