Retirement tax questions

When entering this, you should answer "Yes" to the question "Did you receive any lump-sum payments?" in TurboTax. Answering "Yes" does not double-count your income; instead, it triggers a special IRS calculation known as the Lump-Sum Election, which can actually reduce your tax bill.

When you receive a lump-sum payment for a prior year (like the 2024 windfall repayment received in 2025), the IRS requires the full amount to be reported in the year you received the check. However, they allow you to use the "lump-sum election" method to prevent that large payment from pushing you into a higher tax bracket.

TurboTax uses the total from Box 3 as your starting point. When you select "Yes," the software will ask you to break down how much of that Box 3 amount was for 2024. It then recalculates your 2025 tax as if that portion had been received back in 2024.

If your income was lower in 2024 than in 2025, or if the lump sum would make more of your Social Security taxable this year, this election ensures you only pay the amount of tax you would have owed if you had received the money on time.

TurboTax will run the numbers both ways—taxing it all in 2025 versus using the lump-sum election—and will automatically apply the method that results in the lowest tax for you.

To complete this section accurately, have your 2024 Tax Return handy. TurboTax will ask for:

• The specific portion of the 2025 payment attributed to 2024 (found in the Description of Amount in Box 3 on your SSA-1099).
• Your 2024 Filing Status.
• Your 2024 Adjusted Gross Income (AGI).
• Any Tax-Exempt Interest you reported in 2024.

Follow these steps to ensure the election is applied:

1. In the Social Security (SSA-1099) section, enter the full amounts exactly as they appear on your 2025 form.
2. On the screen "Did you receive any lump-sum payments for 2024 or earlier?", select Yes.
3. Enter 2024 as the year the payment was for.
4. Enter the amount designated for 2024 from your form's description.
5. Follow the prompts to enter your 2024 return data.
6. Once finished, you can verify the result by viewing your 1040 (select Tax Tools > Tools > View Tax Summary > Preview my 1040). You will see a checkbox on Line 6c indicating the Lump-Sum Election was used.