Today TaxMama hears from Stephen in Las Vegas, who’s been around , “My daughter worked part time in 2005 and made only $4000. This year, she made $13,000. Years ago, I remember being in the same situation myself, where I had a large increase in income from one year to the next. I remember I was able to income average the two years together to reduce the taxes owed. I can’t seem to locate any Income Averaging form other than Schedule J for Farmers and Fisherman. Is there another form for Income Averaging for taxpayers in my daughter’s situation? Can she still average the income from 2005 and 2006? She is a 19 yr. old college student whom we claim as a dependent.”
~~~~
Dear Stephen,
You have a long memory.
The income averaging form did exist.
I believe it used to be on Schedule G. But it disappeared with the Tax Reform Act of 1986.
So, sorry, your daughter won’t be able to income average.
But the taxes won’t be high. She does still get her standard deduction, even if she doesn’t get her personal exemption.
It’s good to see her earning so much while she’s getting an education. You raised her well.
And remember, you’ll find answers to lots of questions about income averaging and other tax information, free. Where? At TaxMama.com
[Note: If you were subscribed to the e-mailed TaxQuips, you’d be getting other exciting news and tips. Please click on the subscribe link and join us.]To make your comments, please visit TaxMama’s Parlor at TaxTwist.com.
- Ask TaxMama :: Where taxes are fun and answers are free
- TaxTwist.com :: Where TaxQuips will be moving & You can add your comments
File Download (1:36 min / 0.4 MB)
