Lump Sum Social Security

[hjltax]

Annoyed.

Doing a 2009 t/r. Client received 1099-SSA for 57K. Included in the 57K is 15K for '08, 10K for '07, 10K for '06.

Under Lump Sum election (pub.915) we are to fill out wrksheets 1, 2 (times 3), and 4. Did it manually and w/ Tax Tools. That's not the issue. On wrksheet 1 (which is the regular SS taxable income worksheet), we use AGI w/out regard to any SS income for line 3.

Worksheets 2 (for the prior year(s) seem to be very similar but line 3 of the worksheet says AGI reported on the return for _______ (insert prior year - say 2008). It does not say w/out regard to any SS income.

Taxpayer had some taxable SS income in 2008 (and now has more due to 2009 1099-SSA)

Pub 915's example does not have SS income in the prior year and is therefore silent on the issue. It is clear from the example that you do not include the 15K (above) on that 2008 AGI line. The question remains whether or not to include the taxable SS income that was on the return as filed.

Any help would be appreciated.

[erchess]

No

I do not think you include the Social Security but rather use the figure from the return.

Does anyone disagree? I have not done one of these in the last three years but before that I averaged two per year.

[oceanlovin'ea]

yes, I agree

You use the figures on the return that was submitted to IRS.

Linda, EA

[erchess]

Look before you leap

It is pointless to do the lump sum calculation unless prior year income was significantly less than current year income without the social security or unless tax rates were lower in prior years. Without that factor there won't be a savings because what you are doing boils down to on the one hand calculating the consequences of taxing the whole lump sum as current year social security and on the other hand calculating the total tax that would have been paid had the monies been received in the years to which they pertain.

[hjltax]

I'm in agreement

Thanks. I'm going with the AGI as filed.