The tax rate is not 85%.
The amount that is taxable can be 85% of the amount above some limits.
Do the worksheets in irs pub 915 for lump sum distributions (including back and retro pay )
that cover more than one year.
the worksheets allow you to split the lump sum into its respective years and figure if any additional tax is due.
http://www.irs.gov/pub/irs-pdf/p915.pdf
.
The amount that is taxable can be 85% of the amount above some limits.
Do the worksheets in irs pub 915 for lump sum distributions (including back and retro pay )
that cover more than one year.
the worksheets allow you to split the lump sum into its respective years and figure if any additional tax is due.
http://www.irs.gov/pub/irs-pdf/p915.pdf
.
