Is this post from EXPERT ToddL99 correct?

[manyaday]

Question:  My SSA-1099 disability award included the attorney ( I hire)  fees payout as part of my income even though it was paid out directly to the attorney,  So I'm going to be taxes on $16922.25 that was paid to the attorney that I never received. Lump payout + Attorney fee = total taxable income in box 3.    Can this be right?    Not to say that the attorney will also pay income tax on the same $16922.25, Taxed twice.

REPLY BY EXPERT ToddL99 ---

Yes, you can deduct the attorney fees included as part of your SSDI income. 

To enter the adjustment:   

• Go to Less Common Income, Miscellaneous Income and Other reportable income. Enter "Lawsuit settlement" in the Search Box and Select "Jump to lawsuit settlement" "to get to this screen ("Lawsuit settlement" is just an effective search term to get to this interview screen) 

• Continue to the screen "Other Taxable Income". Enter the description as "Attorney Fees" and the amount as a negative number. Entering "-$ XXXX" here will offset the attorney fees included in your SSDI award. These are NOT wages.   

A corresponding negative amount will be entered on line 8 of Schedule 1.

[DawnC]

Unfortunately, no, not anymore.   Prior to the Tax Cuts and Jobs Act, the IRS allowed you to deduct attorney fees as long as the fees were related to a tax issue or to producing taxable income.  If you hire an attorney to figure your taxes or appeal to the IRS over back taxes owed, then the charge for the time spent on these matters is no longer deductible.

After you enter the SSA-1099, TurboTax will ask you if it is a lump sum payment.  If it was, answer Yes and follow the 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.  If you need to enter benefits received for a different tax year, select Add another lump-sum payment.

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.

Lump-sum SSA payment, how to enter