SS-1099

[terimac4]

My husband received retro SS in 2024, and Box 5 has the total amount he received. However, it does not show the amount after the attorney fees, which were $7500. If I have to claim the entire amount in Box 5, where do I indicate that the $7500 went to the attorney?

Also, I am entering the SS for prior years and it is asking me "Taxable SS benefits in 2021." He didn't receive any SS in 2021, so am I putting zero or am I supposed to put what he just got in 2024 for 2021? It isn't very explanatory. 

[ThomasM125]

You can't deduct the attorney fees on your 2024 federal tax return. Per IRS Publication 529, legal fees relating to the collection of taxable income are not currently deductible in 2024: 

You do not enter any social security benefits for 2021, since you received them all in 2024.

[terimac4]

Someone said that I use the lump sum method and put in each year's adjusted gross income.

[KeshaH]

Yes, you would include the amount that he received in 2024 for 2021.

[terimac4]

For each prior year, there is a box that says "Taxable Social Security Benefits in 2021"

This is on the page that asks for that prior year's Adjusted Gross Income. Is this where I put each amount allocated to the prior year? For example, in 2021, part of the allotment was $8600. It's confusing because in parentheses it says "Enter a zero if your Social Security benefits weren't taxable."

[DaveF1006]

Here is how to report your lump-sum Social Security payment, as outlined by esteemed expert DianeW777 in this Turbo Tax post. 

1. Open your TurboTax Return > Search (upper right) > type ssa1099 > Click the Jump to.... Link
2. Select Yes you received benefits > Complete your SSA-1099 > Continue > Yes I received at least one lump sum payment for 2022 or earlier > Continue
3. Type a year from your SSA-1099 > Enter the amount received for that year > Continue
4. If you received a Form SSA-1099 for the earlier year enter the box 5 amount, if not enter zero or leave it blank > Continue
5. Enter the filing status for the earlier year > Continue > Select whether you lived with a spouse in the earlier year > Continue >
6. Enter the information from the earlier year return > Continue > Add another lump sum payment (another year from box 3) if applicable or Click Done
7. Continue to follow the screens until you are back at the Income Summary page.

As far as the attorney's fees, if you itemize your deductions, you may be able to claim a Right of Repayment for any amount over $3000. Here is how to claim the deduction.

1. Open your return
2. Go to Federal
3. Deductions and Credits
4. Other Deductible Expenses
5. In the first question, say no to generation-skipping taxes
6. On the screen that follows, say yes 
7. On the screen that follows, say no.
8. In the third screen, say yes.
9. In the claim of right, repayment, record $4500.

[terimac4]

I think I am doing it correctly. These are the two areas I wanted to confirm:

For the first box, I am putting the entire amount he received in 2024

This is where I am putting the entire amount for the 4 years

For each of the previous 4 years, I will put my adjusted gross income for that previous year and then the benefits I will put the retro paid, correct? The box with the 8625 is where I am confused. That's what we received for 2021

For this box, I put each of the years we received retro for. I put in my AGI for each year, and the bottom box is the retro amount we received for each prior year, correct? This amount is only for 2021, but I will do this for 21, 22, and 23. Is that correct? We owe about $24K this way, so I just want to make sure!!

[RobertB4444 · Accepted solution]

You are entering it correctly.  

@terimac4 

[terimac4]

Quick question:

I am still confused about the second image I posted. It asks for the adjusted gross income from the previous year and for "Taxable Social Security Benefits in 2021." The instructions say, "This can be found on your 2021 tax return." You mentioned that entering the lump sum payment amount in that 3rd box was correct, but I want to confirm that it’s not asking for other Social Security benefits that were actually paid in that year.

When I input the lump sum amount for each year received in 2024 in that third box,  my tax owed decreases from $15,000 to $75,000. If I leave the box blank for the three prior years, it is taxing a lot more of the total amount.

[KrisD15]

You are in the correct section, but if there was no Social Security payments in 2021, then enter zero for Taxable Social Security benefits in 2021. 

I think the previous answer was saying you were going about it correctly, (on the right screens) 

but yes, change the taxable amount to zero. 

Zero in box 5 if no Social Security was received in 2021 and Zero taxable in 2021 on the screen that follows. 

[terimac4]

Thank you-I. I meant the tax goes from 7500 to 15K. The language just isn't clear. It should ask for benefits that were actually paid in 2021 if that's what they want you to indicate. 

[KrisD15]

Yes, it is complicated.

The program is trying to determine, if the benefits were paid in the year they were meant to be paid, what would have been the effect on your tax liability. 

So the program is asking, what did you get, and what SHOULD you have gotten.

Then it asks about taxable Social Security for the year in question since if there was taxable Social Security for that prior year, the additional amount (what you should have gotten) would have been taxed too.

You did not get payments that year, so there could not have been any taxable.

[terimac4]

Thank you. I just wanted to make sure I was doing it right!