http://www.irs.gov/publications/p915/ar02.html#d0e244 is online
info covering tax computation for lump sum retroactive benefits.
Call 1-800-829-3676 to order current-year forms, instructions,
and publications and prior-year forms, instructions. You should
receive... within 10 days. Call to order Publication 915 (2004).

Part of what I read online seems pertinent to anyone who may be
involved with SS disability services/payments:
> If the only income you received during 2004 was your social
security ..., your benefits generally are not taxable and you
probably do not have to file a return.
> If you have income in addition to your benefits, you may have to
file a return even if none of your benefits are taxable....
> ...Base amount for an individual? $25,000 if you are single,
head of household, or qualifying widow(er).....
> ...You can use ... worksheet to figure the amount of income to
compare with your base amount. This is a quick way to check
whether some of your benefits may be taxable.....
> Lump-Sum ... You must include the taxable part of a lump-sum
(retroactive) payment of benefits received in 2004 in your 2004
income, even if the payment includes benefits for an earlier year.
(but there are ways to figure this... worksheets, etc)...

From another site, offering to help folks figure out SS stuff, this:
> ...your receipt of benefits for more than one year might make
your "lump sum award" taxable. That's not fair. It's not right. And
there are two ways we can make adjustments:
> You first split the lump sum award by years. The amount for
each year is noted in "Description of Box 3" on the SSA-1099
form you receive. Pull out your old returns, and for each year,
determine how much Social Security benefits, if any, would have
been taxable based on the worksheet calculations. Then add all
the taxable amounts together, and show this number on the
correct line on your current return with the letters "LSE" next to it.
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Sounds as if I can begin to understand some of this, even if I do
end up going to a CPA and paying a fee to have it done right for
sure and not have to fret about my curious math computation! it
is a habit of mine, to do the rough work even when I give in and
go pay H&RBlock or some 'expert' to fudge through it for me. -Zer
(who believes that even folks with piddly money deserve to have
a strategy in how to conserve their pennies -- for as Ben Franklin
said "Watch the pennies and the dollars will watch themselves!")