Generally, you use your 2021 income to figure the taxable part of the total benefits received in 2021. However, you may be able to figure the taxable part of a lump-sum payment for an earlier year separately, using your income for the earlier year.
You can elect this method if it lowers your taxable benefits. Under the lump-sum election method, you refigure the taxable part of all your benefits for the earlier year (including the lump-sum payment) using that year's income. Then, you subtract any taxable benefits for that year that you previously reported. The remainder is the taxable part of the lump-sum payment. Add it to the taxable part of your benefits for 2021. 2021 Publication 915.
In TurboTax:
- Login to your account.
- Select Federal from the left menu
- Go to Wages and Income
- Scroll down to Retirement Plans and Social Security.
- Select Update/ Revisit next to Social Security (SSA-1099, RRb-1099).
we will ask you to enter:
What year was the lump-sum payment for?
What year was the lump-sum payment for?
How much was your lump-sum payment for 2020?
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