TN 18 (08-12)
RS 02505.020 Determining Total Wages in a Fiscal Taxable Year (TY)
A. Definition of a fiscal taxable year
A fiscal TY is a year that begins on other than January 1.
B. Calculating total earnings for the fiscal TY
Some self-employment beneficiaries may also work for wages and report their total income on a fiscal TY basis. In such cases, calculate the amount of wages earned in the fiscal TY to determine total earnings for earnings test purposes.
When we know the amount of wages earned in each month of the fiscal year, add the sum of the monthly wages to the self-employment income to obtain total earnings for the TY. If we do not know the amount of wages earned in each month, prorate the amount shown on the W-2s for each of the two calendar years in which the fiscal year falls by the number of fiscal year months in each calendar year to obtain total earnings for the fiscal TY.
C. Example for totaling the earnings for the fiscal TY
Mr. Gibbons was self-employed for many years and filed fiscal year tax returns. His fiscal year (FY) was from November 1 through October 31. His current employment shows wages only, and he continues to report his wages to the Internal Revenue Service on a fiscal year basis. His W-2 for 2010 shows $18,000 total wages. He expects to earn $24,000 in calendar year 2011 and $30,000 in calendar year 2012.
His estimated earnings are determined as follows:
FY 2011 (11/1/2010 through 10/31/2011)
2 months of 12 months of $18,000 for 11/2010 through 12/2010
10 months of 12 months of $24,000 for 1/2011 through 10/2011
Estimated earnings for FY 2011 are $23,000. Do not count amounts of less than $1 when determining total yearly earnings for deduction purposes.
FY 2012 (11/1/2011 through 10/31/2012)
2 months of 12 months of $24,000 for 11/2011 through 12/2011
10 months of 12 months of $30,000 for 1/2012 through 10/2012
Estimated earnings for FY 2012 are $29,000.00.