topic Re: lump sum social security payment in Retirement tax questions

lump sum social security payment

QAjoA — Wed, 22 Oct 2025 23:00:08 GMT

I received a retroactive lump sum social security payment of about $10,000mdue to the Social Security Fairness Act. Some is from 2024. How will I claim it and how will it be taxed?

Re: lump sum social security payment

xmasbaby0 — Wed, 22 Oct 2025 23:06:02 GMT

In January you will receive a SSA1099 to enter. That document from SS will show the amount of SS you received for 2025. You will enter it and let the software calculate ow much--if any--of it is taxable. The new tax laws did not change in regard to the fact that up to 85% of your Social Security can be taxable if you have other sources of income. Since you were affected by the Fairness Act, we can safely assume you are receiving some other income such as a pension from teaching or some other work you did that was previously affected by the WEP rules that reduced the amount of SS you could receive while also getting a pension.

Up to 85% of your Social Security benefits can be taxable on your federal tax return. There is no age limit for having to pay taxes on Social Security benefits if you have other sources of income along with the SS benefits. When you have other income such as earnings from continuing to work, investment income, pensions, etc. up to 85% of your SS can be taxable.

What confuses people about this is that before you reach full retirement age, if you continue working while drawing SS, your benefits can be reduced if you earn over a certain limit. (For 2021 it was $18,960. For 2022 it was $19,560 — for 2023 $21,240) For 2024, $22,320. For 2025 it will be $23,400

After full retirement age, no matter how much you continue to earn, your benefits are not reduced by your earnings; your employer will still have to withhold for Social Security and Medicare. If you work as an independent contractor then you will pay self-employment tax for Social Security and Medicare.

To see how much of your Social Security was taxable, look at lines 6a and 6b of your 2024 Form 1040

https://www.irs.gov/help/ita/are-my-social-security-or-railroad-retirement-tier-i-benefits-taxable

You need to file a federal return if half your Social Security plus your other income is

Single or Head of Household $25,000

Married Filing Jointly $32,000

Married Filing Separately $0

Some additional information: There are 9 states that tax Social Security—Colorado, Connecticut,, Minnesota, Montana, New Mexico, Rhode Island, Utah, Vermont and West Virginia These states offer varying degrees of income exemptions, but two mirror the federal tax schedule: MN and VT.

IF YOU WANT TO HAVE TAX WITHHELD FROM YOUR SOCIAL SECURITY BENEFITS

https://www.ssa.gov/manage-benefits/request-withhold-taxes

https://www.irs.gov/forms-pubs/about-form-w-4-v

Re: lump sum social security payment

rjs — Thu, 23 Oct 2025 01:07:56 GMT

I assume that you received the payment in 2025. You will report the entire lump-sum payment on your 2025 tax return. You do not amend your 2024 tax return. There is a "lump-sum election" that might reduce the amount of the payment that is taxable. Essentially what the lump-sum election does is calculate how much of the payment for 2024 would have been taxable if you had reported it on your 2024 tax return, and then include that amount in the taxable Social Security on your 2025 tax return.

Your SSA-1099 for 2025 will show how much of the payment is for 2024. After you enter the SSA-1099 in TurboTax, it will ask if you received any lump-sum payments. If you answer Yes it will then ask for information about the lump-sum payment for 2024. It will also ask for information from your 2023 SSA-1099 (if you got one) and your 2023 tax return. After you enter all the information, TurboTax will calculate whether you benefit from using the lump-sum election. If so, it will make the appropriate entries on your Form 1040.

Re: lump sum social security payment

Bomar — Mon, 02 Feb 2026 15:38:57 GMT

The Turbo Tax section of lump sum social security payments is confusing. I am the person with a lump sum. My husband also receives social security. I’m asked to enter how much social security he received in 2024. He received no lump sums. Is the Turbo Tax program counting this income twice?

Re: lump sum social security payment

DoninGA — Mon, 02 Feb 2026 15:49:48 GMT

@Bomar wrote:

The Turbo Tax section of lump sum social security payments is confusing. I am the person with a lump sum. My husband also receives social security. I’m asked to enter how much social security he received in 2024. He received no lump sums. Is the Turbo Tax program counting this income twice?

