Hi @DianeW777 - I appreciate your help very much.
It was just a one time death benefit payout of about $1000 - why would there be any kind of 10-year tax option on such a small, one-time distribution?
I still don't know which option does apply in my situation, the "Should I use" link you show is saying "if YOU were born..." because SHE was born in 1935, not me.
That would lead me to believe that I would just report the entire distribution as ordinary income and I would not use Form 4972, does that sound right? Then how do I do that?
When I am in TT at the "Lump Sum Distribution Tax" screen - which displays differently when I switch options:
The tax on the lump distribution is $50 and the total tax amount is $30k (which I do not understand at all, since it was just a $1000 payout)
When I choose "Try a Different Option" the LSDT screen shows:
We calculated the tax by not using the special averaging method on my lump sum distribution and the total tax is $32k.
Again, this doesn't make any sense to me at all - where are these $30k + numbers coming from on a one-time $1k payment? (If I don't need to understand this aspect, please just say so, thanks!)
But more importantly, which of the 2 methods do I use on TT? NOT using the special averaging method or the "other" method?
If it's my choice then I'd say I'd like to report it as ordinary income this year and not deal with it in future at all. And from these 2 options on the LSDT screens, I cannot determine which one is the Form 4972 option.
Sorry but I've been using TT for umpteen years and have never come across this and it's baffling me. Thank you so very much.
