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Retirement tax questions
Your total payments for 2021, including the retro pay, will be taxable on your tax return. SSA will send you a statement at the end of the year showing your total payments, any taxes withheld, and other deductions to help you know how much to report on your tax return.
The retro pay is known as a "Lump-Sum Payment" and while it is taxable, you have options on how to calculate the tax. Rest assured that TurboTax will help walk you through these options when it is time to file your taxes. In the meantime, if you would like to know more about the options, you can read about them in this article from the IRS.
I am not able to help you with how the retro pay was calculated though. I hope knowing how it will be taxed is helpful.
‎July 15, 2021
2:04 PM