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10/20/2010 09:14 AM

paying taxes on lump sum

Posts: 281

hello all...i am glad to be here. it's be a loooonggg road to say the least for myself and surely all of us.

my main question is regarding lump sum payment taxes. i know this is such a tricky question and just wanted to get some input from others who have either been thru it or have more knowledge than myself. i did receive the payment, but honestly i had so very many past due monies due that over half of it is gone.

Any advice? Ideas?

much appreciated...blessings to us all Smile


10/21/2010 02:57 PM
Posts: 4152
Group Leader

You may not even have to pay taxes on it. It all depends on how you file and how much money you've taken in. If you do have to pay- you can make quarterly payments to them if necessary.

Here's what SSA says about disability benefits and taxes:

Some people have to pay federal income taxes on their Social Security benefits. This usually happens only if you have other substantial income (such as wages, self-employment, interest, dividends and other taxable income that must be reported on your tax return) in addition to your benefits.

No one pays federal income tax on more than 85 percent of his or her Social Security benefits based on Internal Revenue Service (IRS) rules. If you:

* file a federal tax return as an "individual" and your combined income is

x) between $25,000 and $34,000, you may have to pay income tax on up to 50 percent of your benefits.

x) more than $34,000, up to 85 percent of your benefits may be taxable.

* file a joint return, and you and your spouse have a combined income that is

x) between $32,000 and $44,000, you may have to pay income tax on up to 50 percent of your benefits

x) more than $44,000, up to 85 percent of your benefits may be taxable.

* are married and file a separate tax return, you probably will pay taxes on your benefits.


Your adjusted gross income

+ Nontaxable interest

+ ½ of your Social Security benefits

= Your "combined income"

Each January you will receive a Social Security Benefit Statement (Form SSA-1099) showing the amount of benefits you received in the previous year. You can use this Benefit Statement when you complete your federal income tax return to find out if your benefits are subject to tax.

If you do have to pay taxes on your Social Security benefits, you can make quarterly estimated tax payments to the IRS or choose to have federal taxes withheld from your benefits.

For more information about taxation of benefits, see IRS Publication 915, Social Security and Equivalent Railroad Retirement Benefits.

10/21/2010 11:31 PM
Posts: 281

Hi Amy! This is also Amy Smile

How have you been feeling?? Lots of up and downs here.

Thank you SO much for the information. I wonder, let's say when I get the 1099 next year & it has my entire lump sum dollar amount on it, do I need to break it out for the years it was originally due? or will it all count in ONE year? does that make sense? if i can break it out into the 3 years it would have been given, then i would definitely fall below the yearly $25k for sure, but the lump sum of 3+ years will be more than that on my 1099. Does this make sense? What are you thoughts?

10/22/2010 02:40 PM
Posts: 4152
Group Leader

You will have to count the whole lump some towards the year that it came. Unfortunately. It would be great if you were allowed to separate it out. But, the government paid at one time, so that's how you have to claim it.

10/26/2010 06:01 PM
Posts: 230

I recently got a approved for SS and am waiting for my Retro check. So, a quick internet search provided some interesting information. Since part of my retro has been paid as SSI, that amount is not taxable. The remainder is subjected to an individuals situation, such as single/married, total combined income. There was also mention that SS will send you a form 1099 and should indicate the Taxable portion. In some cases you may be able to deduct the cost of your SS attorney or agency fee. Then there are rules about those who re=pay a long term disability provider, and so on... Then there are other formulas to complete to find out how much your SS retro is taxable from 15% to 85%.

Since I am already confused due to the whole SS process, then getting Medicare A<B<C<D, (LOL). I'm going to get help from IRS, and let them figure it out. (I've had really good experience in the past where the IRS caught mistakes I made and refunded me money.!) Otherwise I would suggest getting help from a source that knows how to handle this particular situation.

The government gives from one hand and then takes with the other hand.

I'm just happy to get approved and have a monthly income.

Post edited by: poorjane, at: 10/26/2010 06:03 PM


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