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previous page Previous Page: Publication 505 - Tax Withholding and Estimated Tax - When To Pay Estimated Tax
next page Next Page: Publication 505 - Tax Withholding and Estimated Tax - How To Pay Estimated Tax
 Use previous pagenext page to find additional occurrences of topic items.Index for this Publication
taxmap/pubs/p505-014.htm#en_us_publink10007394

How To Figure 
Each Payment(p25)


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After you have figured your total estimated tax, figure how much you must pay by the due date of each payment period. You should pay enough by each due date to avoid a penalty for that period. If you do not pay enough during any payment period, you may be charged a penalty even if you are due a refund when you file your tax return. The penalty is discussed in chapter 4.
taxmap/pubs/p505-014.htm#en_us_publink10007395

Regular Installment Method(p25)


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If your first estimated tax payment is due April 15, 2009, you can figure your required payment for each period by dividing your annual estimated tax due (line 16a of the 2009 Estimated Tax Worksheet) by 4. Enter this amount on line 17. However, use this method only if your income is basically the same throughout the year.
taxmap/pubs/p505-014.htm#en_us_publink10007396

Household employers.(p25)


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Reduce your required payment for each period by the amount of advance EIC payments you paid during the period.
taxmap/pubs/p505-014.htm#en_us_publink10007397

Change in estimated tax.(p25)


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After you make an estimated tax payment, changes in your income, adjustments, deductions, credits, or exemptions may make it necessary for you to refigure your estimated tax. Pay the unpaid balance of your amended estimated tax by the next payment due date after the change or in installments by that date and the due dates for the remaining payment periods.
If you do not receive your income evenly throughout the year, your required estimated tax payments may not be the same for each period. See Annualized Income Installment Method on this page.
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Amended estimated tax. If you refigure your estimated tax during the year, or if your first estimated tax payment is due after April 15, 2009, figure your required payment for each remaining payment period using Worksheet 2-16 on page 48.
taxmap/pubs/p505-014.htm#en_us_publink10007399

Example.(p25)

Early in 2009, Mira Roberts figures that her estimated tax due is $1,800. She makes estimated tax payments on April 15 and June 15 of $450 each ($1,800 ÷ 4).
On July 10, she sells investment property at a gain. Her refigured estimated tax is $4,100. Her required estimated tax payment for the third payment period is $2,175, as shown in her filled-in Worksheet 2-16 on this page.
If Mira's estimated tax does not change again, her required estimated tax payment for the fourth payment period will be $1,025. taxmap/pubs/p505-014.htm#w15008e08

Worksheet 2-16. Amended Estimated Tax Worksheet—Illustrated

       
1.Amended total estimated tax due1.$4,100 
2.Multiply line 1 by:    
 50% (.50) if next payment is due June 15, 2009    
 75% (.75) if next payment is due September 15, 2009    
 100% (1.00) if next payment is due January 15, 20102.3,075   
3.Estimated tax payments for all previous periods3.900   
4.Next required payment: Subtract line 3 from line 2 and enter the result (but not less than zero) here and on your payment voucher for your next required payment 4.$2,175   
 Note. If the payment on line 4 is due January 15, 2010, stop here. Otherwise, go to line 5.    
5.Add lines 3 and 45.3,075 
6.Subtract line 5 from line 1 and enter the result (but not less than zero)6.1,025 
7.Each following required payment: If the payment on line 4 is due June 15, 2009, enter one-half of the amount on line 6 here and on the payment vouchers for your payments due September 15, 2009, and January 15, 2010. If the amount on line 4 is due September 15, 2009, enter the full amount on line 6 here and on the payment voucher for your payment due January 15, 2010 7.$1,025 
taxmap/pubs/p505-014.htm#en_us_publink10007400

Underpayment penalty.(p25)
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If your estimated tax payment for a previous period is less than one-fourth of your amended estimated tax, you may be charged a penalty for underpayment of estimated tax for that period when you file your tax return. See chapter 4 for more information.
taxmap/pubs/p505-014.htm#en_us_publink10007401

Annualized Income Installment Method(p25)


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Annualized Income Installment Method

If you do not receive your income evenly throughout the year (for example, your income from a repair shop you operate is much larger in the summer than it is during the rest of the year), your required estimated tax payment for one or more periods may be less than the amount figured using the regular installment method.
The annualized income installment method annualizes your tax at the end of each period based on a reasonable estimate of your income, deductions, and other items relating to events that occurred from the beginning of the tax year through the end of the period. To see whether you can pay less for any period, complete the 2009 Annualized Estimated Tax Worksheet (Worksheet 2-10) beginning on page 44.
EIC
You first must complete the 2009 Estimated Tax Worksheet through line 16b. (See page 35 for a blank worksheet.)
Use the result you figure on line 28 of the 2009 Annualized Estimated Tax Worksheet to make your estimated tax payments and complete your payment vouchers.
See Example 2, beginning on page 30, to see how the worksheet is completed.
Note.If you use the annualized income installment method to figure your estimated tax payments, you must file Form 2210 with your 2009 tax return. See Annualized Income Installment Method (Schedule AI) in chapter 4 for more information.
taxmap/pubs/p505-014.htm#en_us_publink10007404

