How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask TaxRobin Your Own Question
TaxRobin
TaxRobin, Tax Preparer
Category: Social Security
Satisfied Customers: 13317
Experience:  15+ years in tax preparation and instruction
14155347
Type Your Social Security Question Here...
TaxRobin is online now
A new question is answered every 9 seconds

If I received a lump sum SSDI payment (92,207.80) for years,

Customer Question

If I received a lump sum SSDI payment (92,207.80) for years, 2012, 2013, and 2014 in 2015 is the total amount taxable, part of the total taxable or none of it? Filing married jointly with two minor dependents and a HH income of $72,640. If all or part of it is taxable, can it be proportionally applied to the applicable prior years to reduce the total due? And if so, would that require those year's TR's to be amended?
Submitted: 1 month ago.
Category: Social Security
Expert:  TaxRobin replied 1 month ago.

Hello, I'm Robin. Welcome to JustAnswer. I'm reviewing your question now and typing up my reply. I'll post that in just a few moments.

Expert:  TaxRobin replied 1 month ago.

You cannot amend returns for prior years to reflect social security benefits received in a single lump-sum in the current year.

You must include the taxable part of a lump-sum payment of benefits received in the current year (reported to you on Form SSA-1099,Social Security Benefit Statement) in your current year's income, even if the payment includes benefits for an earlier year.

However, there are two ways to determine the amount of income to include:

  • You can use your current year's income to figure the taxable part of the total benefits received in the current year; or
  • You may make an election to figure the taxable part of a lump-sum payment for an earlier year separately, using your income for the earlier year.

You can select the lump-sum election method if it lowers the taxable portion of your benefits:

  • Under this method, you refigure the taxable part of all your benefits (including the lump-sum payment) for the earlier year using that year’s income.
  • Then you subtract any taxable benefits for that year that you previously reported.
  • The remainder is the taxable part of the lump-sum payment. Add it to the taxable part of your benefits for the current year (figured without the lump-sum payment for the earlier year).

Worksheets in Publication 915, Social Security and Equivalent Railroad Retirement Benefits, can help your CPA calculate the taxable portion using this method but I am sure they know that already.

Your positive rating is always thanks enough.

Expert:  TaxRobin replied 1 month ago.

Please let me know if you need clarification. If you do not then a positive 5 star rating is appreciated so I get credit for the response. (look for the STARS or SMILEY FACES)

Customer: replied 1 month ago.
Thanks but I already spent a lot of time with 2015 Publication 915 and I already have the information in your response. I also attempted their "Worksheet 1" but I was still confused. I continued to search for answers and when I gave up, I decided it would be worth it to pay for the answer, or at least some clarity. I really thought the response here would be more detailed and I would get solid answers as opposed to information on where to go to look for answers for $45? How am I supposed to know how much the "taxable part" of my benefits are? It's not specified on the Form SSA-1099. The total amount of information for my year 2015 is very simple. Married filing jointly with two minor dependents. Total HH income was $72,640 and my back pay was $92,207.80. You can't give me an approximate amount I might be facing, or even an approximate percentage of the total that might be taxable? Thank you
Expert:  TaxRobin replied 1 month ago.

The amount for each year is what is used. That information is listed on your payout information. They break down how much was for each year.

Then half of that benefit plus all your other income is looked at to see if any of the SSDI is then taxable.

If you want to make sure your CPA calculated in the best way for you then ask them if they actually calculated the lump sum for the year of payment AND split it all to the year it was meant for.

You specifically asked

can it be proportionally applied to the applicable prior years to reduce the total due? And if so, would that require those year's TR's to be amended?

I have told you it can be calculated based on prior year info but you do not do an amended return when you calculate that way.

Expert:  TaxRobin replied 1 month ago.

To figure out the taxable part use this formula

Compare the base amount for your filing status with the total of:

  • One-half of your benefits.
  • All of your other income, including tax-exempt interest.

The base amount for your filing status is:

  • $25,000 if you are single, head of household, or qualifying widow(er),
  • $25,000 if you are married filing separately and lived apart from your spouse for the entire year,
  • $32,000 if you are married filing jointly,
  • $0 if you are married filing separately and lived with your spouse at any time during the tax year.

You have to do that for each year.

Related Social Security Questions