If you want to enter the lump sum payments individually for each year, you will need to access the prior year returns for the information. If you did not keep them, you can get transcripts or even prior year returns from the IRS. The taxable potion of any social security payment will be on Line 5 b of your prior year 1040s.
A free IRS return transcript via mail or online is the quickest option and has most of the information from your return. Go to the IRS transcript site and follow the online instructions.To get a transcript via mail (which most people can do)
To get a transcript via mail you’ll need:
- Your date of birth.
- Your SSN or Individual Tax Identification Number (ITIN).
- The mailing address from your latest tax return.
This option will allow you to:
- Get your transcript in 5 to 10 calendar days to the address on file for you with the IRS (if you’ve moved recently, you might not be able to get a transcript via mail).
- Choose different transcript types (for the one with your tax return info, select “Tax return transcript”).
When figuring the taxable portion of social security benefits, two options are available for lump-sum benefit payments:
The first option allows the taxpayer to report the whole payment in the year it was received. When the taxpayer chooses this option, complete the Social Security Benefits Worksheet as usual by including the entire lump-sum payment on line 1.
The second option is to treat the payment as received in the earlier year or years. This is done by figuring whether any part of these benefits is taxable, based on the earlier year's income. Any part that is taxable is then added to any taxable benefits for the current year and included on Form 1040, line 20b. The taxpayer can elect this method if it lowers the taxable benefits.
If you choose the second option, only the current year income will be adjusted. Do not file amended returns for the earlier years.
After you enter your SSA-1099 information, TurboTax will ask if you received a lump-sum Social Security payment. If you want to treat it all as taxable in 2018, just answer No and move on.
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.
You will need information from your returns for the years that the lump sum covers.
When filing with Turbo Tax I gave all information about breakdown for 2016 and 2017. Turbo Tax completed my return. I filed and received a CP11 letter from IRS stating I owe an additional $400; they found miscalculation on the 1040, even though my 1040 shows the initials LSE on line 5a. Do not understand.