How do I enter an SSA-1099 for lump sum payment for a disability lump sum payment received in 2024 which includes 2023 and 2022 benefits and attorney fees.

Forum|Forum|1 year ago
January 26, 2025
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The previous posts on this subject do not include examples with screen shots of what to enter in each of the questions for prior year benefits. In this example, Box 3 and Box 5 of my statement says $70,000. Box 4 is None. Then, Box 3 breakdown says I paid $500 in Medicare part B premiums, and $7000 in Attorney Fees. It says the $70,000 includes $27,000 paid in 2024 for 2023 and $14,000 paid in 2024 for 2022.

Please step me through what to enter in each of the boxes for 2023 and 2022 and where I enter the attorney fees.

MAK70

After you enter the 1099SSA information, you will continue until you see the question on the Lump Sum payment for a previous year (see below). The attorney fees are included in the 2024 amount.

The following screens will ask:

How much was your lump-sum payment for 2023?

If you had a SSA-1099 for 2023, enter Box 5 amount

Filing Status for 2023

Adjusted Gross Income

Tax Exempt Interest

Taxable Social Security

Adjustments

Adoption Benefits (Form 8839)
Qualified U.S. Savings Bond Interest (Form 8815)
Student Loan Interest
Tuition and Fees
Foreign Earned Income or Housing (Form 2555)
Certain income of residents of American Samoa or Puerto Rico
Domestic Production Activities

Then you can add 2022 following the same steps.

JackieT2025Author

Thank you MaryK4. I have no SSA for 2023. Should I enter zero in Box 5?

For "Taxable Social Security benefits in 2023" enter zero there as well?

After I enter these amounts (for 2023 and 2022) the total federal tax due is still $13,000. It made no difference. I was expecting the Federal tax Due to drop. Does it recalculate later? Do I need to look into filing separately instead of jointly? What can I look at to decrease the Tax due? I appreciate your help!

JohnB5677

Yes you would enter zero for 2023 Box 5 and Taxable Social Security Benefits.

The $13,000 tax should not change.

Regardless of when the Social Security is distributed, even as a lump-sum payment, it will be taxed in the current year even if the payment includes benefits for earlier years.

To determine if the benefits are taxable, taxpayers should take half of the Social Security money they collected during the year and add it to their other income. Other income includes pensions, wages, interest, dividends and capital gains.

Do not file separately

Up to 85% of Social Security income may be taxed for those who are Married Filing Separately and lived with their spouse at any time during the tax year.
If you are Married Filing Separately and lived apart from your spouse for the entire tax year, reference the chart above for Single, Head of Household, or Qualifying Surviving Spouse.

Please see IRS reminds taxpayers their Social Security benefits may be taxable

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