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When determining how much of your Social Security benefit is subject to taxation, the IRS only uses 0%, 50%, and 85%.    Here is how those percentages are determined and how the IRS handles the math when a lump-sum payment is involved: The IRS uses a specific formula called Combined Income to determine if you fall into the 0%, 50%, or 85% bucket. Your Combined Income is: Your Adjusted Gross Income (AGI) + Nontaxable Interest + 50% of your total Social Security benefits for the year. 0% Taxable: If your Combined Income is under $25,000 (Single) or $32,000 (Married Filing Jointly), your benefits are completely tax-free. Up to 50% Taxable: If your Combined Income is between $25,000–$34,000 (Single) or $32,000–$44,000 (Joint), up to 50% of your benefits become taxable. Up to 85% Taxable: If your Combined Income is over $34,000 (Single) or $44,000 (Joint), up to 85% of your benefits become taxable. The golden rule of Social Security is that the IRS can never tax more than 85% of your benefit, no matter how much money you make. When you receive a lump-sum payment for back benefits it can artificially spike your Combined Income for the current year. This spike might unfairly push your benefits into the 85% taxable bracket, even though the money was meant for prior years when your income was lower. To fix this the IRS offers a special calculation method called the Lump-Sum Election.   Here is how the election works: You do not amend your old tax returns. You still report the entire lump sum on your current year's tax return. However, the IRS allows you to look backward. You take the portion of the lump sum that belonged to a prior year and apply the 0%, 50%, and 85% math to your income from that specific prior year. If your income was lower back then, a larger portion of the lump sum might fall into the 0% or 50% tiers. You calculate the taxable amount for each prior year, add those amounts together, and put that final total on your current year's tax return. If this backward-looking math results in a lower taxable amount, you are allowed to use it. TurboTax will calculate both methods automatically and apply the one that saves you the most money. It is important to remember that 50% and 85% are not the tax rates you pay. They represent the portion of your Social Security money that gets added to your taxable income. Once that money is added to your income, it is taxed at your normal ordinary income tax bracket (such as 10%, 12%, or 22%).

Thanks for quick response! I saw the ordinary income of ESPP I had entered in Schedule 1 line 8 and 1040 line 8.  Just note that the ordinary income of ESPP sale is not reported in 1099-Misc or 1099-B, but in the 1099-B supplemental page for information only. In my case, it is not reported in W2, either.  I had to enter the data manually under the Miscellaneous Income/Other Reportable Income in Turbo Tax. 

If you are using the Online version of TurboTax you will need to setup a new account using a new User ID. Sign out of your current TurboTax account to avoid overwriting your previous return. Go to TurboTax.com. If your browser automatically logs you into the old account, Clear your browser's cache, cookies, and history Enter your Email address On the sign in page select New to TurboTax?  Create an account Enter your  User ID Password Phone Create an Intuit Account  

 Tax software sometimes pre‑checks “Received interest payments from a seller‑financed mortgage” when:   You entered mortgage interest you paid earlier in the interview, and the software misinterprets it as interest you received.  You entered a Form 1098 that includes a recipient/lender section, which can trigger the assumption that you might be the lender. A previous year’s return had that box checked, and the software carried it forward even though it doesn’t apply this year. Why it won’t uncheck when you select “None of the above” Most tax programs treat “None of the above” as a navigation choice, not a true override. If the system thinks you triggered the seller‑financed mortgage rule earlier in the interview, it'll keep re‑checking the box until an underlying entry is removed.   Tax software sometimes pre‑checks “Received interest payments from a seller‑financed mortgage” when:   You entered mortgage interest you paid earlier in the interview, and the software misinterprets it as interest you received.  You entered a Form 1098 that includes a recipient/lender section, which can trigger the assumption that you might be the lender. A previous year’s return had that box checked, and the software carried it forward even though it doesn’t apply this year. To fix.   The solution is usually to backtrack to the earlier section:  Go to the Interest and Dividends section. Open the Interest You Received subsection. Look for: A stray entry showing interest received  A Form 1098 entered in the wrong place A carried‑over seller‑financed mortgage entry Delete or correct that entry. Return to the “Other interest and dividends” screen — the box should now stay unchecked.

You can start another return in TurboTax Online by: Logging out if you are in your account Choose what TurboTax Online product you want to use for the second return https://turbotax.intuit.com/personal-taxes/compare/online Create your account screen Set up a new login for the second return Start working on the new return   Looks like you can't use the same email.  So no more 5 accounts for 1 email address using Turbo Tax.  See RachelW33 2/5/26 post….. https://ttlc.intuit.com/community/taxes/discussion/how-to-add-another-account-to-an-email/00/3737232

@Sammytoone You have to create a new account with a new User ID and a new email address if you want to file another tax return using the TurboTax online editions. Go to this website and click on Sign up to create a new account - https://turbotax.intuit.com/personal-taxes/online/file-your-own-taxes/

I'm afraid that didn't work. No matter what I set those to boxes to (Multiple States, Massachusetts, U.S. Virgin Islands, etc.) the total goes into Mass Schedule B. And I can't only specify Mass exempt income on that screen because it enforces that those boxes add up to the total on the 1099-DIV. And I can't change the total on the 1099-DIV because that feeds into the federal return and elsewhere in the Mass return. Any other suggestions?

Ok. That makes it sound like they might ignore my request for an installment plan then, or it won't override that payment automatically, which is unfortunate. And maybe that is why that is all still pending. Guess I will need to call them at some point to sort it. Thanks. 

I was able to call Schwab, and they are sending me a 1099-R with Code R (box 7). I would have to wait for it (3/25/26) and report it in my 2025 tax year documents.    How would I report this in TurboTax? 1. Do I report that I contributed $7k to a Roth IRA, then recharacterize it to $7k in a rollover IRA, and report the loss of $92.32 and the original amount of $7,000 in an explanation statement?  Recharacterization amount for Roth IRA to Rollover IRA for 2025 = $6,907.68    (Ineligible for Roth contributions)    2. How would I know that the Recharacterization $7k is counted as a non-deductible basis in the 2025 tax form, so I can convert all my money from a traditional IRA into a Roth IRA for a backdoor Roth conversion in 2026 without being taxed again? What line and amount would it be on Form 8606?   In an explanation statement, what I write:  2025 Recharacterization Amount $6907.68, Loss of $92.32  Please correct me if I'm wrong     @MonikaK1 @ReneV4 

Thank you.  With the exception of about $400, non qualified dividends, the remaining $1200 is capital gains and qualified dividends.  I trust since the majority is cap gain and qual div, the result is no tax liability. Appreciate your prompt response.