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 ?
"Through these 17 developments, we are delivering on the promise of putting large public sites to greater use, advancing innovative new initiatives like Neighborhood Pillars and the Mitchell-Lama Reinvestment program, and leveraging new federal policies such as income averaging,
Ninety-eight tax returns filed from the Northbrook post office boxes reported income averaging nearly $5 million, which would result in $246,987 of state income taxes at the current rate.
The lifting of the restriction under Income Averaging whereby farmers with additional self-employed income (for either themselves or their spouses) could not participate.
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.
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 4.4 percent of sales.