How To Enter Social Security Windfall Repayment for Tax Year 2025

[dcam4]

In March 2025 my wife received a lump sum repayment from the SSA as part of the Windfall Elimination Provision. Her 2025 Form SSA-1099SM states that the amount shown in Box 3 (Benefits Paid in 2025) includes the windfall repayment amount "paid in 2025 for 2024". Since the windfall payment amount is already accounted for in Box 3 of our 2025 Form SSA-1099SM, do we answer "yes" to the TurboTax question, "Did you receive any lump-sum payments?"  I don't want the windfall repayment counted twice for my income.  Thanks!

[CatinaT1 · Accepted solution]

Yes, 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.

[mikez149]

After entering the windfall amount a screen comes up that says......

Now, let’s look at your 2024 form

If either you or Carolyn received benefits in 2024 that were already reported on your 2024 tax return, there will be an amount in box 5 of your Form SSA-1099.

 

Are they asking if we received windfall benefits in 2024 or just overall social security? If the latter, would I also enter my spouses's Social security for 2024 if she did not get a windfall amount on a prior screen?

 

Then the next screen says......

 

This info can be found on your 2024 tax return.

Adjusted gross income in 2024

Tax-exempt interest in 2024

Taxable Social Security benefits in 2024

 

Which forms/lines am I looking at to provide this information and will it be for both of us since it was a joint return?

 

Thanks, Mike

[KrisD15]

Just the overall social security for 2024. Not any additional windfall. 

TurboTax is asking if you received benefits in 2024 that were reported on your 2024 SSA-1099 Box 5 and which would then also have been reported on your 2024 Federal tax return (1040).

Yes, the 2024 social security you both earned and reported on your 2024 Federal return. 

(If there was no Social Security Lump sum paid in TAX YEAR 2024 the amounts in your SSA-1099 Box 5 should add up to the same amount as listed on your 2024 Federal Return line 6a)

For the other amounts needed, please look at your tax year 2024 Federal return (Form 1040 or 1040-SR)

• Adjusted Gross Income is on line 11
• Tax Exempt Interest would be on line 2a but may be blank if none
• Taxable Social Security would be listed on line 6b

You will report your 1099-R (including the lump-sum)  on your 2025 return, but you do have two options regarding the tax treatment. .

You can be taxed on all the income on your 2025 tax return at your 2025 tax rate

OR

2.)You can opt to pay the tax on your 2025 return, BUT AT THE RATE YOU WOULD HAVE PAID ON IT HAD THE INCOME BEEN PROPERLY PAID IN THE PREVIOUS YEAR(S)..

If you have no tax on your Social Security Payments, it doesn't matter, but if the additional income puts you into a higher tax bracket, you might want to use that second option.

Basically you figure the tax you would have been charged on your 2024 return for that income and then pay that dollar amount on your 2025 return.

TurboTax can help you determine if this is advantageous for you.

Designate the 2024 amount as a lump-sum payment and proceed through the interview.

(NOTE- This is NOT the lump-sum Social Security death benefit.)

HERE is a link with more information.

[user17719472838]

Thank you, it answered my question resolving my issue.

[mikez149]

One more question. We entered all this information for windfalls for years 2021-2024 however there is another $630 listed as paid in 2025 but lists "for other tax years". How do I enter this in Turbo Tax if I do not have a specific year?

Thanks, Carolyn

[MarilynG1]

You can use a year prior to the years for which you received a Social Security lump sum in 2025.  For instance, if your lump sums are for 2024, 2023, 2022, then use 2021 as the year for the 'other tax years' amount.

Here's more info on Entering Social Security Lump Sums.

@mikez149 

[northidaho]

continuing in this thread about payment for 2024 SSA in 2025.  during a final review the software is saying "Earlier Year Lump-Sum Social Security Ws(2024): Earlier year taxable social security benefits for taxpayer should not be more than $3954, 85% of the sum of Line B, earlier year total SSA and RRB benefits for the taxpayer and spouse."  The number the program input into the field is $30,800 which is the correct number from the previous year for taxable ssa benefits.  I can't determine where the $3954 number comes from and I can't seem to force finish my return to file it.  Is this a program calculation error?

[lgwalker59]

Make sure when you answer the lump sum interview questions, (Now let's look at your earlier return) make sure you enter the amount for both spouses on the earlier return (box 5 of SSA-1099M), even if only one has a lump sum payment. I ran into this exact same issue 🙂

[northidaho]

yes, i used the interview but it still did not place the missing number from my social security into the correct box on the soc sec lump sum worksheet in order for it to calculate correctly.

