Social Security Lump Sum Payment Options

[richw1]

It's been a while and I want to get this right.  I've got a client with a lump sum Social Security disability payment.  Most applies to 2025, but a portion applies to 2024.  Am I able to amend 2024 and reduce 2025 by that amount, or is there a more systematic way of doing it in the 2025 program?

[IRonMaN]

Look a wee bit closer at the Social Security worksheet and you will find a section for lump sum payments.

[BobKamman · Accepted solution]

No, there's a way to compute the tax on the 2025 return as if the funds had been received in 2024.  But before doing that computation, you can eyeball the 2024 return and ask yourself if it would have made any difference that year.  For a joint return with $100K AGI in both 2024 and 2025, it's not going to be worth the effort.  If 2024 taxable income was zero and 2025 is going to be 50K, then proceed with the worksheets.