Since he did not receive a lump sum payment you can either leave box for entry blank or enter 0

Re: lump sum social security payment

CatinaT1 — Mon, 02 Feb 2026 16:02:26 GMT

When entering this, you should answer "Yes" to the question "Did you receive any lump-sum payments?" in TurboTax. Answering "Yes" does not double-count your income; instead, it triggers a special IRS calculation known as the Lump-Sum Election, which can actually reduce your tax bill.

When you receive a lump-sum payment for a prior year (like the 2024 windfall repayment received in 2025), the IRS requires the full amount to be reported in the year you received the check. However, they allow you to use the "lump-sum election" method to prevent that large payment from pushing you into a higher tax bracket.

TurboTax uses the total from Box 3 as your starting point. When you select "Yes," the software will ask you to break down how much of that Box 3 amount was for 2024. It then recalculates your 2025 tax as if that portion had been received back in 2024.

If your income was lower in 2024 than in 2025, or if the lump sum would make more of your Social Security taxable this year, this election ensures you only pay the amount of tax you would have owed if you had received the money on time.

TurboTax will run the numbers both ways—taxing it all in 2025 versus using the lump-sum election—and will automatically apply the method that results in the lowest tax for you.

To complete this section accurately, have your 2024 Tax Return handy. TurboTax will ask for:

The specific portion of the 2025 payment attributed to 2024 (found in the Description of Amount in Box 3 on your SSA-1099).
Your 2024 Filing Status.
Your 2024 Adjusted Gross Income (AGI).
Any Tax-Exempt Interest you reported in 2024.

Follow these steps to ensure the election is applied:

In the Social Security (SSA-1099) section, enter the full amounts exactly as they appear on your 2025 form.
On the screen "Did you receive any lump-sum payments for 2024 or earlier?", select Yes.
Enter 2024 as the year the payment was for.
Enter the amount designated for 2024 from your form's description.
Follow the prompts to enter your 2024 return data.
Once finished, you can verify the result by viewing your 1040 (select Tax Tools > Tools > View Tax Summary > Preview my 1040). You will see a checkbox on Line 6c indicating the Lump-Sum Election was used.

Re: lump sum social security payment

user17709929011 — Fri, 13 Feb 2026 14:39:08 GMT

CantinaT1-

i did not itemize for my 2024 tax return with TurboTax. For 2025, I am able itemize due to the large increase in deductible state and local taxes. My 1099R for SS does not break out the amount I received in March 2025 as a lump sum resulting from elimination of WEP. I divided the lump sum by 13 for the months the lump sum covered and then multiplied it by 11 for the 11 months in 2024 to get the lump sum for 2024. I plugged that into the lump sum line on TurboTax and it seems to have dropped my taxes by about $800. This does not sound right, but TurboTax is not importing my 2024 tax return like it has in previous years. Am I doing this correctly? Thank you.

Re: lump sum social security payment

xmasbaby0 — Fri, 13 Feb 2026 14:51:30 GMT

@user17709929011 Look again at your SSA1099------down in the left corner you should see an amount that says "Includes $xxxx Paid in 2025 for 2024"

Re: lump sum social security payment

user17709929011 — Fri, 13 Feb 2026 16:31:42 GMT

Thank you. For some reason, I ignored that. Of course, my wife's 1099 doesn't have it.

It says $XXX.xx paid in 2025 for 2024

Is that the number I use in the TT calculator? That's close to the amount I calculated. But I'm still confused as to why TT doesn't show my 2024 taxes. They were all done on the desktop app.

Re: lump sum social security payment

xmasbaby0 — Fri, 13 Feb 2026 16:43:59 GMT

Yes, that amount down in the corner is your lump sum. When you got that payment for the Fairness Act, most of the payment was the retroactive amount for 2024, and then for 2025 you continued to get a higher amount of SS benefits.

If you used desktop download software to prepare your 2024 return, the 2024 return is stored only on your own hard drive. Find it and look at your 2024 AGI to help you decide if you want to assign that lump sum to 2024 or to 2025. If you want to assign it to 2024, you just make that choice in the 2025 software. You do not have to amend 2024.

https://ttlc.intuit.com/turbotax-support/en-us/help-article/tax-return/find-last-year-tax-data-file-tax-file-computer/L0XJvPaJr_US_en_US

https://ttlc.intuit.com/turbotax-support/en-us/help-article/data-systems/find-tax-data-file-mac/L4VNGm33S_US_en_US?uid=m6guhab0

Re: lump sum social security payment

user17709929011 — Fri, 13 Feb 2026 17:52:12 GMT

I went through everything again and it turns out that my federal refund is the same with or without the lump sum calculation. Thank all of you so much for helping me out with this. I had made a few incorrect entries, but I'm pretty sure I have it right now. Thanks again.

