Thank you for the question. Your question starts with the premise that you know you must report the entire lump-sum in the year you receive it. Generally, you use your current-year income to figure the taxable part of the total benefits received in that year.
So currently, only eleven states in the U.S. impose some form of income taxes on Social Security benefits: Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, and Vermont. The other states and District of Columbia don't tax Social Security benefits.
So assuming you moved from one of the states that does impose tax on Social Security, and were there for some part of January, you may need in the state interview questions exclude that income from taxation in one of the eleven states above in the State interview or depending upon the income allocation methodology for each of the 11 states, some of the benefit could be taxable.
If you were not in one of the 11 states as of January 1, 2023, then none of this would apply. You would more than likely would not have a state tax filing requirement in the state you left, if it is one of the 11 states.
When you get working on your 2023 taxes, this is a great question for a Turbo Tax Live Expert. We stand ready to help you when you file your 2023 taxes.
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