Mark for follow up Question 14 of 75. Which option correctly completes this sent

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Mark for follow up Question 14 of 75. Which option correctly completes this sentence? The the lump-sum social security benefit as if the benefits: correctly completes this sentence? The social security lump-sum election means the O For prior years had been received in those years by amending the prior-year returns O Had been evenly allocated among the reported years O For prior years had been received in those years. O For prior years were received in the current year. Mark for follow up Save / Return Later Summary Next

Explanation / Answer

The answer is the fourth option i.e.The social security lump sum election means the taxpayer elects to treat the lump sum social security benefits as if the benefits for prior years were received in current year.

A lump sum Social Security payment is one that was paid in the current year as back pay for previous years. Depending on their current year’s AGI, this income may be taxable and should be reported on the taxpayer’s Form 1040.

When looking at a taxpayer’s 1099-SSA, box 3 generally shows any amount received for prior years. Box 5 shows the total amount received in the current year and must be reported as income. The lump sum election allows the taxpayer to refigure their taxable lump-sum payment for a previous year. If the amount reduces their taxable benefit for this year, the amount can be deducted from their taxable income.

To determine if the lump-sum election would benefit the taxpayer, access the SSA Lump-Sum Payment Worksheet. From the Main Menu of the Tax Return (Form 1040) select:

The adjusted amount will not carry back automatically. If the adjustment amount calculated is a negative number, from the Social Security Menu select Amount to Adjust the Taxable Social Security Amount. Enter the calculated adjustment amount as a negative number.

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