Dependent/Son Earned $19k of back SS

[AZ-Tax]

Dependent/Son received an SSA-1099 with $19K in box 3 & 5 thou I never seen one like this before. Under the "description of amt in Box 3" left side, it has "Attorney fees" & "Benefit payment offset-Treasury". On the bottom it has has 2 lines which states an amt that was paid in 2012 for 2011 and amt pd in 2012 for 2010. Out of the $19K, only $9800 was deposited. My research says the Attorney fees may be a Sch A deduction. Does the Son need to report this? My research says NO but then legal fees would probably not be a Sch A deduction.

[ddoshan]

If his only income was the SS then I don't see how he would have to file a return. As far as legal fees I believe that only any portion or percentage attributable to any taxable income would be potentially deductible.

[tpert]

My concern would be more about support.

Anything spent on the son's behalf is the son's contribution to the son's support.

Even the legal fees are the son's legal fees and thus going to the son's support.

If the funds were not put into savings, I would suggest preparing a support statement to prove that the son did not provide more than half of his own support (perhaps even if the funds were put into savings, I would want this in my records).

[taxea]

I think the IRS should give us more detail on what third party reports are matched. If the only income is SS does the computer know not to spit out a CP2000 letter? If you can get the IRS to answer this question then you will know whether or not to file a return for the son.
The amount of income was probably from having to appeal to the SSA through an atty to proof he qualified for the benefit. Once the SSA aquiested (sic) they gave him back pay that was due. If he filed returrns in the past then amended returns should be done for the prior years.

[ddoshan]

SSA aquiested (sic) they gave him back pay that was due. If he filed returrns in the past then amended returns should be done for the prior years.

I don't believe that is how it would handled.

[DexEA]

I don't believe that is how it would handled.

I agree, if a return needs to filed you can do a lump sum election on the current return, but not go back and amend.

[taxea]

I agree, if a return needs to filed you can do a lump sum election on the current return, but not go back and amend.

If the past pay qualifies to be done that way....however, it could be beneficial to do the amended and I would check this out before automatically inputting the total into the current year.

[DexEA]

If the past pay qualifies to be done that way....however, it could be beneficial to do the amended and I would check this out before automatically inputting the total into the current year.

No, you can't amend past returns for the benefits received in the current year for past years.

[arlo]

Back SS

I did this three years ago on $32,000 pack SS payments. I went back to the years the payment represented
and amended the returns. They ended up paying very little compared to the one year lump sum. I was told at the time
that is the way it should be done. I had no problem with the filings.

[FEDUKE404]

Cannot amend for retroactive Soc Sec payments

I did this three years ago on $32,000 pack SS payments. I went back to the years the payment represented
and amended the returns. They ended up paying very little compared to the one year lump sum. I was told at the time
that is the way it should be done. I had no problem with the filings.

You were lucky. The fact you had "no problem" is totally irrelevant.

As others have noted, you cannot go backwards to claim SS income on a prior year return.

LINK--->>> Prior Payments

There is an option to, more or less, calculate certain limitations on the current year (large amount) income as if it were earned in prior year(s), but that is a side calculation/limitation which involves no amended returns. Most good tax software now has the worksheets built in, but you do need many "numbers" from the tax returns for the other year(s) involved.

FE

[tpert]

I did this three years ago on $32,000 pack SS payments. I went back to the years the payment represented
and amended the returns. They ended up paying very little compared to the one year lump sum. I was told at the time
that is the way it should be done. I had no problem with the filings.

Just because they did not catch your error does not mean it is done properly.

Please see Publication 915 for the correct way to handle this. You compute the taxable amount using the earlier years, but do not amend the earlier years. In fact, the first statement in the section on how to compute this says:

You must include the taxable part of a lump-sum (retroactive) payment of benefits received in 2012 in your 2012 income, even if the payment includes benefits for an earlier year.

[DexEA]

Here is a great example

I agree, if a return needs to filed you can do a lump sum election on the current return, but not go back and amend.

If the past pay qualifies to be done that way....however, it could be beneficial to do the amended and I would check this out before automatically inputting the total into the current year.

If you were to amend rather than do the LSE you would have completed an incorrect return.

If another preparer were to look over the amendments and see this to be incorrect they could assume everything that this particular EA does is incorrect. No different than the HRB preparer, if you review an incorrect return you can't just assume that every preprarer, including the one that made the mistake at HRB is not competent.