Tax question, I went to H & R block.......?

I received a check from social security disability for back payment of $44,000, The guy at H & R block said I don't owe taxes, do I still have to file and could he be wrong? has anyone else received back payment and not had to file?

If you did NOT receive a form SSA-1099, then there is a chance your payment was really SSI (Supplemental Security Income). SSI is never taxable.

If you DID receive a SSA-1099, then your payment was OASDI or (Old-Age, Survivors, and Disability Insurance). OASDI can be taxable income, but it depends on what other income you have that year and how much OASDI you received. When you receive OASDI for back payment, you have to go back to the year it applies to and see if it should have been taxable income. If it was, then that same amount of taxable income is taxable in the year you actually receive it.

Confused? I don't blame you. Let me explain by example.

In 2007, you receive $44,000 of OASDI. $11,000 for 2005, $15,000 for 2006, and $19,000 for 2007. You go back to your 2005 tax return. You see that of the $11,000, $2,000 is taxable. You go to your 2006 tax return and see that of the $15,000 payment, none is taxable. You look at your 2007 tax return and see that of the $19,000, $1,000 is taxable. Therefore, in 2007, you would write down that you got $44,000 of SS (enter it on line 20a) and you would write down that $3,000 is taxable (enter it on line 20b).

It is difficult to determine how much of your OASDI is taxable. The IRS publishes a document called Publication 554. Look for Worksheet 2-B. This walks you through the calculation. Find publication 554 for all years (2007 is available on the attached link).

Now, even if you find that part of your OASDI is taxable doesn't mean that you have to file a tax return or owe tax. You can thank congress for making things so confusing. Your total taxable income needs to exceed a certain amount in order for you to have to file a return. That amount is your standard deduction plus your (and your spouse's) exemption.

I'm sorry for the confusing answer, but the truth is, this is a confusing topic. If you don't trust your H&R Block person, see someone else for verification. At a minimum, get your H&R Block person to give you in writing the answer. Then, if it turns out you should have filed, you can go back to them and ask for compensation.

Good luck.

I also received backpay for SSD. He is wrong that you don't need to file but he may be right that you don't owe any taxes. The first part of your social security is not taxable based on a formula. It doesn't matter if it is for this year or back pay - it matters when you received the money. Go to IRS.gov and get links to companies that will let you efile your federal return for free like taxactonline.com (that's who I used). They will keep trying to get you to upgrade to a paying service but just decline and use the free service. Also, even if you don't owe any taxes you will probably be eligible for a "stimulus" check for at least $300, maybe more. You can only get your stimulus check if you file a tax return. If you do owe any taxes better to know now and set up a payment plan than have them come after you later! PS-in most states the tax preparers at those services are not licensed or particularly well trained. You can also call the IRS for help (or go to irs.gov). They will answer your questions, help you prepare your return and asking does not trigger an audit (an old urban myth). The worst thing you can do is nothing.

Unless you owe taxes, you are not legally obligated to file. However, it would be a good idea to anyway, in case your numbers and theirs disagree for whatever reason (and as well, no file = no refunds).

I would be going somewhere else to be sure. H&R block is about the worst out there, they screwed our taxes up twice. We now go to an independant tax firm. and it costs less!

Besides the ssd check, what other income did you have?