After a 10+ year battle with Social Security, including escalating appeals, my husband was approved for disability benefits. In addition, our minor son (age 11) also receives a dependent benefit.

As the battle waged on for more than a decade, my son received a substantial lump-sum payment. I am using TurboTax to complete our tax returns. According to the software, my son's return must be filed separately, as gross income (earned and unearned) is in excess of $1,250, and we do not qualify to file form 8814 to include his income on our return.

I then checked the IRS website, specifically Publication 501. As one-half of the amount reported on the SSA-1099 exceeds $25,000, it would appear that he must file an independent return.

My concern is that nearly 90% of the amount listed on the 1099 is for prior tax years; should I only look at the amount that represents 2011 SSDI income when determining whether a return should be filed in his name? Besides the SSDI, he has minimal interest and dividend income from child savings accounts.

I did run through the data entry in TurboTax, noting the amounts received as attributed to previous tax years, and find that there is no tax liability for him. If I do end up filing a federal return, with a zero tax liability, should I also file a state return (we are in New Jersey) with zero liability as well?

Any advice from those "in the know" is greatly appreciated.

Thanks in advance,

Tina