No, the form is correct. Benefits paid are taxable in the year you receive them, even if they are for a prior year.
The Social Security Administration is not required to report prior year lump sums on the 1099, it would make filing taxes easier if they did. There is no way to verify the information, other than the supplemental documents you received. It can impact your taxes in some cases- there have been instances where the lump sum payment is for several years, so the income can be in the $xx,xxxs (which can put you in a higher tax bracket- this is why the calculation can be helpful). In your case, the impact may be minimal because it was only a few months, but TurboTax will do the calculation so you do not pay more than you have to.
You can use your current year's income to figure the taxable part of the total benefits received in the current year or you may make an election to figure the taxable part of a lump-sum payment for an earlier year separately, using your income for the earlier year.
In TurboTax. you can indicate the lump sum payment for 2023 after you enter the SSA-1099 and TurboTax will ask the questions to get the correct amount reported with the best tax results:
You will be asked:
- 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
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