Who Must Pay 
Estimated Tax(p19)

If you owed additional tax for 2008, you may have to pay estimated tax for 2009.

You must pay estimated tax for 2009 if both of the following apply.

1. You expect to owe at least $1,000 in tax for 2009, after subtracting your withholding and credits.
2. You expect your withholding and credits to be less than the smaller of:
   1. 90% of the tax to be shown on your 2009 tax return, or
   2. 100% of the tax shown on your 2008 tax return. Your 2008 tax return must cover all 12 months.

Note. These percentages may be different if you are an eligible small business, farmer, fisherman, or higher income taxpayer. See Special Rules beginning on page 20.

You may find Figure 2-A on page 20 helpful in determining if you must pay estimated tax.

To figure whether she should pay estimated tax for 2009, Jane, who files as head of household, uses Figure 2-A and the following information.

Expected adjusted gross income (AGI) for 2009	$82,800
AGI for 2008	$73,700
Tax shown on 2008 return	$  9,744
Tax expected to be shown on 2009 return	$11,640
Tax expected to be withheld in 2009	$10,500

Jane's answer to the chart's first question is YES; she expects to owe at least $1,000 for 2009 after subtracting her withholding from her expected tax ($11,640 − $10,500 = $1,140). Her answer to the chart's second question is also YES; she expects her income tax withholding ($10,500) to be at least 90% of the tax to be shown on her 2009 return ($11,640 × 90% = $10,476). Jane does not need to pay estimated tax.

The facts are the same as in Example 1, except that Jane expects only $8,500 tax to be withheld in 2009. Because that is less than $10,476, her answer to the chart's second question is NO.

Jane's answer to the chart's third question is also NO; she does not expect her income tax withholding ($8,500) to be at least 100% of the tax shown on her 2008 return ($9,744). Jane must pay estimated tax for 2009.

The facts are the same as in Example 2, except that the tax shown on Jane's 2008 return was $8,000. Because she expects to have more than $8,000 withheld in 2009 ($8,500), her answer to the chart's third question is YES. Jane does not need to pay estimated tax for 2009.

If you qualify to make joint estimated tax payments, apply the rules discussed here to your joint estimated income.

You and your spouse can qualify to make joint estimated tax payments even if you are not living together.

However, you and your spouse cannot make joint estimated tax payments if:

• You are legally separated under a decree of divorce or separate maintenance,
• You and your spouse have different tax years, or
• Either spouse is a nonresident alien (unless that spouse elected to be treated as a resident alien). See Choosing Resident Alien Status in Publication 519.

If you do not qualify to make joint estimated tax payments, apply these rules to your separate estimated income.

Making joint or separate estimated tax payments will not affect your choice of filing a joint tax return or separate returns for 2009.

If you plan to file a joint return with your spouse for 2009, but you filed separate returns for 2008, your 2008 tax is the total of the tax shown on your separate returns. You filed a separate return if you filed as single, head of household, or married filing separately.

If you plan to file a separate return for 2009, but you filed a joint return for 2008, your 2008 tax is your share of the tax on the joint return. You file a separate return if you file as single, head of household, or married filing separately.

To figure your share of the tax on a joint return, first figure the tax both you and your spouse would have paid had you filed separate returns for 2008 using the same filing status as for 2009. Then multiply the tax on the joint return by the following fraction.

	The tax you would have paid had you filed a separate return
	The total tax you and your spouse would have paid had you filed separate returns

Joe and Heather filed a joint return for 2008 showing taxable income of $48,500 and a tax of $6,476. Of the $48,500 taxable income, $40,100 was Joe's and the rest was Heather's. For 2009, they plan to file married filing separately. Joe figures his share of the tax on the 2008 joint return as follows:

Tax on $40,100 based on separate return		$6,375
Tax on $8,400 based on separate return		863
Total		$7,238
Joe's percentage of total ($6,375 ÷ $7,238)		88%
Joe's share of tax on joint return ($6,476 × 88%)		$5,699

There are special rules for eligible small businesses, farmers, fishermen, and certain higher income taxpayers.

