Hi Everyone,

I received my back pay in August 2007 what happens at tax time do we have to pay on the total amount or what?If we do can we have them take out federal taxes monthly so you don't have to pay all at one time.Not sure how this all works first year.

Thanks you,
Mary

You need to get the publication 915 which is used for lump sum payments. Are you doing your own taxes? What you do is go back and figure how much SS income was taxable for the previous yrs. You do each yr seperate, like you figure the taxable income for 2006, 2005 and then the taxable income for 2007. You then add up the taxable amounts from each yr and put them on your 2007 tax return. I hope this helps you understand what you need to do.

Do you mean that you go back and separate what portion of the lump sum was for what year? Do you file an ammendment for those years, then, or can you just put it all on the current year?

(I sure hope I'll have this problem!)

Emily

WHAT AN EXCELLANT POST QUESTION !! This is esp. good at this time of year. I also would like some more info about back taxes and what to do with them. I received my backpay one week after New Years. (so nice they let me struggle through Christmas !! )It is for a total of 13 months which spans from 2006-Nov of 2007. I am going to have someone prepare my taxes this year because I think this will be difficult to do it on the internet myself this year. Another question I have, I just started to receive my SS checks in Nov of 2007 and was in so need of money I didn't have any taxes withheld (plus didn't want to mix them up anymore before they sent me my very FIRST check) so now I want to have taxes withheld so as not to have to pay for them at the end of the year but I do not know how much to have withheld. I am going to ask the person that is going to do my tax return but was just curious about the response I would get from my experienced friends here first. The government FINALLY gives it just to have us give it back later...hmmm ........thanks in advance .......take-care :angel:

Don't forget about the state tax as well. Not all states tax SS but some do.
It may be worth paying someone to do your taxes for the year you get the back sum for. At least you got approved and your income now!

When you receive your 1099 form from SS, it will have the break down for each yr. You can claim all of it in just one yr if you find out your taxable income isn't that high. As far as filing an admended return no you don't fill an admended return. If you're married you go back to the previous yrs and add your husband's income just like you will do for this yr to get the taxable amount. Then you just add the taxable amounts for each yr and put the amount on this yrs return. Also be sure you send in a copy of your 1099 to show that the amount you receive was a lump sum payment. As far as the tax tables from previous yrs, you can go back and retrieve them on the IRS website.

Thanks for replying everyone.One more question.So you can call Social Security and have them start deducting state and federal taxes taken out just like employment?Because I don't want to have to pay at tax time again.

THANKS,
Mary

If you receive a lump sum, you pay the taxes on the total for the year in which you received the payment. They don't go back and split up the taxes for each year. You'll get a 1099 and you have to add it as income for the following year.

Hi Antiquemother,

Do you know for the years ahead can we call Social Security and have them start taking taxes out monthly when your still on S.S. Because I'm not sure.

Thanks,
Mary

I only know about our individual tax situation and I'm not an attorney or accountant, so you should ask someone how receiving SSI or SSDI is going to affect your bottom line money-wise. It gets added into a joint return if you file married joint return, that's all I know.

When I receive my 1099 last yr, it had each yr broken down for me. It showed the amount that I should have received for 2004, 2005 and 2006. You can call SS or go on-line to have them withold what ever amount you want. They do not withold state income tax only federal witholding. Also any attorney's fees they have taken out of your back pay is consider income.

I cut and pasted from the IRS site briefly to get you started. Go to the publication they reference.

6.1 Social Security Income: Back Payments

I received social security benefits this year that were back benefits prior years. Do I amend my returns for prior years? Are the back benefits paid in this year for past years taxable for this year?

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

Generally, you use your current year's income to figure the taxable part of the total benefits received in the current year. However, you may be able to figure the taxable part of a lump-sum payment for an earlier year separately, using your income for the earlier year. You can elect this method if it lowers the taxable portion of your benefits. Refer to Publication 915, Social Security and Equivalent Railroad Retirement Benefits, for a detailed explanation of the election and worksheets. Refer to Tax Topic 423, Social Security and Equivalent Railroad Retirement Benefits.

For monthly withholding of federal taxes going forward, complete IRS Form W-4V (Voluntary Withholding Request). You can choose 7%, 10%, 15%, or 25% to be withheld. The completed form gets mailed to your local Social Security office.