miorelli (12/09/82)
From: pwa-b!miorelli (Bob Miorelli) Newsgroups: net.taxes Title: Re: Income averaging (Sch. G) Article-I.D.: pwa-b.42 Posted: Fri Dec 3 16:34:54 1982 Received: Fri Dec 3 16:34:54 1982 Income averaging is a bit more complex than we have seen on the net thus far (I work for H & R Block part time and also teach their training course). There are special rules for students depending on how many years you have supported yourself AND the number of years you have not been a student since turning age 21. More special rules for those people with a changed marital status over the 4 base period years. Really interesting for people with 2 or 3 different spouses in 4 years (yes, I've seen it). Anyway, Block has an excellent flowchart that determines if a person is eligable for income averaging (other than the dollar limits). If there is sufficient interest I will post it to the net; however I expect limited interest. Mail me if you're interested in this flowchart (include U.Snail address). In a few days I will decide whether to key it in & post it, or to photocopy it and Snail it to the few interested (the latter easier on my part). One additional point -- income averaging may be used as often as it is advantageous to you. There are people who beleive that it is a once in a lifetime option -- NOT TRUE!!! Also -- be sure to check the tax tables even if you qualify for averaging. There are rare cases where a fluke in the numbers causes the averaged income tax to be >= to the table lookup !! (yup, I've seen this also). Bob Miorelli, Pratt & Whitney Aircraft decvax!harpo!utah-cs!utah-gr!pwa-b!miorelli
miorelli (12/16/82)
Income Averaging (sch G) has minimal instructions on the reverse side of the form. Complete instructions may be found in Publication 506 available from the IRS at no charge. -->BoB Miorelli, Pratt & Whitney Aircraft (also H&R Block) decvax!harpo!utah-cs!utah-gr!pwa-b!miorelli
montoye (02/28/83)
#N:uiucdcs:13200006:000:636
uiucdcs!montoye Feb 27 13:18:00 1983
Subject: tax
Does anyone know about the rules for income averaging for singles.
Specifically, if you register 0 income (as RAs do) some year then
can that year be counted for income averaging. The idea is that if
not then the RAs should, perhaps, get their income taxed for a short
duration (say summer) and make the year eligible for income averaging.
And since the income will be small, the tax will be refunded. So, you
do not loose anything, except that the state tax goes.
I think this is something we RAs should think about now, so that
we are prepared when we go to do jobs, and do not give away extra taxes
than needed.wjl (03/03/83)
Has anyone heard anything else about changing the tax structure to a common percentage based only on income?
miorelli (03/21/83)
Income Averaging for graduate students is really interesting. I've been doing some research on this subject and have found conflicting opinions. Yes, you must support yourself in each of the base period years; however, the tax courts disagree on whether non-taxable graduate student grants count as support by you or not. Two versions of the 1983 Prentice Hall Tax Guide (the big one is about 12" thick) disagree. It appears that different IRS centers are interpreting this differently. What am I trying to say?? Well, if you want to be safe don't do it; however if you are willing to risk an audit and fight the IRS you might save yourself a lot of bucks. GOOD LUCK !!!!!!!!! -->BoB Miorelli, Pratt & Whitney Aircraft (also H & R Block) decvax!harpo!utah-cs!utah-gr!pwa-b!miorelli
smith@umn-cs.UUCP (06/06/83)
#R:uiucdcs:13200006:umn-cs:10500005:000:633 umn-cs!smith Mar 5 12:51:00 1983 To income average, you must have supported yourself for the past 4 years in addition to meeting the increasing income requirement. "Supporting yourself" means paying more that 50% of your own expenses, NOT including money from your parents OR from tax exempt fellowships. I remember seeing a book, perhaps "Tax Guide for Engineers", that gave an example in which someone ultimately saved more money by paying taxes on assistantship income and then income averaging after leaving school. I don't remember what the criteria are; if you're expecting to enter industry rather than teach, you might fall in this category. Rick.
