I rec'd a lump sum retroactive disability pension payment in 2018 for 2017 pension funds - Can I amend my 2017 tax return to include the retroactive lump sum payment?

[tracey-j-kelley-]

I became disabled effective 4/2107.  Social Security disability approved my claim in 12/2017and in 2018 issued a lump sum retroactive payment dating back to 4/2017. 

Due to social security accepting my claim, in 2018 my employer offered to begin paying disability pension also retroactive to 4/2107.  I received the 2017 disability pension funds in 2018. 

Are there any options to avoid paying taxes for my 2017 disability pension funds on my 2018 tax return?  I do not want to pay taxes on both my 2017 and 2018 pension income on my 2018 federal income tax return.  

[tracey-j-kelley-]

Thank you for your response.  In addition, beginning 4/2017 I began collecting long term disability from my employer's group long term disability plan.   In 2018, when I received the retroactive lump sum disability payments from both Social Security and from my employer's disability pension income (both retroactive dating back to 4/2017), I was required to reimburse my employer's group long term disability plan for the payments they had previously issued.  So I wasn't able to keep the marjority of the retroactive lump sum payment I received in 2018 from the disability pension income.  Does this change as to whether I can amend my 2017 return or is there is a way to calculate the taxes owed as if the previous year's disability pension income was actually received in the previous year?

[AnnetteB · Accepted solution]

No, there is not a provision to have the payment that was received in 2018 for 2017 be included on your 2017 tax return instead.  It will be included on the 2018 return since that is the year you received it.

The same is not true for Social Security lump sum payments though.  There is a way to calculate the taxes owed (if any) on the Social Security income as if the previous year was actually received in the previous year.  Watch for the Lump Sum Payment check box in the Social Security input section of your return.

[tracey-j-kelley-]

Thank you for your response.  In addition, beginning 4/2017 I began collecting long term disability from my employer's group long term disability plan.   In 2018, when I received the retroactive lump sum disability payments from both Social Security and from my employer's disability pension income (both retroactive dating back to 4/2017), I was required to reimburse my employer's group long term disability plan for the payments they had previously issued.  So I wasn't able to keep the marjority of the retroactive lump sum payment I received in 2018 from the disability pension income.  Does this change as to whether I can amend my 2017 return or is there is a way to calculate the taxes owed as if the previous year's disability pension income was actually received in the previous year?