For Most, No More Income Averaging

Q: I am a waitress and have been out of work for over a year due to aggressive cancer treatments. I saw that the law (allowing income averaging) was repealed. I understand how it was beneficial to those who had markedly higher income in a particular year. Is there any sort of option for those who have lost a year of income to average their prior income and make it lower?

— M.R., city undisclosed

A: I’m very sorry to hear about your medical issues. But the answer generally is no.

Lawmakers repealed income averaging many years ago for most taxpayers. But they made some exceptions: People in farming or fishing may still qualify for a form of income averaging. For details, see the instructions for Schedule J (Form 1040).

Q: Congress threw us a curve last year by waiting until December to extend the IRA charitable-transfer law. Since I took my required minimum distribution in October and wrote checks to several charities, I missed out on it. Will that be extended to 2015?

— D.G., Shawnee Mission, Kan.

A: You raise a very good point that has irked numerous other taxpayers.

In December, lawmakers did indeed resurrect the IRA charitable-transfer law for 2014. But that tax break died again at the end of 2014, and nobody knows what, if anything, Congress will do this year. To quote Yogi Berra, it’s déjà vu all over again.

The provision our reader mentioned allowed many taxpayers 70 ½ or older to transfer as much as $100,000 directly from an individual retirement account to qualified charities, tax-free. The transfer counted toward the taxpayer’s required minimum distribution.

Q: What is the standard deduction for 2014 for two seniors filing a joint return and over 65 years of age?

— F.M.L., Farmington, Minn.

A: Based on that information, the answer is $14,800. For tax year 2014, the basic standard deduction for a married couple filing jointly is $12,400 (or $6,200 for singles or for married taxpayers who file separately). But it’s higher for taxpayers who were 65 or older, or blind, as IRS Publication 17 explains.