Is income averaging still available?

Income averaging for all taxpayers was a way to effectively lower the tax rate on this year’s income by spreading it over a number of prior (lower-income) years to find an average tax rate for it. The general 4-year income averaging rule expired in 1986. Currently, income averaging can only be used by farmers and fishermen for their business income and, in some cases, for lump-sum retirement plan distributions.

Tags: Income averaging

Ask JK

Most Popular

Ask JK

Advanced

Is income averaging still available? 21.5k views
Where do I report income from my corporation on Form 1040? 8.9k views
I paid a convenience fee when I charged my property taxes. Can I deduct this fee? 5.1k views
I sold some municipal bonds at a loss. Can I deduct the loss? 5k views

Featured Books

JK Lasser's New Rules for Estate, Retirement, and Tax Planning, 6th Edition

Stewart H. Welch, III, J. Winston Busby

$24.95

Learn more

View all books Next Book

Tax Glossary

Deductions

Items directly reducing income. Personal deductions such as for mortgage interest, state and local taxes, and charitable contributions are allowed only if deductions are itemized on Schedule A, but deductions such as for alimony, capital losses, moving expenses to a new job location, business losses, student loan interest, and IRA and Keogh deductions are deducted from gross income even if itemized deductions are not claimed.

More terms Next Term