Instructions for Schedule J (Form 1040), Income Averaging for Farmers and Fishermen

Instructions for Schedule J (Form 1040)

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If line 11 is zero or less, enter -0- on line 12. Otherwise, figure the tax on the amount on line 11 using:

The 2010 Tax Rate Schedules below,
The 2010 Qualified Dividends and Capital Gain Tax Worksheet, later,
The 2010 Schedule D Tax Worksheet in the 2010 Schedule D instructions (but use the 2010 Tax Rate Schedules below when figuring the tax on the Schedule D Tax Worksheet, lines 34 and 36), or
The 2010 Foreign Earned Income Tax Worksheet, later.

If your elected farm income includes net capital gain, you must use the 2010 Schedule D Tax Worksheet to figure the tax on the amount on line 11. However, if you filed Form 2555 or 2555-EZ for 2010, you must first complete the 2010 Foreign Earned Income Tax Worksheet, and then use the 2010 Schedule D Tax Worksheet to figure the tax on the amount on line 3 of that worksheet.

When completing the Schedule D Tax Worksheet, you must allocate 1/3 of the amount on line 2b (and 1/3 of the amount on line 2c, if any) to 2010. If for 2010 you had a capital loss that resulted in a capital loss carryover to 2011, do not reduce the elected farm income allocated to 2010 by any part of the carryover.

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2010 Tax Rate Schedules—Line 12

Schedule X—Use if your 2010 filing status was Single or you checked filing status box 1 or 2 on Form 1040NR					Schedule Y-2—Use if your 2010 filing status was Married filing separately or you checked filing status box 3, 4, or 5 on Form 1040NR
If Schedule J, line 11, is: Over—	But not over—	Enter on Schedule J, line 12		of the amount over—	If Schedule J, line 11, is: Over—	But not over—	Enter on Schedule J, line 12		of the amount over—
$0 8,375 34,000 82,400 171,850 373,650	$8,375 34,000 82,400 171,850 373,650 .............	........... $837.50 + 4,681.25 + 16,781.25+ 41,827.25+ 108,421.25+	10% 15% 25% 28% 33% 35%	$0 8,375 34,000 82,400 171,850 373,650	$0 8,375 34,000 68,650 104,625 186,825	$8,375 34,000 68,650 104,625 186,825 .............	........... $837.50 + 4,681.25 + 13,343.75+ 23,416.75+ 50,542.75+	10% 15% 25% 28% 33% 35%	$0 8,375 34,000 68,650 104,625 186,825
Schedule Y-1—Use if your 2010 filing status was Married filing jointly or Qualifying widow(er) or you checked filing status box 6 on Form 1040NR					Schedule Z—Use if your 2010 filing status was Head of household
If Schedule J, line 11, is: Over—	But not over—	Enter on Schedule J, line 12		of the amount over—	If Schedule J, line 11, is: Over—	But not over—	Enter on Schedule J, line 12		of the amount over—
$0 16,750 68,000 137,300 209,250 373,650	$16,750 68,000 137,300 209,250 373,650 ............	........... $1,675.00+ 9,362.50 + 26,687.50+ 46,833.50+ 101,085.50+	10% 15% 25% 28% 33% 35%	$0 16,750 68,000 137,300 209,250 373,650	$0 11,950 45,550 117,650 190,550 373,650	$11,950 45,550 117,650 190,550 373,650 .............	........... $1,195.00 + 6,235.00 + 24,260.00+ 44,672.00+ 105,095.00+	10% 15% 25% 28% 33% 35%	$0 11,950 45,550 117,650 190,550 373,650

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2010 Qualified Dividends and Capital Gain Tax Worksheet—Line 12

