Instructions For Underpayment Of Estimated Tax By Individuals Form 2008 printable pdf download

REV-1630 (12-08)

UNDERPAYMENT OF

2008

ESTIMATED TAX

BY INDIVIDUALS

BUREAU OF INDIVIDUAL TAXES

INSTRUCTIONS

PURPOSE & USE: Under Pennsylvania Personal Income Tax law,

Line 2. The credits allowed to reduce the tax due are also used to

any individual who reasonably expects annual income for the tax

reduce your tax liability for this calculation. Add together the following

year to exceed $8,000, disregarding income subject to PA withholding,

lines from Form PA-40: Line 13 (Total PA Tax Withheld), Line 17

must declare and pay estimated tax.

(Nonresident Tax Withheld), Line 21 (Tax Forgiveness Credit), Line

22 (Resident Credit) and Line 23 (Total Other Credits). If Line 2 is

Use this form to determine if you paid enough estimated tax in each

more than Line 1b, you do not owe a penalty and do not need to

of the four payment periods (Part l). If you did not pay enough tax in

complete this form.

any payment period, then there is an underpayment for that period

and a corresponding interest penalty imposed. Use this form to

Line 3. Subtract Line 2 from Line 1a. If the amount is $246 or more,

determine if any exceptions to the interest penalty apply (Part II). If

complete Lines 4 through 10. If less than $246, you did not owe

an exception does not apply, use this form to calculate the interest

estimated income tax and do not have to complete this form.

due (Part III). This form must be filed even if one of the exceptions

Line 4. Subtract Line 2 from Line 1b. This amount is used to deter-

applies. A different exception may apply for each payment period.

mine if you have an underpayment. If you have an underpayment,

the penalty is calculated on this amount.

NOTE: If you are using this form to calculate penalty on your 2008

return, enclose a copy of this form (including applicable worksheet)

Line 5. Divide Line 4 by 4 and enter the amount in each of the four

with Form PA-40.

Columns a through d.

FARMERS - There are special estimated tax payment rules that apply

Fiscal year filers. For Column a use the 15th day of the fourth

to farmers. These rules apply to those who cultivate, operate or

month of the tax year, for Column b use the 15th day of the sixth

manage a farm for profit or gain. A farm is a tract of land devoted to

month of the tax year, for Column c use the 15th day of the ninth

agriculture, pasturage, stock raising or some allied industry. It

month of the tax year and for Column d use the 15th day of the first

includes dairy, stock and poultry farms.

month following the close of the tax year.

If you meet both of the following tests, you do not owe interest for

Line 6. Line 6 represents the timely payments credited to your

underpaying estimated tax:

account for each of the four payment due dates. Each column will

indicate a total of your estimated payments for the period. To calcu-

1) Your gross income from farming for the taxable year is at least 2/3

late the amounts to be entered on Line 6, use the following steps and

of your gross income from all sources for the taxable year; and

insert the total result for each column in the appropriate column. Do

2) You filed your tax return and paid the entire amount due by

not include any credits from Line 2.

March 1 of the following year, or you paid all of your estimated tax

In Column a, enter the amount of 2008 estimated tax payment(s)

by Jan. 15, 2009.

made on or before April 15. Include in your estimated tax payments

If you meet these tests, please complete the part entitled "Exception

in Column a any overpayment of tax from your prior year’s return that

3 Worksheet For Farming" on Page 3.

you elected to apply to this year’s tax. In Column b, enter the amount

WHO MUST PAY INTEREST FOR UNDERPAYMENT OF ESTI-

of 2008 estimated payments made after April 15 and on or before

MATED TAXES: If you did not pay any estimated tax or did not pay

June 16. In Column c, enter the amount of 2008 estimated payments

the correct estimated tax by any due date or if you did not pay the

made after June 16 and on or before Sept. 15. In Column d, enter

entire 2008 estimated tax in one payment on or before April 15, 2008,

the amount of 2008 estimated payments made after Sept. 15 and on

you may be charged an interest penalty. This is true even if you are

or before Jan. 15, 2009.

due a refund when you file your PA income tax return. Interest is cal-

Farmers only: Include on Line 6 Column d estimated tax paid on

culated separately for each due date. Therefore, you owe interest for

or before Jan. 15, 2008.

an earlier payment due date, even if you paid enough tax later to

If you filed a final return and paid the total tax due by Jan. 31, 2009,

make up for the underpayment.

enter the amount paid with your return as the fourth installment.

IMPORTANT: If you are a Pennsylvania resident working in a

IMPORTANT: Complete Lines 7 through 10 for one payment period

reciprocal state and your employer does not withhold PA Personal

before you go to the next payment period.

Income Tax, you are required to make estimated payments.

Line 7. If you have an overpayment on Line 10 for the prior payment

WHEN INTEREST IS APPLIED: In general and unless you qualify

period, enter that amount. This does not apply to the April 15th pay-

for the farming exemption, there is an underpayment if your 2008

ment period (Column a).

prepayments were not:

Line 8. Add Lines 6 and 7 for each of the columns to determine the

•

90 percent of the estimated tax due for the payment period; or

total payments applied to the payment period. This figure will be used

•

100 percent of the estimated tax due for the payment period

to determine if you have an underpayment.

calculated by multiplying the taxable income on Line 11 of 2007

Line 9. If Line 5 is greater than Line 8 for any column, calculate the

Form PA-40 by 3.07 percent (0.0307). This provision does not

amount of the underpayment for the payment period by subtracting

apply if you did not file a prior year’s return or if you filed your prior

Line 8 from Line 5. If Line 8 is greater than Line 5 for any column,

year’s return as a part-year resident.

subtract Line 5 from Line 8 and enter it in the appropriate column

CAUTION: You can only use your prior year’s tax liabilities as a safe

and on Line 7 of the next payment period. If Line 5 is not greater

harbor if the rates for the prior year and the current year are the

than Line 8 for any of the Columns a through d, enter zero on Line

same. If the tax rate changes, use the prior year’s income multiplied

9. If all Columns 9a through 9d are zero, stop here. You do not owe

by the current year’s rate to calculate the safe harbor.

the interest penalty. If there are overpayments but not in every

The total estimated tax and credits for tax year 2008 must be equal

quarter, go to the applicable columns for Lines 14a and 14b and

to or greater than the 2007 tax year liability per installment period.

place an X in each column where no overpayments exist.

PART l. CALCULATING YOUR UNDERPAYMENT

Line 10. Calculate the amount of the overpayment for the payment

Line 1a. Insert the tax liability figure from Line 12 of your 2008 PA-40

period. Enter this amount on Line 7 of the next payment period. If you

tax return.

have an overpayment in the Jan. 15th payment period, do not carry it

Line 1b. Calculate 90 percent of Line 1a by multiplying Line 1a by 0.90.

to any other space on the form.

(Instructions continued on back cover.)

Instructions For Underpayment Of Estimated Tax By Individuals Form 2008

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