income averaging

Income Averaging

A former method of spreading out one's tax liability by averaging one's income over 10 years. Income averaging was particularly beneficial to farmers and ranchers, as well as members of other professions with significant variations in annual income. Income averaging was eliminated in President Reagan's Tax Reform Act of 1986.

income averaging

A technique for calculating personal income taxes in which an individual with large variations in annual taxable income is allowed to average income over a specified period. Income averaging was eliminated by 1986 tax reform.

income averaging

A tax tool formerly given to all taxpayers and now available for just a few classes,such as farmers and fishermen.It allows taxpayers to average their income over 3 years and pay taxes on the average income,rather than no taxes one year and then high taxes at a high bracket in the next year,for example.(Calculated on Schedule J of IRS Form 1040.)

Income Averaging

A method by which farmers may sometimes reduce tax liability by computing their income tax as if their current farm income had been spread evenly over the preceding three years. The term also is sometimes used when referring to the 10-year averaging method, which is used for computing the tax on a lump-sum distribution from a qualified employer plan. See "10-Year Averaging."
References in periodicals archive ?
The need for income averaging is supported by strong evidence that incomes have become less stable since the 1980s in Canada, as in the United States.
Overall, households in Scotland affected by the condition experience a loss of income averaging PS8158 a year.
Those who had discussed their retirement finances estimated that they will live on a joint annual retirement income averaging nearly PS28,500.
The changes to the income tax averaging rules for farmers recognise that income from primary production can be unpredictable and allows income averaging to reapply ten years after a farmer has chosen to opt out, rather than permanently excluding them from the benefits of averaging.
PEOPLE retiring in 2016 expect an income averaging PS17,700, the third rise in row and PS700 up from 2015, a study found.
Monthly account income averaging $6500, does not include additional income for side work.
Shan added: "There are many disadvantages to properties remaining empty, loss of income averaging over pounds 6,000 per house, according to research, being just one.
The average man who starts drawing a pension during 2010 is set to receive an annual retirement income averaging pounds 12,169, but women who give up work this will receive just pounds 7,424 annually, according to Prudential.
The Case for Income Averaging Under the Permanent Income
Macmillan research has found that among those aged 55 or under, seven out of 10 households suffer a loss in income averaging 50 per cent following a cancer diagnosis.
Latin America was the most profitable retail region with net income averaging 4.
Looked at from a vertical equity perspective, however, I note that income averaging targeted toward lower income earners can be a helpful way to provide relief to workers who have uneven earnings patterns.