If Windfall Elimination in Social Security payments resulted in lump sum payment is it reported?

[scorekeeper36]

Turbo Tax says lump sum payment for previous year is larger than can be reported

[xmasbaby0]

LUMP SUM PAYMENT FOR FAIRNESS ACT

Your 2025 SSA1099 will show the extra payment you received in 2025 as a result of the Fairness Act.  Look in the bottom left corner.   It will say something like “Includes $XXXX  Paid in 2025 for 2024.

When the software asks if you have a lump sum payment say yes.  The program will help to determine if is better for you to attribute the sum to 2024 or to 2025, based on your AGI for each of those years.   This will all be done within the 2025 program; you do not amend 2024.

https://www.irs.gov/faqs/social-security-income/back-payments/back-payments

[Marta17]

My Fairness Act lump sum payment for 2024 is said to exceed the 85% limit and gives this error message during the Check process.  It seems to be entered correctly.  How to fix the error?

[CatinaT1]

I would review how you entered the lump sum payment.

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.

[albersr]

I received a lump-sum payment for social security, and would like to use the lump-sum method.  I accidently said "NO" when the pop-up came up.   How  can I change this to "YES".   (line 6c is not checked on my return)

[MonikaK1]

You can still change your selection if you have not yet filed your return. Return to the Social Security section under Income / Wages & Income and go through the questions again. The lump-sum question appears after the question about living in other countries.

See this help article for more information about this topic.

@albersr 

[ragpaq2]

I'm having the same difficulty with my lump sum SS benefit. I followed the  guidance and verified that my 2024 taxable SS benefit amount is correct. it continues to show the error when doing a check and when it try to file, help!

[DianeW777]

It depends. The following two actions will be helpful to try to eliminate the error. First close your tax return.

1. Try clearing the cookies and cache.  It handles many issues that seem nonsensical on a regular basis with online activity. Watch to be sure you are selecting 'all time' as example.  Do not use selections like 'last hour' for those browsers that give  you options. 
   • How to clear your cache -- Once this is complete open your return and try again. 
   • If you are using TurboTax Desktop, save your return, then at the top select Online, then Check for updates.
2. Walk through the steps of your social security lump sum section to be sure you have answered all the questions 

@ragpaq2