Use this worksheet only if both of the following apply. Your elected farm income on your 2012 Schedule J, line 2a, does not include any net capital gain. You (a) entered qualified dividends on your 2010 Form 1040, line 9b (or your 2010 Form 1040A, line 9b, or 2010 Form 1040NR, line 10b); (b) entered capital gain distributions directly on your 2010 Form 1040, line 13 (or your 2010 Form 1040A, line 10, or 2010 Form 1040NR, line 14) and were not required to file Schedule D; or (c) filed Schedule D in 2010 and you answered "Yes" on lines 17 and 20 of that Schedule D.
1.	Amount from your 2012 Schedule J, line 11. If for 2010 you filed Form 2555 or 2555-EZ, enter the amount from line 3 of the 2010 Foreign Earned Income Tax Worksheet			1.
2.	Amount from your 2010 Form 1040, line 9b* (or your 2010 Form 1040A, line 9b, or 2010 Form 1040NR, line 10b)		2.
3.	Did you file Schedule D in 2010?*
	Yes.	Enter the smaller of line 15 or 16 of your 2010 Schedule D, but do not enter less than -0-	3.
	No.	Enter the amount from your 2010 Form 1040, line 13 (or your 2010 Form 1040A, line 10, or 2010 Form 1040NR, line 14)
4.	Add lines 2 and 3		4.
5.	Amount, if any, from your 2010 Form 4952, line 4g		5.
6.	Subtract line 5 from line 4. If zero or less, enter -0-			6.
7.	Subtract line 6 from line 1. If zero or less, enter -0-			7.
8.	Enter one of the following three amounts depending on your filing status:
	$34,000 if single or married filing separately, or if you checked filing status box 1, 2, 3, 4, or 5 on Form 1040NR;			8.
	$68,000 if married filing jointly or qualifying widow(er) or if you checked filing status box 6 on Form 1040NR; $45,550 if head of household.
9.	Enter the smaller of line 1 or line 8			9.
10.	Enter the smaller of line 7 or line 9			10.
11.	Subtract line 10 from line 9. This amount is taxed at 0%			11.
12.	Enter the smaller of line 1 or line 6			12.
13.	Enter the amount from line 11			13.
14.	Subtract line 13 from line 12			14.
15.	Multiply line 14 by 15% (.15)				15.
16.	Figure the tax on the amount on line 7. Use the 2010 Tax Rate Schedules				16.
17.	Add lines 15 and 16				17.
18.	Figure the tax on the amount on line 1. Use the 2010 Tax Rate Schedules				18.
19.	Tax. Enter the smaller of line 17 or line 18 here and on your 2012 Schedule J, line 12. If for 2010 you filed Form 2555 or 2555-EZ, do not enter this amount on Schedule J, line 12. Instead, enter it on line 4 of the 2010 Foreign Earned Income Tax Worksheet				19.
*If for 2010 you filed Form 2555 or 2555-EZ, see the footnote in the 2010 Foreign Earned Income Tax Worksheet before completing this line.

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2010 Foreign Earned Income Tax Worksheet—Line 12

Use this worksheet if you claimed the foreign earned income exclusion or housing exclusion on your 2010 Form 1040 using Form 2555 or 2555-EZ. However, if Schedule J, line 11, is zero or less do not complete this worksheet.
1.	Enter the amount from your 2012 Schedule J, line 11	1.
2.	Enter the amount from your (and your spouse's, if filing jointly) 2010 Form 2555, lines 45 and 50, or Form 2555-EZ, line 18	2.
3.	Add lines 1 and 2	3.
4.	Tax on the amount on line 3. Use the 2010 Tax Rate Schedules, the 2010 Qualified Dividends and Capital Gain Tax Worksheet,* or the 2010 Schedule D Tax Worksheet in the 2010 Schedule D instructions,* whichever applies.	4.
5.	Tax on the amount on line 2. Use the 2010 Tax Rate Schedules.	5.
6.	Subtract line 5 from line 4. Enter the result. If zero or less, enter -0-. Also include this amount on your 2012 Schedule J, line 12	6.
*Enter the amount from line 3 above on line 1 of the 2010 Qualified Dividends and Capital Gain Tax Worksheet or the 2010 Schedule D Tax Worksheet if you use either of those worksheets to figure the tax on line 4 above. Complete the rest of that worksheet through line 6 (line 10 if you use the Schedule D Tax Worksheet). Next, you must determine if you had a capital gain excess. To find out if you had a capital gain excess, subtract the amount from your 2012 Schedule J, line 11, from line 6 of your 2010 Qualified Dividends and Capital Gain Tax Worksheet (line 10 of your 2010 Schedule D Tax Worksheet). If the result is more than zero, that amount is your capital gain excess.
If you did not have a capital gain excess, complete the rest of either of those worksheets according to the worksheet's instructions. Then complete lines 5 and 6 above.
If you had a capital gain excess, complete a second 2010 Qualified Dividends and Capital Gain Tax Worksheet or 2010 Schedule D Tax Worksheet (whichever applies) as instructed above but in its entirety and with the following additional modifications. Then complete lines 5 and 6 above. These modifications are to be made only for purposes of filling out the 2010 Foreign Earned Income Tax Worksheet above.
1. Reduce (but not below zero) the amount you would otherwise enter on line 3 of your 2010 Qualified Dividends and Capital Gain Tax Worksheet or line 9 of your 2010 Schedule D Tax Worksheet by your capital gain excess.
2. Reduce (but not below zero) the amount you would otherwise enter on line 2 of your 2010 Qualified Dividends and Capital Gain Tax Worksheet or line 6 of your 2010 Schedule D Tax Worksheet by any of your capital gain excess not used in (1) above.
3. Reduce (but not below zero) the amount on your 2010 Schedule D (Form 1040), line 18, by your capital gain excess.
4. Include your capital gain excess as a loss on line 16 of your 2010 Unrecaptured Section 1250 Gain Worksheet in the 2010 Instructions for Schedule D (Form 1040).

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