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Disability payments that you receive from a private plan or an employer plan must be reported in the year you receive them, even if you receive a lump sum payment that covered prior years. You cannot amend prior year returns to spread out the payments over the years they actually pertain to.
The only time that you can claim a tax credit for lump sum diability payments made in one year is if you receive a lump sum disability payment from Social Security. In that case you may go back and recalculate what your taxes would have been in prior years, and then claim the difference as a tax credit on your current year return. But this does not apply in the case of benefits you received from your union.
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