Report SSDI back pay with "Lump-Sum Election"

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Topic Author
hesalefty
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Joined: Wed Apr 03, 2019 3:41 pm

Report SSDI back pay with "Lump-Sum Election"

Post by hesalefty »

In 2019, I received a SSA-1099 that included the back pay for the last several years. I plan to use the "Lump-sum election" method to report this income by allocating prior years benefit to prior year's tax calculations.

Here is the issue:
On the back of the SSA-1099, it shows "Any payments we made to you in 2019 for earlier years are shown in a separate column". But on my SSA-1099, description of amount only shows "Benefit for 2019". It didn't break down the amount into different years.

How can I explain to IRS this 1099 is retro pay for the last several years? My SSDI award letter clearly stated the amount is for the past several years. Should I include my SSDI award letter when I file my taxes?

I usually file my taxes electronically using Turbotax. I don't think Turbotax would allow me to include extra information. If I need to include something like a SSDI award letter with my tax return, should I send it to IRS by U.S. Mail?
fabdog
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Location: Williamsburg VA

Re: Report SSDI back pay with "Lump-Sum Election"

Post by fabdog »

Sounds like you need to contact the SSA and ask for a corrected SSA-1099 if you got benefits in 2019 for a previous year and they did not reflect that on the 1099.

Including the letter won't help you stop the automatic matching letter that will come... when what you filed doesn't match the 1099 they got from SSA

It may help you respond to the IRS on what you did... but they may ask for a corrected 1099... best to head this off at the source

Mike
Topic Author
hesalefty
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Joined: Wed Apr 03, 2019 3:41 pm

Re: Report SSDI back pay with "Lump-Sum Election"

Post by hesalefty »

fabdog wrote: Thu Jun 18, 2020 5:27 pm Sounds like you need to contact the SSA and ask for a corrected SSA-1099 if you got benefits in 2019 for a previous year and they did not reflect that on the 1099.

Including the letter won't help you stop the automatic matching letter that will come... when what you filed doesn't match the 1099 they got from SSA

It may help you respond to the IRS on what you did... but they may ask for a corrected 1099... best to head this off at the source

Mike
Thank you Mike. That's what I thought too. I called SSA several months ago and asked them to correct the 1099. They told me there was nothing they could. Then I wrote to my local SSA office. They replied with some generic letter and said there was nothing they could do.
fabdog
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Location: Williamsburg VA

Re: Report SSDI back pay with "Lump-Sum Election"

Post by fabdog »

Well, at the risk of sounding trite... the next best thing I can think of is contact your congressperson or senator... ask their office for help... sometimes that works when the bureaucracy won't help

Sorry

Mike
earlyout
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Re: Report SSDI back pay with "Lump-Sum Election"

Post by earlyout »

You have the total back pay for SSDI which covers a certain number of years. Why not calculate the value for each year that was covered, including an adjustment for the annual SS inflation factors, and use that number for the tax calculations? The total will match your 1099 and if you get any questions (not likely IMO) you can explain your procedure.
Broken Man 1999
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Re: Report SSDI back pay with "Lump-Sum Election"

Post by Broken Man 1999 »

Perhaps your online SS account would show the accurate breakdown, per month/year.

Worth a look.

Broken Man 1999
“If I cannot drink Bourbon and smoke cigars in Heaven then I shall not go. " -Mark Twain
Topic Author
hesalefty
Posts: 10
Joined: Wed Apr 03, 2019 3:41 pm

Re: Report SSDI back pay with "Lump-Sum Election"

Post by hesalefty »

Broken Man 1999 wrote: Fri Jun 19, 2020 8:40 am Perhaps your online SS account would show the accurate breakdown, per month/year.

Worth a look.

Broken Man 1999
Good suggestion. The online account only has lump sum payment, no breakdown. Thanks anyway.
Topic Author
hesalefty
Posts: 10
Joined: Wed Apr 03, 2019 3:41 pm

Re: Report SSDI back pay with "Lump-Sum Election"

Post by hesalefty »

fabdog wrote: Thu Jun 18, 2020 7:51 pm Well, at the risk of sounding trite... the next best thing I can think of is contact your congressperson or senator... ask their office for help... sometimes that works when the bureaucracy won't help

Sorry

Mike
Thanks Mike. I might try that.
Topic Author
hesalefty
Posts: 10
Joined: Wed Apr 03, 2019 3:41 pm

Re: Report SSDI back pay with "Lump-Sum Election"

Post by hesalefty »

earlyout wrote: Thu Jun 18, 2020 8:20 pm You have the total back pay for SSDI which covers a certain number of years. Why not calculate the value for each year that was covered, including an adjustment for the annual SS inflation factors, and use that number for the tax calculations? The total will match your 1099 and if you get any questions (not likely IMO) you can explain your procedure.
Earlyout,
Thank you. That's what I plan to do. I will include the calculation along with my SSDI award letter in my tax return. Your suggestion makes me feel more confident that this is the reasonable approach.

It looks like I will have to file paper tax return and send via usps. To my knowledge, TurboTax e-file doesn't allow including extra information like a pdf with my calculation.
Topic Author
hesalefty
Posts: 10
Joined: Wed Apr 03, 2019 3:41 pm

Re: Report SSDI back pay with "Lump-Sum Election"

Post by hesalefty »

earlyout wrote: Thu Jun 18, 2020 8:20 pm You have the total back pay for SSDI which covers a certain number of years. Why not calculate the value for each year that was covered, including an adjustment for the annual SS inflation factors, and use that number for the tax calculations? The total will match your 1099 and if you get any questions (not likely IMO) you can explain your procedure.
I think that would work. I know this is unlikely - But what if the IRS doesn't agree with me? Would they ask me to pay penalty?

If that is a possibility, should I over-pay my taxes first and then try to get a refund? Would that minimize the possibility of penalty fee even if they don't allow me to spread my SSDI lump sum income into previous years?
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