SSDI Back Pay and turbotax

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Is Turbotax able to distribute appropriate ssdi back pay to previous years?  Will Turbotax be able to find the lowest possible tax amount options for back ssdi back pay?

[rjs · Accepted solution]

The back pay from SSDI is called a lump sum. You can't distribute it to previous years. There is an option called the lump-sum election that might reduce the amount of tax you have to pay. TurboTax will figure out if the lump-sum election will help you.

When you enter your Form SSA-1099 enter the full box 5 amount, and any other information from the SSA-1099, then click Continue. The next screen will ask whether you received a lump-sum payment. Select Yes and continue through the questions. You will need your tax returns for the earlier years. Enter the information for one prior year at a time. It doesn't matter what order you enter them in. After you answer all the questions for the first prior year you will come to a "Lump-Sum Social Security Payments Summary" screen. On that screen click the button that says "Add Another Lump Sum" and go through the same questions for the next year. Repeat this until you have entered all the prior years, then click Done on the summary screen.

TurboTax will use the lump-sum election if it reduces your tax.