Follow the interview screens in the SSA entry section to report the various years of payments and take the Lump Sum Election. If you use that election you will need to have the filed tax return information for all of the prior years listed on the 1099-SSA form OR you can simply skip that section if the SS benefits in each of the prior tax years would have been 85% taxable.
Social security only becomes taxable when added to sufficient other income. If you are otherwise required to file a tax return, you do need to enter it in Turbotax (TT). TT will determine the taxable portion.
Social security (including SSDI) becomes taxable when your income, including 1/2 your social security, reaches:
Married Filing Jointly(MFJ): $32,000
Single or head of household: $25,000
Married Filing Separately and lived with your spouse at any time during the tax year: $0
After TurboTax (TT) calculates the taxable portion of SS, it puts the total amount of SS on line 20a of form 1040 and the taxable amount on line 20b (lines 14a&b of form 1040A). TT also produces a worksheet to show how the taxable amount is calculated. Although most people pay tax on 85% of their SS. it can be less for lower income taxpayers.
Lump sum payments for past years are taxed in the year received. but, a special calculation is allowed to calculate the tax "as if" the benefits had been received in the previous year. TT can handle this calculation.
