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Possibly, as with regular Social Security payments, they are taxable once you reach a certain income level.
Your benefits include monthly retirement, survivor and disability benefits.
Your benefits may be taxable if the total of
The base amount for your filing status is:
Please also see: Is Social Security Disability Income Taxable?
As JohnB5677 indicated, the lump-sum payment from Social Security may be partially taxable. It will be included in the total benefits on your Form SSA-1099 for the year that you received the payment. How much of it is taxable depends on your other income. If the lump sum is for a prior year, the SSA-1099 will show how much of the total is for the prior year or years.
If Social Security disability, including the lump sum, is your only income for the year, none of it is taxable and you do not have to file a tax return. If you have other income and file a tax return, there is an option called the lump-sum election that might reduce your tax, depending on your income in the year(s) that the lump sum is for. TurboTax will lead you through calculating the lump-sum election, and will use it if it saves you money.
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