A client received a lump sum payment of >$30000 from SSDI retroactive to 2022. The long term disability insurance company demanded payment of past disability payments. I understand that there are two ways to approach the best tax treatment. 1- include the amount as a miscellaneous deduction on the current year's tax return subject to 2%. (It still gives this instruction in the IRS pubs yet miscellaneous deductions subject to 2% no longer exists.) 2- calculate the tax due with and without the payment attributable for that year (2022) and take the difference as a tax credit on the 2023 return, Schedule 3, line 13b. Is there a worksheet that helps determine what that tax credit should be? Do you have to attach a pdf showing your calculations for the credit taken in 2023?