You Make the Call - June 11, 2026

Question: In 2026, Remi receives a lump sum Social Security payment that includes benefits for 2026 and those that relate to an earlier year. How should Remi report the payment in the best way to save taxes? 

Answer: First, Remi should calculate the taxable amount of Social Security benefits using the regular method. Under this method, Remi treats all Social Security benefits received in 2026, including the lump sum amount from the earlier year. 

Next, Remi should calculate the taxable amount using the lump sum election. Under this method, Remi refigures the taxable portion of all benefits for the earlier year, including the lump sum amount attributable to that year, using Remi’s income from that earlier year. Remi then subtracts any taxable benefits previously reported for that year. The remainder is added to the taxable portion of Remi’s 2026 benefits, figured without the lump sum amount attributable to the earlier year.  

Then, Remi should compare the regular method with the lump sum election method. If the lump sum election lowers the taxable amount of his Social Security benefits, Remi should use that method on his 2026 Form 1040, U.S. Individual Income Tax Return, or 1040-SR, U.S. Income Tax Return for Seniors, by checking the box on Line 6c. He does not amend the earlier-year return and should keep the calculation with his tax records.