If you have received a lump-sum Social Security benefit covering several prior years, you may be wondering, “How can I report this to the IRS?”

Generally, you use your current-year income to figure the taxable part of the total benefits received in that 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 your taxable benefits. Under the lump-sum election method, you refigure the taxable part of all your benefits for the earlier year (including the lump-sum payment) using that year’s income. Then you subtract any taxable benefits for that year that you previously reported. The remainder is the taxable part of the lump-sum payment. Add it to the taxable part of your benefits for the current year (figured without the lump-sum payment for the earlier year). See IRS Publication 915 for work sheets and more information on this method.

“I started receiving Social Security this year. My only other income is from my company retirement and some interest. I pay federal taxes on this income. Will I have to pay any taxes on the income I receive from Social Security?

Some of your Social Security benefits may be taxed. It all depends on your other income and filing status. Social Security only becomes taxable when half of your benefits are added to other gross income and that total exceeds an amount determined by your filing status. For example, the amount for married filing jointly is $32,000, and for single taxpayers it is $25,000. Use the Social Security work sheet in your tax booklet to calculate the taxable amount, if any.