Instructions for the 2009 Annualized Estimated Tax Worksheet (Worksheet 2-10)(p25)


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Instructions for the 2009 Annualized Estimated Tax Worksheet (Worksheet 2-10)

Deposit
Use Figure 2-C beginning on page 27 to help you follow these instructions. Another worksheet is available for your use on pages 44 and 45.
The purpose of this worksheet is to determine your estimated tax liability as your income accumulates throughout the year, rather than dividing your entire year's estimated tax liability by four as if your income was earned equally throughout the year. The top of the worksheet (see page 27) shows the dates for each payment period. The periods build; that is, each period includes all previous periods. After the end of each payment period, complete the corresponding worksheet column to figure the payment due for that period.
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taxmap/pubs/p505-014.htm#en_us_publink10007407

Line 1.(p25)


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Enter your AGI for the period. This is your gross income, including your share of partnership or S corporation income or loss, for the period, minus your adjustments to income for that period. See Expected AGI—Line 1 on page 21.
taxmap/pubs/p505-014.htm#en_us_publink10007408

Self-employment income.(p25)
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If you had self-employment income, first complete Section B of this worksheet. Use the amounts on line 39 when figuring the AGI to enter in each column of Section A, line 1.
taxmap/pubs/p505-014.htm#en_us_publink10007409

Line 4.(p25)


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Be sure to consider all deduction limits figured on Schedule A (Form 1040), such as reducing your medical expenses by 7.5% of your AGI, or reducing certain miscellaneous deductions by 2% of your AGI. Figure your deduction limits using your expected AGI in the corresponding column of line 1 (2009 Annualized Estimated Tax Worksheet (Worksheet 2-10)).
taxmap/pubs/p505-014.htm#en_us_publink10007410

Line 6.(p25)


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Multiply line 4 by line 5 and enter the result on line 6, unless line 3 is more than $166,800 ($83,400 if married filing separately). In that case, use Worksheet 2-11 on page 45 to figure the amount to enter on line 6. Complete Worksheet 2-11 for each period, as necessary.
taxmap/pubs/p505-014.htm#en_us_publink10007411

Line 7.(p25)


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If you will not itemize your deductions, use Worksheet 2-3 (see page 38) to figure your standard deduction.
taxmap/pubs/p505-014.htm#en_us_publink10007412

Line 10.(p26)


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Multiply $3,650 by your total expected exemptions and enter the result on line 10, unless line 3 is more than the amount shown below for your filing status.
Single$166,800
Married filing jointly or
qualifying widow(er)
$250,200
Married filing separately$125,100
Head of household$208,500
In that case, use Worksheet 2-12 on page 46 to figure the amount to enter on line 10. However, if in 2009 you provide housing to individuals displaced by a Midwestern disaster, see Taxpayers housing individuals displaced by a Midwestern disaster on page 22. Then complete Worksheet 2-6 on page 40 before entering an amount on line 10 of your 2009 Annualized Estimated Tax Worksheet (Worksheet 2-10).
taxmap/pubs/p505-014.htm#en_us_publink10007413

Line 12.(p26)


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Generally, you will use the 2009 Tax Rate Schedules on page 40 or in the instructions to Form 1040-ES to figure the tax on your annualized income. However, see below for situations where you must use a different method to compute your estimated tax.
taxmap/pubs/p505-014.htm#en_us_publink10007414

Tax on child's investment income.(p26)
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You must use a special method to figure tax on the income of the following children who have more than $1,900 of investment income.
  1. Children under age 18 at the end of 2009.
  2. The following children if their earned income is not more than half their support.
    1. Children age 18 at the end of 2009.
    2. Children who are full-time students over age 18 and under age 24 at the end of 2009.
See Publication 929.
taxmap/pubs/p505-014.htm#en_us_publink10007415

Tax on net capital gain.(p26)
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The regular income tax rates for individuals do not apply to a net capital gain. Instead, your net capital gain is taxed at a lower maximum rate.
The term "net capital gain" means the amount by which your net long-term capital gain for the year is more than your net short-term capital loss.
taxmap/pubs/p505-014.htm#en_us_publink10007416

Tax on qualified dividends.(p26)
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Generally, the maximum tax rate for qualified dividends is 15% (0% for people whose other income is taxed at the 10% or 15% rate).
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Tax on capital gain and qualified dividends. If the amount on line 1 includes a net capital gain or qualified dividends, use Worksheet 2-13 on page 47 to figure the amount to enter on line 12.
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Tax if excluding foreign earned income or excluding or deducting foreign housing. If you expect to claim the foreign earned income exclusion or the housing exclusion or deduction on Form 2555 or Form 2555-EZ, use Worksheet 2-14 on page 48 to figure the amount to enter on line 12.
taxmap/pubs/p505-014.htm#en_us_publink10007419

Line 13.(p26)


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Enter your self-employment tax for the period from Section B, line 37.
taxmap/pubs/p505-014.htm#en_us_publink10007420

Line 14.(p26)


