My wife recently completed her PhD. At her school, when grad students advance to candidacy, they get a raise. This should have kicked in three years ago (before we were married), but due to a series of administrative mistakes, this raise was not paid until this year. All of it was paid at once (about $3600).
Together, we have a higher marginal tax rate than she did before we were married. Filing separate returns doesn't seem to be a good option for us.
Is it possible to count this income in the years it was earned? If it's possible, how would we report that and what documentation would we need?
I have found IRS publications 957 (Reporting Back Pay and Special Wage Payments to the Social Security Administration) and 15-A (Employer's Supplemental Tax Code). It sounds like wages are supposed to be reported in the year paid, not the year earned. I'd be glad if anyone knows a way to adjust for this.