Publication 505 - Tax Withholding And Estimated Tax (Page 19 of 49) in pdf

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

Publication 505 - Tax Withholding And Estimated Tax Page 19

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