Re: lump sum social security payment

pshonore — Tue, 24 Feb 2026 16:04:58 GMT

Now the question is should any of the special SS benefit received retroactively for tax year 2024 be removed from the calculation of taxable income on Line 6b of the 2025 Form 1040-SR. I understand there is a bill submitted in Congress to do that but chances of it getting done before April 15 aren't likely.

Re: lump sum social security payment

RogerD1 — Tue, 24 Feb 2026 16:34:13 GMT

Yes, it would be unlikely for any bill to pass Congress now to reduce the extra taxes in 2025 on Social Security lump-sum payments from 2024. There is pending legislation called 'No Tax on Restored Benefits Act' that was introduced in February 2026 to address this issue. However, since it is proposed legislation and not law yet, there is no guidance whatsoever as to how this bill will address 2024 lump sum Social Security received in 2025. For now, just file taxes as is right now, and, should this become law, guidance from the IRS will be needed as to how affected taxpayers will claim any refunds.

Re: lump sum social security payment

alexb757 — Tue, 10 Mar 2026 21:07:24 GMT

I assume you mean tax year 2024, NOT 2023 in your final paragraph?!

Also, I used TurboTax with a Full Service Tax Expert crunching the numbers while provided the information. I specifically told him to look at this option and if more advantageous, rather than the standard 85% in our case to use it. We got a lump sum from 2024 shown on our SSA-1099. I had to guide him to where that amount was shown on those documents (never mind he was the “expert” CPA with 50 years experience!) and I have to assume he did that. My 1040-SR was filed and accepted on February 25, 2026 and since it seems to be a done deal, I have no way of contacting him once I pay my TT fee and the return is submitted! Why? Because the chat function is automatically disabled!

I need to know if he’s made a mistake on my return with regards to SS lump sums.

Here’s the issue. Line 6a shows total SS as 40,321 (including those lump sums for 2024). Line 6b shows taxable amount as 34,273 (.85 x 40,321). Yet, he has checked Line 6c as X, meaning elected to use the lump sum method! Correct me if I’m wrong, but isn’t the rule that you should use lump sum method if and only if, it gives you a lower tax liabity than the 85% method?

having filed an 85% for our taxable SS then checking the lump sum box is bound to raise a red flag, no? Unless I’m missing something. It’s very frustrating not being able to contact my TurboTax expert …..

Re: lump sum social security payment

JamesG1 — Tue, 10 Mar 2026 21:39:20 GMT

You are able to view the Social Security lump-sum calculation amongst the paperwork with your income tax return.

You should find an Earlier Year Lump-Sum Social Security Worksheet for the prior year(s) and a Lump-Sum Social Security Worksheet for the calculation.

The taxable amount 2024 Social Security benefit is based upon your 2024 Federal income tax return information. Perhaps, the characteristics of your 2024 Federal income tax return computed that 85% of the 2024 lump-sum amount should be taxable.

And, perhaps, the characteristics of your 2025 Federal income tax return computed that 85% of the 2025 Social Security benefit should be taxable.

Then, the sum of the two amounts were reported on line 6a of the 1040 income tax return.

@alexb757

Re: lump sum social security payment

rjs — Tue, 10 Mar 2026 22:56:02 GMT

@alexb757 wrote:

Correct me if I’m wrong, but isn’t the rule that you should use lump sum method if and only if, it gives you a lower tax liabity than the 85% method

@alexb757

I don't see anything in the IRS instructions that says that. You are free to use whichever method you choose, whether or not it saves you any money. Since you are paying tax on 85% of your benefits either way, the IRS is not likely to complain. I don't think you have anything to worry about.

Re: lump sum social security payment

alexb757 — Wed, 11 Mar 2026 06:05:32 GMT

Sorry, I’m not sure you fully understand my question here.

my 2024 return shows ZERO lump sum since that did not come in to vent until 2025. That was the first year and most everyone is concentrating on the BBB with enhanced senior deductions and no tax tips and OT. No one is really focusing on lump sum payments for some 3 million people who were the only ones affected by this!

allow me to explain in more detail because many so-called tax experts and COAs seem unaware of the changes here.

in Jan 2025, Biden signed in to law a bipartisan bill from the previous year doing away with both WEP and GPO legislation affecting ALL government workers , whether federal, state or local. They set a date for retroactive payments starting January 2025 (even though some folks should have gone back further but that’s a different discussion) for the previous tax year, 2024.

