Q: If I have one year with much higher income, can the taxable income be averaged with years of lower income?
I will be retiring in June, 2017, and will have one month with my monthly pay and my first retirement check. Also, I have a supplemental retirement account that I can receive in a lump sum. Instead of my usual $72,000 salary, in 2018 I will receive $118,000, and in 2019 (and thereafter) about $58,000.
A: If you are asking if you can average the income with the IRS in order to lower your tax liability, the answer is no. You may want to rethink taking your retirement in a lump sum.
A: No, some farm income may be eligible for income averaging. The old law has been gone for insurance will not qualify for medical and a gift tax return may be required (splitting). The information presented herein is for general purposes only. It is not intended for, and may not be construed as legal, tax, or accounting advice, or business solicitation. For specific advice, please consult a tax attorney in person. Good luck. Zaher Fallahi, Business and Tax Attorney, CPA (California).
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