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Add your expected other taxes.
Other taxes include:
  1. Additional tax on early distributions from:
    1. An IRA or other qualified retirement plan,
    2. A tax-sheltered annuity, or
    3. A modified endowment contract entered into after June 20, 1988;
  2. Advance earned income credit payments;
  3. Household employment taxes (before subtracting advance EIC payments made to your employee(s)) if:
    1. You will have federal income tax withheld from wages, pensions, annuities, gambling winnings, or other income, or
    2. You would be required to make estimated tax payments even if you did not include household employment taxes when figuring your estimated tax; and
  4. Amounts written in on Form 1040 on the line for "total tax" (line 61 on the 2008 Form 1040). But do not include tax on recapture of a federal mortgage subsidy, tax on golden parachute payments, look-back interest due under section 167(g) or 460(b) of the Internal Revenue Code, excise tax on insider stock compensation from an expatriated corporation, or uncollected employee social security, Medicare, or RRTA tax on tips or group-term life insurance.
  5. Repayment of the first-time homebuyer credit if the home will cease to be your main home in 2009. See Form 5405 for exceptions.
  6. Tax from Form 4972.
  7. Tax from Form 8814.
  8. Tax from recapture of an education credit.
  9. Use Form 6251 to see if you also owe the alternative minimum tax (AMT). Figure alternative minimum taxable income based on your income and deductions during the period shown in the column headings. Multiply this amount by the annualization amounts shown for each column on line 2 of the 2009 Annualized Estimated Tax Worksheet (Worksheet 2-10). Include any AMT owed in the amount on line 14 of this worksheet.
taxmap/pubs/p505-014.htm#en_us_publink10007423

Line 16.(p26)


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Include all the credits (other than withholding credits) you can claim because of events that occurred during the period. If you are using your 2008 return as a guide and filed Form 1040, your 2008 credits included the total credits on line 55, and the credits shown on lines 64a, 66, 68 (boxes b, c, and d), and 69. If you filed Form 1040A, your 2008 credits included the credits on lines 34, 40a, and 41.
Increase your credits for the Making Work Pay credit. Use Worksheet 2-15 on page 49 to figure this credit.
taxmap/pubs/p505-014.htm#en_us_publink10007424

Line 25.(p26)


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If line 24 is smaller than line 21 and you are not certain of the estimate of your 2009 tax, you can avoid a penalty by entering the amount from line 21 on line 25.
taxmap/pubs/p505-014.htm#en_us_publink10007425

Line 27.(p26)


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For each period, include estimated tax payments made and any excess social security and railroad retirement tax.
Also include estimated federal income tax withholding. One-fourth of your estimated withholding is considered withheld on the due date of each payment period. To figure the amount to include on line 27 for each period, multiply your total expected withholding for 2009 by:
  • 25% (.25) for the first period,
  • 50% (.50) for the second period,
  • 75% (.75) for the third period, and
  • 100% (1.00) for the fourth period.
However, you may choose to include your withholding according to the actual dates on which the amounts will be withheld. For each period, include withholding made from the beginning of the period up to and including the payment due date. You can make this choice separately for the taxes withheld from your wages and all other withholding. For an explanation of what to include in withholding, see Total Estimated Tax Payments Needed—Line 16a on page 24.
taxmap/pubs/p505-014.htm#en_us_publink10007427

Nonresident aliens.(p26)


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If you will file Form 1040NR and you do not receive wages as an employee subject to U.S. income tax withholding, the instructions for the worksheet are modified as follows.
  1. Skip column (a).
  2. On line 1, enter your income for the period that is effectively connected with a U.S. trade or business.
  3. On line 17, increase your entry by the amount determined by multiplying your income for the period that is not effectively connected with a U.S. trade or business by the following.
    1. 72% for column (b).
    2. 45% for column (c).
    3. 30% for column (d).
    However, if you can use a treaty rate lower than 30%, use the percentages determined by multiplying your treaty rate by 2.4, 1.5, and 1, respectively.
  4. On line 22, enter one-half of the amount from line 16c of the Form 1040-ES (NR) 2009 Estimated Tax Worksheet in column (b), and one-fourth in columns (c) and (d).
  5. On lines 20 and 23, skip column (b).
  6. On line 27, if you do not use the actual withholding method, include one-half of your total expected withholding in column (b) and one-fourth in columns (c) and (d).
See Publication 519 for more information.
taxmap/pubs/p505-014.htm#en_us_publink10007428

Estimated Tax  
Payments Not Required(p26)


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previous topic occurrence Estimated Tax next topic occurrence

You do not have to pay estimated tax if your withholding in each payment period is at least as much as:
  • One-fourth of your required annual payment, or
  • Your required annualized income installment for that period.
You also do not have to pay estimated tax if you will pay enough through withholding to keep the amount you will owe with your return under $1,000.
previous pagePrevious Page: Publication 505 - Tax Withholding and Estimated Tax - When To Pay Estimated Tax
next pageNext Page: Publication 505 - Tax Withholding and Estimated Tax - How To Pay Estimated Tax
 Use previous pagenext page to find additional occurrences of topic items.Index for this Publication