social security lump sum calculation

[amarrakchi]

The 1040 6b amount is different dependent on whether TurboTax does the calculation or the worksheets are used.  The worksheets amount is lower than TurboTax by a substantial amount.  Can someone check accuracy?

[TomK2023]

You may see two different amounts on Form 1040, Line 6b because the program and the IRS worksheets use two different calculation methods Social Security for lump-sum payments.

TurboTax(uses both methods and then automatically chooses the calculation method that results in the lowest tax.

Using the Standard Method, the entire payment is treated as income for the current year (the back of your SSA-1099 uses this calculation method).

Using the Lump-Sum Election (LSE), the taxable part of the back-pay (as if you had received it in the years it was actually for) is used to calculate the taxable portion.

If the program finds that the Lump-Sum Election saves you money, it will use the lower amount on Line 6b.  The letters "LSE" next to Line 6b will also be printed (or check the box on Line 6c) to let the IRS know that you are using this special election.

Be sure that you:

1. Accurately enter your Adjusted Gross Income and taxable Social Security from the previous year(s) when prompted.
2. Enter the correct amount(s) from your SSA-1099 (Box 3 breaks down which amounts belong to which prior years; don't accidentally enter the total (Box 5) into a single-year field).
3. Choose your correct Filing Status (e.g., if it changed from Single to Married between the prior year and now, the LSE calculation becomes much more complex);.

You can Check how the program made this calculation by:

1. Open or continue your return.
2. Click on "Tax Tools" (bottom left), then "Print Center", and Click on "Print/save all forms and help worksheets." 
3. Look for "Lump-Sum Social Security Worksheet."

or...

1. Click on Forms Mode (top right; when using Desktop TurboTax).
2. Look for the "Lump-Sum Social Security Wks" (left column)