Both my wife and I qualified and received lump-sum SSA payments in 2025 for the previous, earlier year - 2024. It’s all on the 1099-SSA in black and white. I was somewhat surprised I had to brief my TurboTax “expert” about this because he was, apparently unaware of the new rule and couldn’t find it on my docs submitted! Hardly a good look, I’m sure you’ll agree.

so, given all that, I instructed him to look at our numbers and see if it was more advantageous to opt for the lump sum method to lower our tax liability since we seemed to be eligible for the first time this past year. As I understand it, the whole purpose in doing this is to see if the lump sum method would LOWER your tax liability and if so, opt for that calculation instead if the standard 85% which we had the previous year and most people also have.

Having closely looked at our return and the 6a, 6b & 6c lines on the 1040-SR, we have our total, gross SSA benefits for 2025 listed on 6a, 85% of 6a printed on 6b, which is of course the taxable portion of 6a AND box 6c checked with an X. That means the lump sum method was used in this calculation and would normally be LESS than the straight 85% calculation, correct? I’ve read IRS Publication 915, Chap 11, an AARP article on this very subject and even spoken with a TurboTax CPA. All I require is a straight answer on why my taxable SSA is shown as 85% while at the SAME TIME the lump sum box is checked. Surely, it’s an either OR situation? Either it’s 85% taxed OR if the lump sum method shows a LOWER tax liability and you opt for that, then that LOWER amount is taxable and put on Line 6b. How can it be both 85% AND lump sum method? That makes no sense t me. It als made no sense to a CPA I spoke with today either!

And the other issues on TurboTax is once you sigh up for Full Service with a tax expert, once they file and the IRS accepts the return, the chat feature is immediately disabled! Why? I’ve had nothing but comms issues with the guy who did my return. I only spoke to him twice and now he’s leaving many emails because none of the calls are scheduled and he’s 3 hours ahead of me, it’s a big mess. I see my rights as a Full Service customer is that I should still be able to ask tax questions until Aprl 20. It’s very frustrating and I’ve spoken to 3 additional TT CPAs who are unable to fully answer hardly any of my questions. I truly regret being a first-time customer if this is standard MO. At least Liberty Tax gave personal face-to-face advice, instructions and answering any and all questions as it in previous years.

Aplogies for the long rant, but I’m having a real hard time jumping through the TT hoops that seem to be counterproductive. And having to explain my situation multiple times to different people…..

Re: lump sum social security payment

alexb757 — Wed, 11 Mar 2026 07:08:19 GMT

Sorry, I’m not sure you fully understand my question here.

my 2024 return shows ZERO lump sum since that did not come in to until 2025. That was the first year and most everyone is concentrating on the BBB with enhanced senior deductions and no tax tips and OT. No one is really focusing on lump sum payments for some 3 million people who were the only ones affected by this WEP/GPO change in the law for 2025.

allow me to explain in more detail because many so-called tax experts and CPAs seem unaware of the changes here.

Having closely looked at our return and the 6a, 6b & 6c lines on the 1040-SR, we have our total, gross SSA benefits for 2025 listed on 6a (and which also indicated the lump sum payments for 2024), 85% of 6a printed on 6b which is, of course, the taxable portion of 6a AND box 6c checked with an X. That means the lump sum method was used in this calculation and would normally be LESS than the straight 85% calculation, correct? I’ve read IRS Publication 915, Chap 11, an AARP article on this very subject and even spoken with a TurboTax CPA. All I require is a straight answer on why my taxable SSA is shown as 85% while at the SAME TIME the lump sum box is checked. Surely, it’s an either OR situation? Either it’s 85% taxed OR if the lump sum method shows a LOWER tax liability and you opt for that, then that LOWER amount is taxable and put on Line 6b. How can it be both 85% AND lump sum method? That makes no sense to me. It also made no sense to a CPA I spoke with today either!

