Back Social Security Income

[Chief]

I have a new client who received $7133 extra income in his social security for 2005. This was to correct an error made in the past. Box 3 includes 468. paid in 2005 for 2004
456.00 paid in 2005 for 2003; 444.00 paid in 2005 for 2002; 444.00 paid in 2005 for 2002; 432.090 paid in 2005 for 2001; and 5221.00 paid in 2005 for other tax years.

Now here is the situation with all his social secuirty income and all other income none of his income is large enough for any of the social security including the 7133 payment to be taxable income.

Am I correct in assuming that I do nothing in this situation? Thanks

[JoshinNC]

I would say yes

As long as he is cash basis (which all individuals are), he would report the income as received. As long as he does not go over the base I would say that none is taxable.

[Bees Knees]

TTB page 3-3, "Taxable benefits for 2005 can be calculated in two ways. Use the one that produces lower taxable benefits:

1) Use the regular method as if all benefits were for 2005.
2) Use the Lump Sum Election Method."

In your case, since the regular method produces zero taxable benefits, that is the method you would use, even though some of the benefits are for prior years.

[JON]

Has to be in Tax Book

You have a calculation on lump sum from a prior year. As I remember it helps only in instances where income in previous years is lower, but this helps ocassionally when some is taxable when going over the taxable base that would have not be exceed in previous years if received then...

[Chief]

Looking in TaxBook

I am a perfect example of looking in the most importanttax reference book of the year before posting a topic on the Message Board. The TaxBook purchased and placed on your desk is of no value unless it is consulted and used. I hope I dont make this mistake too often. Thanks to all of you who responded.

[BOB W]

Chief

While most of us have purchased TTB and many of us use it all the time, it is very good reading the various threads on different topics. If everyone did what they were supposed to do, this web site would be very boring.

I agree, some question are very basic and should be researched without going to this board. But all threads have their value and I, for one, enjoy reading everyone of them. So keep the questions coming no matter how basic, because sometimes there are additional issues to consider even to basic questions.

Thanks to all contributors..........

[Unregistered]

What is the amount in box 5.