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IfI cash in a traditional IRA and pay the taxes on it, can I…

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IfI cash in a...

IfI cash in a traditional IRA and pay the taxes on it, can I spread the income amount out over 5 years ..... to show my income decreased annually? If I show the whole amount as income then my medicare part B rate increases for 1 year

Accountant's Assistant: The Accountant will know how to help. Is there anything else the Accountant should be aware of?

No thank you

Submitted: 4 months ago.Category: Tax
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12/14/2017
Tax Professional: Lane, JD, CFP, MBA, CRPS replied 4 months ago
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 13,980
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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Income averaging is a federal tax code provision allowing fishermen, farmers and some retirees to spread their income over a period of years rather than paying a large sum in a single year.

...

It shields fishermen and farmers from the variability of their vocations, allowing years of low income to balance out years of high income.

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For pensioners, it creates flexibility in how they treat lump-sum payments from retirement plans. Income averaging was available to a wider cross-section of taxpayers before the 1986 Tax Reform Act, which narrowed the provision to its current form.

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SO it MAY be that you can (And five years comes into the equation, but it's averaged over 10 years if you qualify).

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People born before 1936 who have been in their tax-deferred retirement plan for at least five years and who take out the entire balance in their plan in a single distribution, may be able to use 10-year income averaging to spread the tax bite over a 10-year span. The IRS would assume the account balance was paid in 10 equal annual installments and set the annual tax liability accordingly.

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Tax Professional: Lane, JD, CFP, MBA, CRPS replied 4 months ago

Please let me know if you have ANY questions at all, before rating me.

If this has helped, and you DON’T have other questions … I'd appreciate a positive rating, using the stars on your screen, and then clicking “submit" – That’s the only way I’ll be credited for the work.

I hope you’ll rate me based on my accuracy and thoroughness (as opposed to any good news/bad news content). Thank you!

..

But again, if you need more on this, or if I've not understood your question correctly, please let me know.

Lane

I hold a law degree (J.D.), with concentration in Tax Law, Estate law & Corporate law, an MBA in finance, a BBA, and CFP & CRPS (Chartered Retirement Plans Specialist) designations, as well - I’ve been providing financial, Social Security/Medicare, estate, corporate, non-profit, and tax advice, to clients on three continents, since 1986.

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Lane
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 13,980
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Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986

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