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Back Payments

Question: I received social security benefits this year that were back benefits for prior years. Do I amend my returns for prior years? Are the back benefits paid in this year for past years taxable for this year?

Answer:

You cannot amend returns for prior years to reflect social security benefits received in a single lump-sum in a single 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) 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).
  • There are worksheets in Publication 915, Social Security and Equivalent Railroad Retirement Benefits, to help you calculate the taxable portion using this method.

Additional Information:


Category: Social Security Income
Subcategory: Back Payments

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The OMB number for this study is 1545-1432.
If you have any comments regarding this study, please write to:
IRS, Tax Products Coordinating Committee
SE:W:CAR:MP:T:T:SP
1111 Constitution Avenue NW
Washington, DC 20224