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1). While your lump sum may include benefit payments for more than one year, you do not have to file an amended tax return for any prior year. You might need to pay taxes on a small portion of your lump-sum payment. However, you might be able to avoid these taxes by apportioning prior year benefits to those previous years’ income (still without filing any amended returns). See the example screenshots below.
2). Yes, you may be able to deduct lawyer fees, if you itemize and if your payment to the lawyer was for the pursuit of taxable income listed below:
To deduct certain legal fees related to taxable income:
Legal deductions are limited to 2% of your Adjusted Gross Income (AGI). Click on What is the 2% rule? for additional information.
Generally, you can't deduct fees paid for advice or help on personal matters or for things that don't produce taxable income. For example, you can't deduct fees for:
The response states you may have to pay taxes on a small portion of the lump sum Social Security Payment however, when i entered the amounts for 2017, 2018 and 2019 it is showing the entire amount as my and my husband's income for the year of 2019. I went from a refund to now owing over $2,400 dollars. Did I do something wrong? I don't see a way to enter the $6,000 lawyer fee. Please help!
My SSA-199 shows "*Includes $3,633.00 paid in 2020 for 2019. How do I deduct it? Thanks
@wroyce Click this link for more info on Entering Lump Sum Payments from Social Security.
You might need to pay taxes on a small portion of your lump-sum payment. However, you might be able to avoid these taxes by apportioning prior year benefits to those previous years’ income (still without filing any amended returns).
TurboTax will guide you in entering this info.
I went from $1 refund to $12853 tax!! Then I started entering the individual years and it dropped but not far enough!
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