Publication 505 - Tax Withholding And Estimated Tax Page 19

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10. Enter $9,000 ($12,000 if you expect to
2001 federal tax return as a guide. You can use
Itemized deductions are the deductions that
file married filing a joint return; $0 if you
can be claimed on Schedule A of Form 1040.
Form 1040 – ES to figure your estimated tax.
expect to file married filing a separate
You must make adjustments both for
return and expect to live with your
Reduction of itemized deductions.
spouse at any time during the year) . .
changes in your own situation and for recent
For 2002, your total itemized deduc-
11. Subtract line 10 from line 9. If zero or
tions may be reduced if your adjusted
changes in the tax law. For 2002, there are
less, enter – 0 – . . . . . . . . . . . . . .
gross income (AGI) is more than $137,300
several changes in the law. These changes are
12. Enter the smaller of line 9 or line 10 . .
($68,650 if married filing separately). If you ex-
discussed under Important Changes for 2002 at
13. Enter one-half of line 12 . . . . . . . . .
pect your AGI to be more than that amount, use
14. Enter the smaller of line 2 or line 13 . .
the beginning of this publication. For information
15. Multiply line 11 by 85% (.85). If line 11
the following worksheet to figure the amount to
about these and other changes in the law, get
is zero, enter – 0 – . . . . . . . . . . . . .
enter on line 2 of the 2002 Estimated Tax Work-
Publication 553, Highlights of 2001 Tax
16. Add lines 14 and 15 . . . . . . . . . . . .
sheet.
Changes, or visit the IRS Web Site at
17. Multiply line 1 by 85% (.85) . . . . . . . .
18. Enter the smaller of line 16 or line 17.
Worksheet 2.3
This is the amount of your expected
Form 1040 – ES includes a worksheet to
taxable social security and railroad
1. Enter the estimated total of your
retirement benefits. Include this amount
help you figure your estimated tax. Keep the
itemized deductions . . . . . . . . . . . .
in the total on line 1 of your 2002
worksheet for your records. Example 2.9 illus-
2. Enter the amount included in line 1 for
Estimated Tax Worksheet . . . . . . . .
trates the use of the worksheet. A blank work-
medical and dental expenses,
investment interest, casualty or theft
sheet appears later in this chapter.
losses, and gambling losses . . . . . . .
Adjustments to income. Be sure to subtract
3. Subtract line 2 from line 1 . . . . . . . .
from your expected total income all of the adjust-
Expected Adjusted
Note. If the amount on line 3 is zero,
ments you expect to take on your 2002 tax
stop here and enter the amount from
Gross Income
return. If you are using your 2001 return as a
line 1 of this worksheet on line 2 of the
guide and filed Form 1040, your adjustments for
2002 Estimated Tax Worksheet.
Your expected adjusted gross income for 2002
2001 were on lines 23 – 31a. If you filed Form
4. Multiply the amount on line 3 by .80 . .
(line 1 of the 2002 Estimated Tax Worksheet) is
1040A, your 2001 adjustments were on lines 16
5. Enter the amount from line 1 of the
your expected total income minus your expected
2002 Estimated Tax Worksheet . . . . .
and 17.
adjustments to income.
6. Enter $137,300 ($68,650 if married
Self-employed. If you expect to have
filing separately) . . . . . . . . . . . . . .
income from self-employment, use the
7. Subtract line 6 from line 5 . . . . . . . .
Total income. Include in your total income all
8. Multiply the amount on line 7 by .03 . .
following worksheet to figure your ex-
9. Enter the smaller of line 4 or line 8 . . .
the income you expect to receive during the
pected self-employment tax. The result on line
10. Subtract line 9 from line 1. Enter the
year, even income that is subject to withholding.
