Tax Year Prior to 2020: Earlier Year Lump Sum Social Security Benefit

[sjkreil]

In 2017 my wife got a lump sum social security payout for the years 2013 - 2017 and paid in 2017. I reported it on our 2017 return. Now I'm doing our 2019 federal return and Turbo Tax wont let me get passed the tax return review. It says: "Earlier year lump-sum Social Security Ws (2017): Earlier year taxable social security benefits for tax payer should not be more than $5023, 85% of the sum of line B earlier year SSA and RRB for the tax payer and spouse." First question what is line B on which form? Second is it telling me I should just enter the amount $5023 in that box (it can't be more than that because of the 85% limitation)? The actual amount of the lump sum payment was higher than that amount.  

[AnnetteB6]

If you received the lump sum payment in 2017 and it was already reported on your 2017 tax return, you do not need to enter any information about it on your 2019 tax return.  You would only enter information in 2019 for lump sum payments received in 2019.

That being said, if you did receive a lump sum payment in 2019 that was for the 2017 tax year, then behind the scenes, TurboTax is filling out worksheets to be able to calculate the taxable amount of that lump sum payment so that it can be included on your 2019 return and you would not need to amend earlier years to account for it. 

The worksheet is called Earlier Year Lump Sum Social Security Worksheet.  There will be a worksheet for each year for which you received a lump sum payment in 2019.  On the worksheet for 2017, line B is asking for the amount of Social Security benefits that was received in that year (2017).  You would find this number on line 20a of Form 1040 for 2017.

[jbdnj]

I am having a problem with this.  I got a lump-sum for 2018 in 2019.  I’ve entered that.  At the end, Turbotax says there are errors to correct.  It says that our earlier yr taxable SS ben-TP should not be greater than zero.  However, we filed jointly and our 2018 return on line 5a shows what she received.  How can that not be greater than zero?  When I look at the form, it appears to be filled out correctly, but this keeps giving me an error in the Smart Check.  How to get past this?

[DMarkM1]

The question asks about any part of the lump sum you received in 2019 that was included on the 2018 1099-SSA box 5.  That is very uncommon and should be zero or left blank in your 2019 lump sum interview. 

[suf]

My husband received a 2018 lump sum payment received in 2019. I entered it correctly, I thought, on the worksheets.  When I got to the smart check, I received the same error message as the previous questioner.

To move on, I entered my taxable social security amount in 2018.  Now I can't get rid of it and my tax liability has increased significantly.  How can I get rid of this entry?  Thanks.

[ColeenD3]

Delete the Social Security forms as shown at the bottom of the post. After you do so, you can try again following these instructions.

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

Otherwise, answer Yes and follow the onscreen 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; when finished, click Add Another Lump Sum if you need to enter benefits received for a different tax year.

• After you enter your 2019 SSA-1099 information, we'll ask if you received a lump-sum Social Security payment. Answer Yes and follow the onscreen 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. Start with 201x. (earliest year)
•  On the next screen, Enter your 201x lump-sum payments received in 2019 and Continue
•  When finished with 201x, click Add Another Lump Sum if you need to enter benefits received for a different tax year (201y)
•  Now simply do the same thing that you just did for 201x, but use the relevant numbers for the next year (e.g.201y).

To Delete a Form

Open your return in TurboTax. 

• In the left side bar, select Tax Tools> Tools.
• In the pop-up window Tool Center, choose Delete a form.
• Select Delete next to the form/schedule/worksheet and follow the onscreen instructions

[mike-219]

We received a lump sum social security payment in 2019 with some of the amount for the prior year 2018. If I enter the amount in as a lump sum with the portion allocated to 2018 or if I enter the full amount in as a lump sum payment in 2019 the tax number is the same. Shouldn't it be different?

[VictorW9]

You enter the full amount from box 5 of the SSA-1099. You don't allocate or adjust anything. After you enter the SSA-1099, the next screen will ask you whether you received a lump-sum payment. Select Yes, then go through the subsequent screens for one of the years for which you got a lump-sum payment. When you get to the "Lump-Sum Social Security Payments Summary," if you have a lump sum for another year, click the button that says "Add Another Lump Sum." Repeat the process for each year that you got a lump-sum payment for. After you have entered all the years, click Done on the summary screen. TurboTax will determine whether the Lump-Sum Election will save you any money, and will fill out your Form 1040 appropriately.

[WITT548]

I had exactly the same problem. This is a fairly uncommon tax situation so I think it has not gotten much attention. The "Can't be above zero" error message  that appeared for line D of the "Earlier Year Tax Return Smart Worksheet" appears to be a programming error on a different worksheet that is causing the error message.

I had loaded all data in TurboTax using step-by-step data entry.

 After reading the worksheet instructions line by line I realized there is an error in the "Earlier Year Lump-Sum Social Security Worksheet" Line B. Line B is supposed to be any SS benefits received in the earlier year being calculated.  Even though the correct value was loaded in the Step-by-Step, Line B was calculated at 0 (zero). When I used form OVERRIDE and entered the correct value, the "Can't be above zero" error message  that appeared for line D of the "Earlier Year Tax Return Smart Worksheet" disappeared.

[cali]

I have received a lump sum SSA payment in 2019 which includes payments for prior four years. When I enter lump sum payments for each prior year, none of it brings my tax due down! When I try the same thing in TurboTax 2018, adding each lump sum for a prior year does bring the tax due down.  I also noticed that "Taxable Social Security Benefits" box is gone in TurboTax 2019. Why is that? Is it broken or just a change in the law?

[SusanY1]

Make sure that you are going the entire way through the section for the lump-sum benefits and, if you elect to use your income from the prior years to tax those benefits, that you are entering all of the information requested separately for each year for which your lump sum benefit applies.  

Also be sure that with each lump sum amount you are entering that year's Box 5 number (which is likely 0) and not the Box 5 from your current year benefit payment (this is a common entry error.) 

TurboTax will ask you the amount of your taxable social security in prior years in relationship to the lump-sum but you do not have the option to enter this amount for the current year.  The current year taxable amount is calculated by the program.

TurboTax will adjust the tax amount due after all of the entries are complete, if appropriate.  

[cali]

"Also be sure that with each lump sum amount you are entering that year's Box 5 number (which is likely 0) and not the Box 5 from your current year benefit payment (this is a common entry error.)"

Because another person on the return was receiving SSA benefits in prior years, the Box 5 amount is not 0 for those years. Is this why I'm not getting the tax break I expect?

[t4xdon8tions]

I receive a regular monthly disability SS payment for each year in monthly payments-would this be considered Lump sum?

[DoninGA]

---

@t4xdon8tions wrote:

I receive a regular monthly disability SS payment for each year in monthly payments-would this be considered Lump sum?

---

No.  Monthly benefit payments are NOT a lump sum payment.

[GreyMist]

I have the same problem for 2021, and enter the amount being asked for from line 6b on the 2020 form, and it tells me it should not be greater than zero. The number on line 6b for 2020, is greater than zero. how do you resolve this.