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    Tricky1549's Avatar
    Tricky1549 Posts: 126, Reputation: 2
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    #1

    Jan 2, 2013, 01:17 PM
    Averaging income
    I just retired and had received a terminal leave payout of $105,000.00 of which I put in 30,000 in a non-taxable 457 plan, 46,000 in my hand, 19,000 in fed tax and 10,000 in NJ state tax. I will be getting another 105,000 in January again but not able to place 30,000 in tax defered plan. Will I be able to average the income over the next few years? A friend told me it was 10 years. Thanks for all answers. Happy New Year to all.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
     
    #2

    Jan 2, 2013, 03:11 PM
    Sorry, but income averaging is no longer available to most taxpayers.
    Tricky1549's Avatar
    Tricky1549 Posts: 126, Reputation: 2
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    #3

    Jan 2, 2013, 03:29 PM
    Quote Originally Posted by AtlantaTaxExpert View Post
    Sorry, but income averaging is no longer available to most taxpayers.
    Is that because of the "New tax law" or pre-Obama?
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
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    #4

    Jan 2, 2013, 04:59 PM
    WAY pre-Obama, about 1988 is the last year income averaging was allowed!
    MLSNC's Avatar
    MLSNC Posts: 158, Reputation: 17
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    #5

    Jan 2, 2013, 08:45 PM
    Income averaging has been gone for some time except for an averaging convention for farmers/fishermen and the 10 year averaging on lump-sum distributions. You should review Form 4972 and the instructions to determine if you qualify for the lump-sum averaging.
    Tricky1549's Avatar
    Tricky1549 Posts: 126, Reputation: 2
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    #6

    Jan 3, 2013, 03:42 AM
    Thanks for the answer
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
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    #7

    Jan 3, 2013, 06:31 AM
    Glad to help!
    ebaines's Avatar
    ebaines Posts: 12,131, Reputation: 1307
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    #8

    Jan 3, 2013, 09:30 AM
    I doubt that Form 4972 applies in this case, for several reasons:

    1. It can be used only if the amount you received is a distribution of the entire balance of your retirement plan.
    2. It cannot be used if any portion of the distribution was rolled to another tax-deffered plan.
    3. You must also be at least 75 years of age (born before Jan 2 1936).

    You can obtain the form and review it here: www.irs.gov/pub/irs-pdf/f4972.pdf

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