[DaveF1006]

To determine if you reported this correctly, did you perform these steps correctly? To determine this, I am going to present a hypothetical example just to see if the flow is correct in the Social Security worksheet. For sake of simplicity, I am going to assume you received $5000 a year in Social Security and received a lump-sum payment of $20,000. As a result, $25,000 is appearing in Box 1 of your 1099 SSA. Now let's begin!!

Enter the 1099-SSA Data

1. Go to Federal > Wages & Income.
2. G‌o to Retirement Plans and Social Security and select Social Security (SSA-1099).
3. Enter the full amount from Box 5 (the Net Benefits). ($25,000)
4. In a screen that follows,  TurboTax will ask: "Did you receive any lump-sum payments for 2024 or earlier?" Select YES. 
5. On the next screen, enter the amount designated for 2024 (this is usually found in the "Description" area of your SSA-1099). This is labeled in a section entitled "How much was your lump-sum payment in 2024". You would enter the lump-sum payment amount here.  For our example, it's $20,000.
6. The next question says, "if you received benefits in 2024 that was reported on your 2024 return", report that here. Leave this blank. The WEP payment is specific to Tax Year 2025 and wasn't reported in your 2024 Social Security statement.

Now here is where you will need to do your homework. You will need to look at your 2024 return to get specific information so that your taxable social security is taxed at the 2024 tax rates rather than the rates for 2025.  The program will now ask things like;

• Filing status in 2024
• Adjusted Gross income in 2024.  Found on Line 11B on the 2024 1040
• Tax exempt interest amount Found on line 2A on the 1040. If blank, don't record anything here.
• Record the taxable social security found in line 6B on the 1040.  If blank, leave blank.
• Now it will ask if you had any adjustments to report. Here you will look at Schedule 1, line 26 for any amount that might appear here. If blank, leave blank.
• Now, you are done with this section.

Now, looking at the Lump-sum worksheet, you should see:

1. Line A $20,000.  This is the amount of the lump-sum payment.
2. There should be no amount listed in Box B. 
3. The remaining entries are entries you entered in the interview regarding your 2024 return.
4. Note on the smart worksheet, the AGI amount is listed on line A, but line B is blank. If there is an amount listed there, see my instructions for step 6 listed above.
5. The rest of the worksheet is dedicated to determining the amount of the taxable amount of your social security payment.

If you have questions and concerns about the line items in the lump-sum worksheet, please reach back so we may address those concerns. You might also delete your original entry by navigating to your social security entry listed in steps 1 and 2 in my instructions. Once you get to the lump-sum summary, you may wish to delete this and follow the precise set of steps that I have just listed.

@northidaho 

[ljhum]

I did receive a social security lump sum payment in 2025 for 2024.  I followed all the directions you gave for entering the information in Turbo Tax.  However, Turbo Tax will not accept the number I entered for taxable social security in 2024, line 6B on 1040 form. Turbo Tax says something about the number can't be more than 85% of something...  Back in 2024, Turbo Tax calculated that very number.  Please help me understand.

[northidaho]

Sounds like what I experienced. On the TurboTax soc sec lump sum payment worksheet where it has the spouse with the lump sum payment for last year and their soc sec for last year, it did not populate my soc sec for last year. This is the number I had to manually enter. 

[Vanessa A]

I would like to take a deeper look at this. However, I need a diagnostic file which is a copy of your tax return that has all of your personal information removed. You can send one to us by following the directions below:

TurboTax Online:

1. Sign into your online account.
2. Locate the Tax Tools on the left-hand side of the screen.
3. A drop-down will appear. Select Tools
4. On the pop-up screen, click on “Share my file with agent.”
5. This will generate a message that a diagnostic file gets sanitized and transmitted to us.
6. Please provide the Token Number that was generated in the response.

TurboTax Desktop/Download Versions:

1. Open your return.
2. Click the Online tab in the black bar across the top of TurboTax and select “Send Tax File to Agent” *
3. This will generate a message that a diagnostic copy will be created.  Click on OK and the tax file will be sanitized and transmitted to us.
4. Please provide the Token Number  (including the dash) that was generated in the response.

*(If using a MAC, go to the menu at the top of the screen, select Help, then, “Send Tax File to Agent”)

@ljhum 

[northidaho]

Done.  

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