1). While your lump sum may include benefit payments for more than one year, you do not have to file an amended tax return for any prior year. You might need to pay taxes on a small portion of your lump-sum payment. However, you might be able to avoid these taxes by apportioning prior year benefits to those previous years’ income (still without filing any amended returns). See the example screenshots below.
After you enter your lump-sum Social Security payment information, TurboTax will automatically figure what if any taxes you owe due to the lump-sum payment.
A
lump-sum payment is simply a one-time Social Security payment that you received for prior-year benefits. When someone is granted disability benefits, for example, they will receive a lump sum to cover the entire time since they first applied for disability; this period could cover months or years. To enter your Lump Sum SSA-1099 form, click on
Where do I enter an SSA-1099, SSA-1099-SM, or SSA-1099-R-OP1?
2). Yes, you may be able to deduct lawyer fees, if you itemize and if your payment to the lawyer was for the pursuit of taxable income listed below:
-
Pursuing
taxable income on your behalf, or is working on a determination, collection, or
refund of any tax. For example, if you’re going through a divorce and pay
$1,000 to a lawyer who is working to secure alimony for you, you may deduct the
$1,000. However, hiring a lawyer to gain custody of a child is not deductible.
-
Collecting
disputed Social Security only to the extent that your benefits are
taxable on your tax return (i.e., if 50% of your social security is
taxable, 50% of the legal fees would be deductible.) That likely would
result in no deduction if your payment of legal fees was for social security
disability payments.
- Incurred
while doing or working to keep your job. For instance, if you’re in a legal
dispute with your company over unlawful termination, you could deduct the
expenses as long as you’ve paid the fees you’re deducting and you’re deducting
them in the year you paid them.
To deduct certain legal fees related to taxable
income:
- Type legal
expenses, deduction in the search or find box, click search.
- Click
on Jump to legal expenses, deduction.
- Continue
with the onscreen questions.
Legal deductions are limited to 2% of your Adjusted Gross Income
(AGI). Click on What is the 2% rule? for additional
information.
Generally, you
can't deduct fees paid for advice or help on personal matters or for things that don't
produce taxable income. For example, you can't deduct fees for:
- filing
and winning a personal injury lawsuit or wrongful death action—the reason
is that the money you win isn't taxable
- settling
a will or probate matter between your family members
- help
in closing the purchase of your home or resolving title issues or disputes
(these fees are added to your home’s tax basis)
- obtaining
custody of a child
- obtaining
child support
- name
changes
- legal
defense in a civil lawsuit or criminal case that's not work-related—for
example, attorney fees you pay to defend a drunk driving charge or against a
neighbor's claim that your dog bit and injured her child.
