I received a lump sum unemployment payment this year for prior years. Do I amend prior year returns or pay tax this year

[DoninGA]

You report the unemployment compensation received in 2022 on your 2022 tax return that is filed next year.

You will receive a Form 1099-G from your state for the UC received in 2022 in January of 2023.  The information from the Form 1099-G is reported on your 2022 tax return.

[aversalucinda]

Do I need to prepay taxes to avoid a penalty in 2023

[Critter-3]

Maybe ... if so you can make an estimated tax payment or increase your withholding from another source.

As you enter the SSA-1099 in the program watch for the LUMP SUM question and follow the screen instructions carefully for each tax year involved.  

[DoninGA]

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@aversalucinda wrote:

Do I need to prepay taxes to avoid a penalty in 2023

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If federal income taxes are not being withheld from the UC you received then you may need to pay estimated taxes to avoid an underpayment penalty on the 2022 tax return.

Generally, most taxpayers will avoid this penalty if they owe less than $1,000 in tax after subtracting their withholdings and credits, or if they paid at least 90% of the tax for the current year, or 100% of the tax shown on the return for the prior year, whichever is smaller.

If you need to calculate 2022 estimated taxes then use the worksheets for the Form 1040-ES - https://www.irs.gov/pub/irs-pdf/f1040es.pdf

Estimated tax payments for tax year 2022 can be paid directly to the IRS using the IRS payment website - https://www.irs.gov/payments

[SweetieJean]

@Critter-3 OP is asking about Unemployment Comp, not Social Security.

[Critter-3]

So true ... I saw lump sum and went straight to SSA ... never heard of an unemployment "lump sum" payment before.