Amend for SS Lump Sum

[erchess]

A new client prepared his own return for 05. The only error I can find is that he began to receive Social Security because of Disability in 05 and even though some of the money he got in 05 was for 03 and 04, he treated it as if he had received it all for 05 rather than making the Lump Sum Election. His other income for the three years was about the same. His wife had a pension from her 20 years as a teacher and when he became disabled she went back to work, so she brought in a total of about 75K each year.

May he amend 05 for this issue, and how much money is he likely to save?

[taxea]

Amend for SS Lump Sum

If he got it all in 05...he declares it all in 05. If it has a distribution code of 3 in box 7 depending on the rules, none of it may be taxable therefore there wouldn't be any changes to his refund for the year. taxea

[WhiteOleander]

Go to the Pub for Soc. Sec. benefits. There are worksheets to use to see if it would be better to claim the lump sum election or not.

You will just have to do the figuring to see what is beneficial for the client.

[S T]

Lump Sum SSA

See TTB page 3-3 and here is the IRS info link, go to lump sum and then there is an example and the worksheets http://www.irs.gov/publications/p915/ix01.html

If you have CFS Tax tools they have a computerized worksheet to calculate this as well.

Sandy

[Brad Imsdahl]

I think the question was whether or not the taxpayer can amend the 05 return and take the lump sum election, as it was not claimed on the original return.

IRC Section 86(e)(2)(B) says you can make the election per IRS instructions. It does not say the election has to be made on an original return, which if that was the requirement, it would be in the code. The only restriction it gives is that once made, it can only be revoked with the consent of the IRS.