lump sum from ssdi

Forum|Forum|7 years ago
April 21, 2019
11 replies
92 views

My question actually will apply to next year, but I need to plan. In 2018 I my marginal tax rate was 12%. In 2019 we received a lumpsum payment of social security disability that includes payments for 2018. In 2019 because of this lumpsum payment we will be in the 22% marginal tax bracket. While 85% of benefits are taxable, if I distribute disability income between 2018 and 2019, I will be saving over 1000 dollars in federal taxes because of this 10% difference in marginal tax bracket. I do not see anything that allows me to amend my return. All those lengthy calculations are to see if the taxable SSDI would be lowered. It does not see if the actual taxes are lowered. AT least that is my understanding after reading pub 915. Can someone tell me if I understood right? Thanks in advance

Other

Kat11_2

Alumni - Champ

According to the TurboTax FAQ below, the TT program will allow you to allocate the lump-sum payment to both 2018 and 2019. This will help on your tax situation, of course, but you'll also see that there is no need to amend your 2018 return.

I believe the info in the FAQ will tell you all you need to know. But if you still have further questions, please post back.

"What is a lump-sum Social Security payment?"

https://ttlc.intuit.com/replies/4767454

*** I am NOT a tax expert. I am a seasoned TurboTax user, and volunteer to provide assistance to TT users. Nothing I post is to be considered TAX ADVICE; I bear no legal liability for responses.***

Krishnapriya1Author

Level 2

I posted an issue with Systemic Advocacy Management System (SAMS). IRS does not allow amendments for lump sum SSDI amounts. While it does not hurt the low income or very high income people, it hurts people in the middle. Someone from IRS actually got back to me in 5 days and I was quite surprised. Did anyone file an issue with SAMS? If so did you get a response and did they do anything about it?

rjs

Level 15

Your understanding is basically correct. The lump-sum election potentially reduces the taxable amount of the benefits that you received in 2019. After you go through the lump sum interview in TurboTax, TurboTax will determine whether the lump-sum election reduces your tax. If so, it will use the lump-sum election on your tax return. If not, it will just report it as if the payment was all for 2019.

The lump-sum election is your only option to reduce your 2019 tax. You cannot amend your 2018 tax return.

Mike001188

Level 2

Hello,

I received a lump sum ssdi payment in 2019. After allocating it over prior years in turbotax, when I enter the lump sum box 5 payment amount from the SSA-1099 do I reduce this amount I include in box 5a on my 1040 2019 return by the amounts I received in prior years?

HelenC12

Level 15

No, you do not reduce your SSA-1099 form, Box 5, by the prior year lump-sum payments.

After you enter your SSA-1099 information, we'll ask if you received a lump-sum Social Security payment.
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.
To enter benefits received for a different tax year, select Add another lump-sum payment.

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.

For additional information, see the following: What is a lump-sum Social Security payment?

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