And the other issues on TurboTax is once you sigh up for Full Service with a tax expert, once they file and the IRS accepts the return, the chat feature is immediately disabled! Why? I’ve had nothing but comms issues with the guy who did my return. I only spoke to him twice and now he’s leaving many VMs at random because none of the calls are scheduled and he’s 3 hours ahead of me, it’s a big mess. I see my rights as a Full Service customer is that I should still be able to ask tax questions until Aprl 20. It’s very frustrating and I’ve spoken to 3 additional TT CPAs who are unable to fully answer hardly any of my questions. I truly regret being a first-time customer if this is the standard MO. At least Liberty Tax gave personal face-to-face advice, instructions and answering any and all questions as in previous years.

Re: lump sum social security payment

alexb757 — Wed, 11 Mar 2026 07:32:49 GMT

Not even when an AARP article where Lisa G-L, a CPA. and tax expert with TT says and I quote: if your income was more in 2025 (than in 2024), it would definitely benefit you to make that election. And I instructed my CPA to look into that and get back to me if it would be beneficial for us to do this. As soon as I paid and tax return was submitted and accepted, they (TT) disabled the chat feature, so I’ve not been able to get a straight answer in exactly how the calculation was made.

the article went on to say beneficiaries who received reduced SSA payments in 2024 due to the WEP-GPO recouped that money in 2025 via a lump sum payment from SSA and is clearly shown on the 2025 SSA-1099. I had to prompt my CPA tax expert to find that and tell him what the WEP-GPO was all about. Who is the expert here?

further the article goes on, because rpthese payments count as 2025 income, they could push some beneficiaries in to a higher tax bracket or increase the amount of their taxable SS income for the year.

this is exactly what happened to us and gave us a whopping total income of 172,677 - 33,017 more than for 2024. That year, there was no lump sum for SSA beneficiaries, it all started in 2025, affecting some 3 million beneficiaries, all in the same boat as us.

and yes, our income in 2025 was MORE than in 2024, so it would behove us to look at the lump sum election to LOWER our tax liability. I asked my TT CPA to look in to that but because the way TT Full Service is set up once you file, the chat feature is permanently disabled and you have to rely on random phone tags! Three times in the past 2 weeks he’s tried to get a hold of me, left a VM only once. While I have spoken to three other TT CPAs, none of whom could fully address my questions on this or another question and it’s almost impossible to communicate now.

i can’t even ask simple, non-complicated questions as a first-time user.

tell me this, what is the purpose of the lump sum method over the standard 85% for MFJ if not to possibly reduce yoyr tax liability? And if you’re going to do the 85% anyway, why also check box box 6c? Two fundamental questions no one has been able to supply an adequate answer yet.

i would not be having so many issues if communication were set up differently and chat option not disabled after you paid and return sent. BTW, yes, I know it’s in the Ts& Cs, but again, instead of pressuring me to file before Feb 28 and lock in the price, he could have also told me that tidbit of info and prevented some grief here.
Seriously thinking of going back to face-face tax preparers. At least they would answer all your questions before, during and after filing, not cut you off and leave you hanging…….

Re: lump sum social security payment

alexb757 — Wed, 11 Mar 2026 07:54:51 GMT

Sorry, incorrect on two counts.

First, there was No lump sum paid or calculated for 2024. It’s a new thing for 2025 for 3 million beneficiaries for the first time.All I have is AGI and taxes paid for 2024.

the SSA lump sum came in to being for the first time in 2025 for the previous year. For us, the lump sum was over 11k pushing us up to an AGI of 172k + (above the 150k threshold which also affected enhanced senior deductions for both of us).

again, there was no lump sum for 2024, just 2025, and what my TTCPA put in line 6a was total 2025 SSA benefits paid in 2025. That included the 11k lump sum. So it was NOT a combined sum from two different years, only one. He seemed a bit hazy on all this which surprised me, he being the expert…..I even had to point out where to find the lump sum payment on the submitted 1099-SSA which is really hard to miss with the asterisk in the bottom left-hand corner.

am finding it really difficult to explain all this and have repeated it to more than one CPA, most of whom shrug and say you need to speak with the guy who did yoyr return. I wish but the chat function has been disabled ever since I paid and the return was filed. Kinda leaves me hanging not to know how things were calculated, not seeing any worksheets (apparently you don’t actually use those, you just plug the numbers in the software and see what comes out). Is that software updated with ALL the new changes? I don’t know that either, I’m only the customer….