Yes, you must include the taxable part of a lump-sum payment of benefits for the tax year the benefit is received. There are two methods to determine the amount of income that is taxable:
- Use the current year's income to figure out the taxable part of the total benefits
- select the lump-sump election method (figures the taxable part of all benefits based on earlier year benefits using that year's income.
For more information, see the link below:
Social Security Disability Income Back Pay
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