Instructions For Underpayment Of Estimated Income Tax By Individuals Form

Instructions for Underpayment of Estimated Income Tax by Individuals

Estimated Tax Penalty

Ofﬁ ce of Tax and Revenue

941 N Capitol St NE 6th Floor

What is the DC law regarding payment of Estimated

Washington DC 20002-4265

Income Tax?

Attn: Estimated Tax Penalty Adjustment

DC law requires every individual or couple ﬁ ling jointly, to pay

estimated tax if they:

Completing this form

•

receive taxable income which is not subject to DC

withholding;

Line 1

•

receive wages with too little withholding; and

Enter the amount from your D-40 or D-40EZ

•

the expected tax from these sources is expected to be more

Line 2

than $100.

Multiply the amount on Line 1 by 90% (.90). Your withheld

The law states that anyone who is required to ﬁ le and pay

taxes and/or estimated tax payments must be equal to or greater

estimated tax and fails to pay the amount required by the due

than this amount.

date is subject to an underpayment of estimated income tax

Line 3

penalty and interest.

Enter the amount from your 2005 DC Form D-40 Line 41 or

D-40EZ Line 8. If your 2005 return was amended or corrected,

When is a penalty for Underpayment of Estimated Income

show the corrected amount. You must have been a DC resident

Tax assessed?

during 2005 in order to qualify for this exception.

A penalty is assessed if your total DC estimated income tax

Line 4

payments (and withheld amounts) compared to the DC tax do

Enter the lesser amounts on either Line 2 and Line 3. If you did

not equal at least the smaller of:

not qualify under Line 3, use only Line 2 amount.

•

90% of the tax due as shown on your 2006 return, or

Line 5

•

100% of the tax due as shown on your 2005 DC tax return.

Multiply the amount on Line 4 by 25% (.25). This gives you

You must have been a DC resident during 2005 to qualify

an even distribution of your liability over the four quarters of the

under this exception.

tax year.

Line 6

Are there any exceptions?

Enter the amount from Line 5 under each of the columns for

You are not subject to the penalty for underpayment of estimated

installments. For example, if Line 5 is $2000, you would enter

tax if:

$2000 for the 1st period, $4000 for the 2nd period, $6000 for

•

You had no DC income tax liability for the tax year 2005

the 3rd period and $8000 for the 4th period.

and in that year, you lived in DC the entire 12 months,

Annualized Income method: If your income was different for

•

The tax due for 2006 minus income tax withheld or

each period, determine the percentage for each period (divide

estimated tax payment is less than $100,

the period amount by the full year’s income). Multiply Line 4 by

•

Your DC estimated tax payments plus any DC income tax

each period’s percentage and enter the amounts as shown above.

withheld equals or is greater than your 2005 DC income

Check “Annualized Income” box.

tax liability, or

Line 7

•

The tax due on your DC return is not more than 10% of your

Enter the amounts withheld and estimated tax payments made

total 2006 DC tax. All of the amounts you paid, including

for each period. Include the amounts from the previous period in

estimated tax payments must have been paid on time.

with the 2nd, 3rd and 4th periods. For example, if your withheld

and estimated tax payment amount is $1000 in each period, you

Who needs to ﬁ le this Underpayment

would enter $1000 in the 1st Period, $2000 in the 2nd Period,

$3000 in the 3rd Period and $4000 in the 4th Period.

of Estimated Income Tax form?

Line 8 Underpayment each period

•

You can use this form to calculate your penalty. If you

For each column, subtract Line 7 from Line 6. If Line 7 exceeds

do, attach it to your tax return and add the penalty and

Line 6, you have no penalty. If there is an amount remaining,

any interest to the amount you calculate for Line 43 of D-

this is your quarterly underpayment amount.

40 or Line 16 of D-40EZ. If you do not wish to calculate

Line 9 Penalty factors these are the penalty factors by

the penalty and interest, we will do it when your return is

quarter.

processed and will notify you of the amount due.

Line 10

•

You may also complete this form if you believe the amount

For each column, multiply the amount on Line 8 by the factor on

assessed for Underpayment of Estimated Income Tax

Line 9. This is your penalty by quarter.

penalty is incorrect. NOTE: Use the annualized method

Line 11 Penalty

if your

income was earned disproportionately in the later

Add the amounts from each column on Line 10. This is your

part of the year.

total Underpayment of Estimated Tax Penalty.

•

If you are ﬁ ling this with your form, include the penalty in

Where do you send this form?

the amount you owe and pay it with the return.

•

Attach it to your return. If you complete it after ﬁ ling and

If you are ﬁ ling this form separately, pay the amount you owe.

Make the check or money order out to the DC Treasurer.

receiving notice of a penalty assessment, send it to:

Revised 12-2006

D-2210 page 2

Instructions For Underpayment Of Estimated Income Tax By Individuals Form - 2006

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