How do I enter an SSA-1099 for lump sum payment for a disability lump sum payment received in 2024 which includes 2023 and 2022 benefits and attorney fees.

[JackieT2025]

The previous posts on this subject do not include examples with screen shots of what to enter in each of the questions for prior year benefits.  In this example, Box 3 and Box 5 of my statement says $70,000.  Box 4 is None. Then, Box 3 breakdown says I paid $500 in Medicare part B premiums, and $7000 in Attorney Fees.  It says the $70,000 includes $27,000 paid in 2024 for 2023 and $14,000 paid in 2024 for 2022.  

Please step me through what to enter in each of the boxes for 2023 and 2022 and where I enter the attorney fees.

[MaryK4]

After you enter the 1099SSA information, you will continue until you see the question on the Lump Sum payment for a previous year (see below).  The attorney fees are included in the 2024 amount.

The following screens will ask:

How much was your lump-sum payment for 2023?

If you had a SSA-1099 for 2023, enter Box 5 amount

Filing Status for 2023

Adjusted Gross Income

Tax Exempt Interest

Taxable Social Security 

Adjustments 

• Adoption Benefits (Form 8839)
• Qualified U.S. Savings Bond Interest (Form 8815)
• Student Loan Interest
• Tuition and Fees
• Foreign Earned Income or Housing (Form 2555)
• Certain income of residents of American Samoa or Puerto Rico
• Domestic Production Activities

Then you can add 2022 following the same steps.

[JackieT2025]

Thank you MaryK4.  I have no SSA for 2023.  Should I enter zero in Box 5? 

For "Taxable Social Security benefits in 2023"  enter zero there as well?  

After I enter these amounts (for 2023 and 2022)  the total federal tax due is still $13,000.  It made no difference.  I was expecting the Federal tax Due to drop.  Does it recalculate later? Do I need to look into filing separately instead of jointly?  What can I look at to decrease the Tax due?  I appreciate your help!

[JohnB5677]

Yes you would enter zero for 2023 Box 5 and Taxable Social Security Benefits.

The $13,000 tax should not change.

Regardless of when the Social Security is distributed, even as a lump-sum payment, it will be taxed in the current year even if the payment includes benefits for earlier years.

To determine if the benefits are taxable, taxpayers should take half of the Social Security money they collected during the year and add it to their other income. Other income includes pensions, wages, interest, dividends and capital gains.

Do not file separately

• Up to 85% of Social Security income may be taxed for those who are Married Filing Separately and lived with their spouse at any time during the tax year. 
• If you are Married Filing Separately and lived apart from your spouse for the entire tax year, reference the chart above for Single, Head of Household, or Qualifying Surviving Spouse.

Please see IRS reminds taxpayers their Social Security benefits may be taxable

[orangej777]

I have to repay my private insurance TAXABLE income with my non-taxable income lump sum.  I paid 10k in taxes due to my income in 2022 and 2023 being filed as income from private insurance.  Now I am repaying that with SSDI so i should not have had to pay that tax.  How to i get that money back?

[DianeW777]

You have two situations taking place on your return. Review the information below to handle each one.

1. Social Security Lump Sum 
2. Private Insurance repayment (taxable in a prior year)

Social Security Lump Sum Payment:

• What is a Lump-Sum Social Security Payment?

The lump-sum election has always worked smoothly in TurboTax. Have all tax returns available for each year included in the lump sum payment (shown on your SSA-1099).

This can be handled on your tax return for 2024. The Form SSA-1099 should show a total amount in box 5, and then the amount that is designated for each year in box 3. Worksheet 4 is included after Worksheet 2 is completed for each year.

Be sure to select "lump-sum" method of reporting in this situation which is all done on the tax return for the year of receipt of the benefits.  Enter the appropriate amounts for each year when you start that section of your return.   Continue to add each year for all years listed in box 3. There is no amendment required.

1. Open your TurboTax Return > Search (upper right) > type ssa1099 > Click the Jump to.... Link
2. Select Yes you received benefits > Complete your SSA-1099 > Continue > Yes I received at least one lump sum payment for 2023 or earlier > Continue
3. Type a year from your SSA-1099 > Enter the amount received for that year > Continue
4. If you received a Form SSA-1099 for the earlier year enter the box 5 amount, if not enter zero or leave it blank > Continue
5. Enter the filing status for the earlier year > Continue > Select whether you lived with a spouse in the earlier year > Continue >
6. Enter the information from the earlier year return > Continue > Add another lump sum payment (another year from box 3) if applicable or Click Done
7. Continue to follow the screens until you are done with this section

Also enter a zero if your Social Security benefits weren't taxable or there were none in the earlier year(s) (such as for a spouse). If you are using the TurboTax CD/Download version review the Lump-Sum Social Security Worksheet in Forms.  You can also review 'Earlier Year Lump-Sum Worksheet' for each year. 

Repayment of previously taxed income: The Claim of Right is explained more in the article below.  However I will add some information here about how to report on your tax return to determine if it applies to you and how you prefer to enter it on your tax return.

• What is a claim of right repayment?
  • Income Reduction (most common), or
  • Tax Credit
  • The link above will walk you through the steps for each option.

Claim of Right

• If you had to repay an amount that you included in your income in an earlier year, because at the time you thought you had an unrestricted right to it, you may be able to reduce your income by the amount repaid in the current tax year if the amount you repaid is more than $3,000, or you may take a credit against your tax for the year repaid, whichever results in the least tax.