The underlying concept of this tax form is to adjust for the fact that a lump-sum distribution can push you into a higher tax bracket.
The basic mechanism of adjustment is to take the tax that would apply to 1/10 of the income (a low-bracket amount), and just multiply it by 10. The effect is that you have the full amount taxed at a low-bracket rate, even though the lump sum distribution would otherwise have pushed you into a higher bracket.
The questions at the top of the form track the key tax law requirements for claiming lump sum treatment for a given distribution.
You should answer these questions on the Form 1099-R Worksheet in the section on LUMP-SUM DISTRIBUTIONS following the official form. Your responses the Form 1099-R Worksheet will carry to the boxes at the top of Form 4972.
The text on the face of Form 4972 explains the combinations of responses that are necessary in order to qualify (for example, you must answer "yes" to 1, "no" to 2, and so on).
Data is carried to Form 4972 from your Form(s) 1099-R for which you have selected either the 20% capital gain election or the "Averaging Election" in the portion of the Form 1099-R Worksheet designated as "Lump-Sum Distributions."
Also, we carry data here from the Form 1099-R Worksheet only if the self/spouse indicators match: we carry "self" copies of Form 1099-R to copy 1 of Form 4972 and "spouse" copies to copy 2 of Form 4972.
In the 10-year section of Part III, we compute the tax on line 24 according to the following table:
The tax is: |
Plus |
Of the amount over |
$ 0.00 |
11% |
0 |
$ 130.90 |
12% |
$ 1,190 |
$ 260.50 |
14% |
$ 2,270 |
$ 576.90 |
15% |
$ 4,530 |
$ 900.90 |
16% |
$ 6,690 |
$ 1,297.70 |
18% |
$ 9,170 |
$ 1,706.30 |
20% |
$11,440 |
$ 2,160.30 |
23% |
$13,710 |
$ 2,953.80 |
26% |
$17,160 |
$ 4,441.00 |
30% |
$22,880 |
$ 6,157.00 |
34% |
$28,600 |
$ 8,101.80 |
38% |
$34,320 |
$11,134.20 |
42% |
$42,300 |
$17,388.00 |
48% |
$57,190 |
$31,116.00 |
50% |
$85,790 |