How do i report social security lump sum received for more than one year

[lorainejrn]

I don't  know the amount of the lump sums in previous years fro social security but I did not have a lump sum in 2016.

[MichaelDC]

This is simply a one-time Social Security payment that you received for prior-year benefits. This is called a lump-sum payment. When someone is granted disability benefits, for example, they will receive a lump sum to cover the entire time since they first applied for disability; this period could cover months or years.

After you enter your SSA-1099 information, TurboTax will ask if you received a lump-sum Social Security payment. If you didn't receive one, just answer No and move on.

Otherwise, answer Yes and follow the onscreen instructions. Your SSA-1099 lump-sum section breaks down the payments into what amount was received for each preceding year. You can only enter one year at a time; when finished, click Add Another Lump Sum if you need to enter benefits received for a different tax year.

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). 

After you enter your lump-sum Social Security payment information, TurboTax will automatically figure what if any taxes you owe due to the lump-sum payment.  

When someone is granted disability benefits, for example, they will receive a lump sum to cover the entire time since they first applied for disability; this period could cover months or years.

After you enter your SSA-1099 information, TurboTax will ask if you received a lump-sum Social Security payment. If you didn't receive one, just answer No and move on.

Otherwise, answer Yes and follow the onscreen instructions. Your SSA-1099 lump-sum section breaks down the payments into what amount was received for each preceding year. You can only enter one year at a time; when finished, click Add Another Lump Sum if you need to enter benefits received for a different tax year.

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). 

After you enter your lump-sum Social Security payment information, TurboTax will automatically figure what if any taxes you owe due to the lump-sum payment.  

[rstacy62]

Question on 2020 filing: When you say you may have to pay taxes on a portion, If you receive a lump sum in 2020 for 7 months (the last 3 months of 2019 and the first 4 months of 2020), how is this entered? I tried to enter receiving the lump sum payment in 2020 but the error says enter 2019 or earlier. Do I enter 2019 and list the last 3 months of 2019 then when I do my taxes in 2021 list the first 4 months of 2020?

[AmyC]

Only amounts from 2019 and before are considered lump sum payments. Anything for 2020 is considered a normal payment. Enter the 3 months of income from 2019 in the spot with 2019 as the year. The 2020 income should be reported on this tax return.

@rstacy62

[rstacy62]

Thank you, AmyC!

[AmyC]

You are welcome! Have a great year!

[Oniondaga5]

Can lump sum retroactive Social Security payments be rolled over into a retirement account so taxes are deferred until withdrawal?

[DoninGA]

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@Oniondaga5 wrote:

Can lump sum retroactive Social Security payments be rolled over into a retirement account so taxes are deferred until withdrawal?

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No.  Social Security benefits are NOT compensation so cannot be used to fund a tax deferred retirement account.

[Bmarino3]

Hi,

I've got a single lump sum  from Social Security that was paid to me in 2021. It covers ten months of 2020 (3 to 12/2020) and seven months of 2021 (1 to 7/2021). From the response above, it looks like I need to divide the total amount by total months, declare the ten month amount for 2020 as the lump sum amount and declare the seven months of 2021 as regular 2021 income? If so, how do I enter the 2021 portion of the lump sum as income?

Thanks,

Bernard

[DianeW777]

This can be handled on your tax return for 2021.  Do not amend your 2020 tax return but you will need the information from that return to complete the lump sum election. 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.

• Search (upper right) for ssa1099 > Click the Jump to ... link > Continue to enter your information and select Lump sum treatment 

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.

Also enter a zero if your Social Security benefits weren't taxable or there were none in the earlier year (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. 

For TurboTax Online review this link: How to Preview My Online Return Before Filing

Please update if you have more questions.

[Bmarino3]

DianeW,

Thanks for the quick response. But my 2021 SSA-1099 has the same amount in box 3 as in box 5. I know the dates of the lump sum because of the letter that was sent with it by SSA.  But the box 3 and box 5 amounts are the total of my monthly SSA payments for 8/21 to 12/21 along with the lump sum for 3/2020 through 7/2021. Any additional help is appreciated!

Thanks,

Bernard

[MarilynG1]

Yes, enter your SSA-1099 as received. It's fine if Box 3 and Box 5 are the same amount. 

After you enter it, TurboTax asks if you received any 'lump sum payments.'

Your SSA-1099 lump-sum section breaks down the payments into what amount was received for each preceding year. 

You can only enter one year at a time. If you need to enter benefits received for a different tax year, select Add another lump-sum payment. 

Click this link for info on Entering Lump Sum Payments from Social Security.

[Bmarino3]

Thanks MarylinG1 and DianeW777. You have both helped me immensely!

Bernard