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


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
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
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


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