Discussion:Income Averaging
From TaxAlmanac, A Free Online Resource for Tax Professionals
Note: You are using this website at your own risk, subject to our Disclaimer and Website Use and Contribution Terms.
From TaxAlmanac
Discussion Forum Index --> Tax Questions --> Income Averaging
| 28 March 2007 | |
| At one time I know that any taxpayer could use income averaging if their current tax year was a large increase over the past 3 to 5 years. Now I'm finding income averaging seems to apply only to farm income. Is this correct? Can only farmers now use income averaging? I'm asking because a possible client has a large increase in income due to gambling winnings in 2006. | |
| 28 March 2007 | |
| Thanks Kevin for your help. I've been out of the tax prep game for a few years due to illness (cancer). | |
| March 28, 2007 | |
| I was thinking of the last year I had to fill out those forms, which was in 1987 for 1986. | |
| 28 March 2007 | |
| Again, thanks to everyone for your help. And, yes, Kevin I'm doing ok. I've been in remission for 2+ years now. But (as I half-jokingly say) I had to do cancer twice to get it right. | |
| 3 April 2007 | |
| Do you have to do anything with the prior years returns if you do elect to use farm income averaging on schedule J for the current year? | |
| April 3, 2007 | |
| Yes, you have to fill in the blanks on the Sch J worksheet for each prior year. | |
| 3 April 2007 | |
| You don't have to amended the prior returns or
anything like that. Each year stands separately as to qualifying or benefiting from the farmer income averaging. | |
| 3 April 2007 | |
| So you don't amend the returns - you're just putting the income on the other 3 years to see what their tax bill would have been in those years in order to come up with a reduced tax bill for the current year? | |
| April 3, 2007 | |
| Yes, you just fill in the info for the prior three years on the Sch J worksheet. | |
| April 12, 2007 | |
| Does any one how you handle this on SCH J. In 2003 client file MFS and was single in 2004-2005-2006. Do you have to include ex-spouse income for 2003. | |
| April 12, 2007 | |
| No, I'm sure you don't. Just show the filing status for each prior year. | |
To join in on this discussion, you must first
log in.