If you have an eligible small business, substitute 90% for 100% in (2b) under General Rule on the previous page.

You have an eligible small business if you satisfy the following.

• You certify that more than 50% of your gross income in 2008 was income from a small business.
• The average number of employees for the 2008 calendar year was less than 500.
• Your AGI for 2008 was less than $500,000 ($250,000 if you are married filing separate returns in 2009).

If at least two-thirds of your gross income for 2008 or 2009 is from farming or fishing, substitute 662/3% for 90% in (2a) under General Rule on the previous page.

Your gross income is all income you receive in the form of money, goods, property, and services that is not exempt from tax. To determine whether two-thirds of your gross income for 2008 was from farming or fishing, use as your gross income the total of the income (not loss) amounts.

On a joint return, you must add your spouse's gross income to your gross income to determine if at least two-thirds of your total gross income is from farming or fishing.

This is income from cultivating the soil or raising agricultural commodities. It includes the following amounts.

• Income from operating a stock, dairy, poultry, bee, fruit, or truck farm.
• Income from a plantation, ranch, nursery, range, orchard, or oyster bed.
• Crop shares for the use of your land.
• Gains from sales of draft, breeding, dairy, or sporting livestock.

For 2008, gross income from farming is the total of the following amounts.

• Schedule F (Form 1040), Profit or Loss From Farming, line 11.
• Form 4835, Farm Rental Income and Expenses, line 7.
• Your share of the gross farming income from a partnership, S corporation, estate or trust, from: Schedule K-1 (Form 1065), Box 14, code B; Schedule K-1 (Form 1120S), Box 17, code T; or Schedule K-1 (Form 1041), Box 14, code F.
• Your gains from sales of draft, breeding, dairy, or sporting livestock shown on Form 4797, Sales of Business Property.

Wages you receive as a farm employee and wages you receive from a farm corporation are not gross income from farming.

This is income from catching, taking, harvesting, cultivating, or farming any kind of fish, shellfish (for example, clams and mussels), crustaceans (for example, lobsters, crabs, and shrimp), sponges, seaweeds, or other aquatic forms of animal and vegetable life.

Gross income from fishing includes the following amounts.

• Schedule C (Form 1040), Profit or Loss From Business, line 7.
• Income for services as an officer or crew member of a vessel while the vessel is engaged in fishing.
• Your share of the gross fishing income from a partnership, S corporation, estate or trust, from: Schedule K-1 (Form 1065), Box 14, code B; Schedule K-1 (Form 1120S), Box 17, code T; or Schedule K-1 (Form 1041), Box 14, code F.
• Certain interest and punitive damage awards received in connection with the Exxon Valdez litigation.
• Income for services normally performed in connection with fishing.

Services normally performed in connection with fishing include:

• Shore service as an officer or crew member of a vessel engaged in fishing, and
• Services that are necessary for the immediate preservation of the catch, such as cleaning, icing, and packing the catch.

If your AGI for 2008 was more than $150,000 ($75,000 if your filing status for 2009 is married filing a separate return), substitute 110% for 100% in (2b) under General Rule on page 19.

For 2008, AGI is the amount shown on Form 1040, line 37; Form 1040A, line 21; and Form 1040EZ, line 4.

Resident and nonresident aliens also may have to pay estimated tax. Resident aliens should follow the rules in this publication, unless noted otherwise. Nonresident aliens should get Form 1040-ES (NR), U.S. Estimated Tax for Nonresident Alien Individuals.

You are an alien if you are not a citizen or national of the United States. You are a resident alien if you either have a green card or meet the substantial presence test.

See Publication 519 for more information about Form 1040-ES (NR) and withholding (chapter 8) and the substantial presence test (chapter 1).

Estates and trusts also must pay estimated tax. However, estates (and certain grantor trusts that receive the residue of the decedent's estate under the decedent's will) are exempt from paying estimated tax for the first two years after the decedent's death.

Estates and trusts must use Form 1041-ES, Estimated Income Tax for Estates and Trusts, to figure and pay estimated tax.