john@hp-pcd.UUCP (john) (02/09/85)
<<< Income averaging only works on rising incomes and does not help if your income suddenly drops. There are other ways that could be used in those situations but they all require preplanning. Many Tax shelters work by pushing todays income into tomorrows tax year so if you do it enough you may eventually find a year where your tax rate is low enough to pull money out of a shelter. I have heard of people who are saving up to go to school use IRA's in the same way. The 10% penalty on top of a 0% tax rate is a lot less than paying in the year that the money is earned. I would not be surprised if the penalty rate were incresed in order to stop this type of thing. John Eaton !hplabs!hp-pcd!john
johnson@hplabsc.UUCP (Mark Scott Johnson) (02/19/85)
> Is there any way that >income averaging could be used, after the fact (perhaps by filing >amended returns for the years in question), to reduce the taxes already >paid and receive refunds, in cases where one's income precipitously >DECREASED (such as by a working spouse stopping working)? There is provision in the tax code for companies to average losses against previous gains, but to the best of my knowledge there is no equivalent provision for individuals. -- Mark Scott Johnson CSnet: Johnson%hplabs@csnet-relay.csnet ARPAnet: Johnson%hplabs@csnet-relay.arpa USENET: {allegra,decvax,Shasta,ucbvax}!hplabs!johnson
dgh@sun.uucp (David Hough) (02/21/85)
In article <2410@hplabsc.UUCP> johnson@hplabsc.UUCP (Mark Scott Johnson) writes: > >There is provision in the tax code for companies to average losses >against previous gains, but to the best of my knowledge there is no >equivalent provision for individuals. >-- >Mark Scott Johnson Net operating losses may be carried back three years by individuals as well as corporations, but the rules are quite complex. Most individuals do not have a net operating loss unless they have an extremely unprofitable business loss on schedule C or or E or F. It's not a matter of averaging at all, merely using this year's loss to reduce previous years' taxable income. There is an IRS publication on net operating losses which explains the calculation in detail. David Hough
ins_alal@jhunix.UUCP (Laurah Limbrick) (02/17/86)
A few questions:
1) I am a student who wishes to use income averaging this year, as I earned
more money than I care to pay taxes on. As I understand it, I must have filed
1040s for the past three years AND not have been claimed as a dependent on my
parents' 1040s. Is there a minimum amount of income one needs to use income
averaging?
2) I filled out an exemption form for withholding last February, not realizing
that I would be earning over the $3300 limit stipulated in the exemption form.
Question: Will I only be taxed on my earnings over the $3300 limit, or will I
have to pay tax on all my earnings? I also understand that the IRS can impose
some kind of penalty and/or fine on me for filing the exemption form when I
exceeded the $3300 limit. Would they understand (:-) :-) :-) ) if I tried
to explain the situation? What does one normally do when this happens? Is
there something I should have done when I realized that I had earned over
$3300?
Thanks for any clarifications!
--
bitnet: ins_alal@jhunix.BITNET arpa: ins_alal%jhunix.BITNET@wiscvm.WISC.EDU
uucp: ...{ihnp4!whuxcc | seismo!umcp-cs | allegra!hopkins} !jhunix!ins_alal
OR {cbosgd | decvax} !decuac!aplvax!aplcen!jhunix!ins_alal
"Are we having FUN yet? Huh, huh, are we, are we, huh?morse@leadsv.UUCP (Terry Morse) (02/19/86)
In article <1911@jhunix.UUCP>, ins_alal@jhunix.UUCP (Laurah Limbrick) writes: > > Is > there something I should have done when I realized that I had earned over > $3300? > In order to prevent the penalty for underpayment, you should have sent in a quarterly estimate payment. I believe it's too late now, but the tax on $3300 is small enough that there will be little or no penalty. Here's another way to beat the tax rap: put as much as you can afford into an IRA. That's your best way to save tax money. -- Terry Morse (408)743-1487 { hplabs!cae780 } | { ihnp4!sun!sunncal } !leadsv!morse
goudreau@dg_rtp.UUCP (Bob Goudreau) (02/22/86)
In article <1911@jhunix.UUCP> ins_alal@jhunix.UUCP (Laurah Limbrick) writes: > >2) I filled out an exemption form for withholding last February, not realizing >that I would be earning over the $3300 limit stipulated in the exemption form. >Question: Will I only be taxed on my earnings over the $3300 limit, or will I >have to pay tax on all my earnings? I also understand that the IRS can impose >some kind of penalty and/or fine on me for filing the exemption form when I >exceeded the $3300 limit. Would they understand (:-) :-) :-) ) if I tried >to explain the situation? What does one normally do when this happens? Is >there something I should have done when I realized that I had earned over >$3300? You will have to pay taxes on all your earnings, like everyone else - minus any allowable deductions and exemptions, of course. However, federal taxes don't even BEGIN until the Adjusted Gross Income hits $3300 (I think that's still the number), unless you have excessive Interest Income. There is a penalty for having too little of your tax withheld, but you can avoid paying this if the tax you owed last year was <= the tax you had withheld this year. You must fill out IRS Form 2210 to avoid the penalty. You should also file a new W-4 form this year to change your withholding status. Bob Goudreau, who went through this mess too.