Lump Sum SSDI

Today TaxMama® hears from Jan in the TaxQuips Forum who feels overtaxed. “How do I spread my Lump Sum SSDI payment over 3 years? I waited a long time to start receiving benefits. Now the IRS wants me pay back for my lump sum!”

Ask TaxMama

Dear Jan,

Is IRS asking you for money already? Have you already filed a tax return? Or are you anticipating the problem because you finally got paid?

First of all, congratulations! It’s quite a battle to get approved. (And you can thank all the scam artists who file false claims for making it so difficult for YOU to get paid.)

Good news. There is a special computation for this lump sum.

All tax software should have it in their systems, though you may need to ask for help from their support team to make it work.

IRS answers this question over here by pointing you to a publication. But it would be really helpful if they actually pointed you to the section in Pub 915 where you can find the information. They have a worksheet you can fill out, if you wan to do it manually. It will allow you to treat the lump sum amount as if you had received it over several years

And remember, you can find answers to all kinds of questions about Social Security Disability benefits and other tax issues, free. Where? Where else? At www.TaxMama.com.

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