wally@cornell.UUCP (Wally Dietrich) (04/04/84)
[] > > If you take a tax exemption this year, you might not be able to income > > average for the next four years, which can hurt you much more than paying > > taxes now. > > I don't get it. If I take the exemption now, how does that prevent > me from income averaging? If it reduces my current taxable income, it > should make it EASIER to average in the future, no? > > Alan Silverstein In order to income average you have to provide 50% of your own support for the previous four years. That's what makes it hard to income average. Support includes food, housing, and all the things you would expect, plus tuition if you are a student. You can't count scholarships and fellowships as support provided by yourself and I believe the IRS puts tax-exempt TA and RA money in the same category. Wally Dietrich
cas@cvl.UUCP (Cliff Shaffer) (04/05/84)
If you take a tax exemption on TA/RA pay, it is true that you probably will not be able to income average. I realized this a couple of weeks ago, so I sat down and tried to figure out the difference between taking the exemption for four years vs. paying on my RA grant and income averaging. I found that it is better to keep the money (particuarly if you put it in a money market account) then it is to income average. Under the most optimistic of future employment conditions, it is better to income average... but not until the third or fourth year after graduation. So I decided to keep the money - who knows when I may need it? Cliff Shaffer rlgvax!cvl!cas
honey@down.UUCP (code 101) (04/06/84)
an anonymous source close to code 101 reports that there is widespread cheating on this point. if all else fails there's always "oh really, mr. auditor? well, excuuuuuuuse me!" peter honeyman