How can avoid high gross income due to SSD lump sum, which includes prior years?

[felix18521]

When using TurboTax, it shows total SSD as gross income for 2020, although that amount is a lump sum which includes payment for prior years, 2017, 2018 and 2019.  Also, how does prior years' gross income would affect how I file my current taxes?

[ColeenD3]

It will be as if you did amended returns for each year and included each year's Social Security income.

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). 

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.

After you enter your SSA-1099 information, we'll ask if you received a lump-sum Social Security payment. 

Otherwise, answer Yes and follow the onscreen instructions. Your SSA-1099 lump-sum section breaks down the payments into what amount was received for each preceding year. You can only enter one year at a time; when finished, click Add Another Lump Sum if you need to enter benefits received for a different tax year.

[felix18521]

This is what I did:

On, the social security benefits, I entered the total amount from box 5 of SSA-1099-SM, which includes lump sums for 2017, 2018 and 2019.

I hit continue and entered the lump sumps received for those years; 2017, 2018 and 2019. But that doesn’t change the Federal Tax Due.

Even if I omit those lump sums, the tax due stays the same and so does the gross income. So what's the point of entering those lump sums. Am I doing something wrong?

By the way, what about amount paid to attorney?

[ColeenD3]

It sounds like you are doing it correctly. You are entering the amounts that were on your SSA-1099 statements each year if any? You have your prior year returns and are including the correct AGI?

Your return should look something like the screenshot below, although with different numbers.

[felix18521]

Yes, I figured it out. Once I continued with the filing using TurboTax, it show amounts for 2017, 2018 and 2019 as non-taxable.  Thank you much.