Lump Sum question: In form SSA-1099, there is a note in the "DESCRIPTION OF AMOUNT IN BOX 3" box, at the bottom, which says" "Includes: $xxx.xx paid in 2020 for 2019. What is this amount?

[doucepoire]

In my form SSA-1099, there is a note in the "DESCRIPTION OF AMOUNT IN BOX 3" box, at the bottom, which says: "Includes: $xxx.xx paid in 2020 for 2019"

In Turbotax it asks if I received any lump-sum payments in 2020 for 2019 or prior years.  What should I answer? 

[doucepoire]

Just to add to this: I selected the "Yes" option just to try it out. For the amount of the lump-sum in 2019, I used the amount from the note at the bottom of the "DESCRIPTION OF AMOUNT IN BOX 3" box in my 2020 SSA-1099.

Then it asks:

"Enter the amount of Social Security and/or Railroad Retirement Benefits received during 2019 and already reported on your 2019 return. (This figure would be in box 5 of Form SSA-1099 and/or Form RRB-1099 for 2019.)"

Then it asks to enter the "Box 5 Amount Reported on Your 2019 Return".

The thing is, I have no SSA-1099 (nor RRB-1099) for 2019...

Very confused at this point. Should I select "No" on the lump-sum question then? 

[DoninGA]

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@doucepoire wrote:

Just to add to this: I selected the "Yes" option just to try it out. For the amount of the lump-sum in 2019, I used the amount from the note at the bottom of the "DESCRIPTION OF AMOUNT IN BOX 3" box in my 2020 SSA-1099.

Then it asks:

"Enter the amount of Social Security and/or Railroad Retirement Benefits received during 2019 and already reported on your 2019 return. (This figure would be in box 5 of Form SSA-1099 and/or Form RRB-1099 for 2019.)"

Then it asks to enter the "Box 5 Amount Reported on Your 2019 Return".

The thing is, I have no SSA-1099 (nor RRB-1099) for 2019...

Very confused at this point. Should I select "No" on the lump-sum question then? 

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Yes, select NO when asked if this a lump sum payment in 2020.

[gloriah5200]

What this section is doing is creating a couple of internal worksheets.  It will decide which costs you less tax, adding that 2019 amount to your 2019 return and adding the amount paid for 2020 to the 2020 return or including all of it on your 2020 return. 

It may ask for information from your 2019 return (if you did not file any 2019 social security on your original 2019 return, then you would still use the amounts from that return even though you did not have any social security benefits received in that year). Once you enter in your 2019 tax return amounts then it will ask how much of current year social security received was for 2019 and you enter that in.  It will calculate taxing your lump sum social security benefits the most beneficial of the two ways. 

Please see the following information from the following link:

Lump Sum Social Security Benefits

A lump-sum payment is a one-time Social Security payment that you received for prior-year benefits.

For example, when someone is granted disability benefits they'll receive a lump sum to cover the entire time since they first applied for disability. This period could cover months or years.

The similar-sounding $255 lump-sum death benefit payment from Social Security is different. This is not a lump sum for tax purposes.

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

If you did, 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.

Related Information:

• Do I need to report the $255 death benefit from Social Security?
• Is my Social Security income taxable?
• Where do I enter an SSA-1099, SSA-1099-SM, or SSA-1099-R-OP1?

[doucepoire]

Hi @gloriah5200  Thank you for your response. Please see the information I added in my comment above, and also the other answer from @DoninGA . Basically if I selected Yes, it ends up asking me for something I don't have. 

[fanfare]

when you say yes, you need your tax return from all the prior years involved.

many folks don't have that info because they don't keep copies of past tax return or don't understand them anyway..

Just enter the entire benefit amount in the 2020 box and you  will pay tax on all the benefits this tax year.

the difference is minimal if any,

[doucepoire]

@fanfare I have my past year returns but the issue is that I never received an SSA-1099 for any prior year (see my additional comment above). 

[Boomer161970]

I have the same exact question. Did you find an answer?

[DaveF1006]

In this instance, follow the advice fanfare has already given "Just enter the entire benefit amount listed in Box 5 and you will l pay tax on all the benefits this tax year".

@Boomer161970  @doucepoire