10 of the worksheet is your deduction for
result here and on line 2 of the 2002
However, do not include income that is tax ex-
one-half of your self-employment tax. Include
Estimated Tax Worksheet . . . . . . . .
empt.
this amount in the adjustments you subtract
from your total income to arrive at your expected
Standard deduction. If you expect to claim
Total income includes all income and loss for
AGI. If you file a joint return and both you and
the standard deduction on your 2002 tax return,
2002 that, if you had received it in 2001, would
your spouse have net earnings from self-em-
subtract it from your expected adjusted gross
have been included in the total on line 22 of
ployment, you must each complete a separate
income. Use the 2002 Standard Deduction Ta-
Form 1040, line 15 of Form 1040A, or line 4 of
worksheet.
bles at the end of this chapter to find your stan-
Form 1040EZ. When figuring your net earnings
dard deduction.
from self-employment, be sure to use only
Worksheet 2.2
92.35% of your total net profit from self-employ-
No standard deduction. The standard de-
1. Enter your expected income and profits
duction for some individuals is zero. Your stan-
ment.
subject to self-employment
dard deduction will be zero if you:
tax . . . . . . . . . . . . . . . . . . . . . . .
Social security and railroad retire-
2. Multiply the amount on line 1
ment benefits. If you expect to receive
1) File a separate return and your spouse
by .9235 . . . . . . . . . . . . . . . . . . .
social security or tier 1 railroad retire-
itemizes deductions,
3. Multiply the amount on line 2
ment benefits during the year, use Worksheet
by .029 . . . . . . . . . . . . . . . . . . . .
2) Are a nonresident alien, or
2.1 to figure the amount of expected taxable
4. Social security tax maximum income . . $84,900
5. Enter your expected wages (if subject
benefits you should include on line 1 of the 2002
3) Make a return for a period of less than 12
to social security tax) . . . . . . . . . . .
months because you change your ac-
Estimated Tax Worksheet.
6. Subtract line 5 from line 4 . . . . . . . .
counting period.
Note. If line 6 is zero or less, enter
Worksheet 2.1
– 0 –
Exemptions. After you have subtracted either
on line 8 and skip to line 9.
1. Enter your expected social security and
your expected itemized deductions or your stan-
7. Enter the smaller of line 2 or line 6
railroad retirement benefits . . . . . . . .
dard deduction from your expected adjusted
2. Enter one-half of line 1 . . . . . . . . . .
8. Multiply the amount on line 7
by .124 . . . . . . . . . . . . . . . . . . . .
3. Enter your expected total income. Do
gross income, reduce the amount remaining by
9. Add line 3 and line 8. Enter the result
not include any social security and
$3,000 for each exemption you expect to take on
railroad retirement benefits, nontaxable
here and on line 11 of your 2002
your 2002 tax return (lines 4 and 5 of the 2002
Estimated Tax Worksheet . . . . . . . .
interest income, nontaxable IRA
Estimated Tax Worksheet). If another person
distributions, or nontaxable pension
10. Multiply the amount on line 9 by .50.
(such as your parent) can claim an exemption
This is your deduction for one-half your
distributions . . . . . . . . . . . . . . . . .
for you on his or her tax return, you cannot claim
4. Enter your expected nontaxable interest
self-employment tax. . . . . . . . . . . .
income . . . . . . . . . . . . . . . . . . . .
your own personal exemption. This is true even
5. Add lines 2, 3, and 4 . . . . . . . . . . . .
if the other person will not claim your exemption
Expected Taxable Income
6. Enter your expected adjustments to
or the exemption will be reduced or eliminated
income except any student loan interest
under the phaseout rule.
deduction . . . . . . . . . . . . . . . . . .
Reduce your expected adjusted gross income
7. Subtract line 6 from line 5 . . . . . . . .
for 2002 by either your expected itemized de-
Phaseout. For 2002, your deduction for
8. Enter $25,000 ($32,000 if you expect to
ductions or your standard deduction and by your
personal exemptions is phased out if your ad-
file married filing a joint return; $0 if you
exemptions (lines 2 through 5 of the 2001 Esti-
justed gross income (AGI) falls within the follow-
expect to file married filing a separate
mated Tax Worksheet).
ing brackets.
return and expect to live with your
spouse at any time during the year) . .
9. Subtract line 8 from line 7. If zero or
Table 2.1
Itemized deductions. If you expect to claim
less, stop here. Do not include any
itemized deductions on your 2002 tax return,
social security or railroad retirement
Single . . . . . . . . . . . . . . . . . $137,300 – $259,800
subtract them from your expected adjusted
benefits on line 1 of your 2002
Married filing jointly
gross income.
Estimated Tax Worksheet . . . . . . . .
or qualifying widow(er) . . . . . . $206,000 – $328,500
Chapter 2 Estimated Tax for 2002
Page 19

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