Publication 505 - Tax Withholding And Estimated Tax (Page 23 of 49) in pdf

ments by that date and the due dates for the

Gross income from farming. This is income

How To Figure

remaining payment periods.

from cultivating the soil or raising agricultural

commodities. It includes the following amounts.

How much to pay to avoid penalty. To deter-

Each Payment

mine how much you should pay by each pay-

1) Income from operating a stock, dairy, poul-

ment due date, see How To Figure Each

try, bee, fruit, or truck farm.

After you have figured your estimated tax, figure

Payment, later. If the earlier discussions of No

how much you must pay by the due date of each

income subject to estimated tax during first pe-

2) Income from a plantation, ranch, nursery,

payment period. You should pay enough by

riod or Change in estimated tax apply to you,

range, orchard, or oyster bed.

each due date to avoid a penalty for that period.

you may need to read the explanation of the

3) Crop shares for the use of your land.

If you do not pay enough during any payment

Annualized Income Installment Method, later, to

avoid a penalty.

period, you may be charged a penalty even if

4) Gains from sales of draft, breeding, dairy,

you are due a refund when you file your tax

or sporting livestock.

Farmers and Fishermen

return. The penalty is discussed in chapter 4.

For 2001, gross income from farming is the

total of the amounts from:

Regular Installment Method

If at least two-thirds of your gross income for

2001 or 2002 is from farming or fishing, you

1) Line 11 of Schedule F (Form 1040), Profit

have only one payment due date for your 2002

If your first estimated tax payment is due April

estimated tax — January 15, 2003. The due

or Loss From Farming,

15, 2002, you can figure your required payment

dates for the first three payment periods, dis-

for each period by dividing your annual esti-

2) Line 7 of Form 4835, Farm Rental Income

cussed earlier under When To Pay Estimated

mated tax due (line 16 of the 2001 Estimated

and Expenses,

Tax, do not apply to you.

Tax Worksheet) by 4. Use this method only if

If you file your 2002 Form 1040 by March 1,

3) Your share of a partnership’s or S

your income is basically the same throughout

2003, and pay all the tax you owe, you do not

corporation’s gross income from farming,

the year.

need to pay estimated tax.

If you do not receive your income evenly

4) Your share of distributable net income

Joint returns. On a joint return, you must add

throughout the year, your required estimated tax

from farming of an estate or trust,

your spouse’s gross income to your gross in-

payments may not be the same for each period.

5) Your gains from sales of draft, breeding,

come to determine if at least two-thirds of your

See Annualized Income Installment Method,

dairy, or sporting livestock shown on Form

total gross income is from farming or fishing.

later.

4797, Sales of Business Property.

Gross income. Your gross income is all in-

Amended estimated tax. If you

Wages you receive as a farm employee and

come you receive in the form of money, goods,

refigure your estimated tax during the

wages you receive from a farm corporation are

property, and services that is not exempt from

year, or if your first estimated tax pay-

not gross income from farming.

tax. To determine whether two-thirds of your

ment is due after April 15, 2002, figure your

gross income for 2001 was from farming or fish-

required payment for each remaining payment

ing, use as your gross income the total of the

period using the following worksheet.

Gross income from fishing. This is income

income (not loss) amounts shown in the follow-

from catching, taking, harvesting, cultivating, or

Worksheet 2.6

ing locations.

farming any kind of fish, shellfish (for example,

1. Amended total estimated tax due . . . . . .

1) Form 1040, lines 7, 8a, 9, 10, 11, 15b,

clams and mussels), crustaceans (for example,

2. Multiply line 1 by:

16b, 19, 20b, and 21.

lobsters, crabs, and shrimp), sponges, sea-

.50 if next payment is due

weeds, or other aquatic forms of animal and

June 17, 2002

2) Schedule C (Form 1040), line 7.

.75 if next payment is due

vegetable life.

3) Schedule C – EZ (Form 1040), line 1.

September 16, 2002

Gross income from fishing includes the fol-

1.00 if next payment is due

4) Schedule D (Form 1040), line 1, column f

lowing amounts.

January 15, 2003 . . . . . . . . . . . . . . .

(gains only), and lines 8 and 13, column f

3. Estimated tax payments for all previous

(gains only).

periods . . . . . . . . . . . . . . . . . . . . . .

1) Income for services as an officer or crew

4. Next required payment: Subtract line 3

member of a vessel while the vessel is

5) Schedule D – 1 (Form 1040), line 1, column

from line 2 and enter the result (but not

f (gains only), and line 8, column f (gains

engaged in fishing.

less than zero) here and on your

payment-voucher for your next required

only).

2) Your share of a partnership’s or S

payment . . . . . . . . . . . . . . . . . . . . .

6) Schedule E (Form 1040), lines 3, 4, 31,

corporation’s gross income from fishing.

If the payment on line 4 is due January

15, 2003, stop here. Otherwise, go on to

36, and 38.

3) Income for services normally performed in

line 5.

7) Schedule F (Form 1040), line 11.

connection with fishing.

5. Add lines 3 and 4 . . . . . . . . . . . . . . . .

8) Form 2439, Box 1a.

6. Subtract line 5 from line 1 and enter the

Services normally performed in connection with

result (but not less than zero) . . . . . . . .

fishing include:

9) Form 4684, lines 15 and 36 (gains only).

7. Each following required payment: If the

•

payment on line 4 is due June 17, 2002,

Shore service as an officer or crew mem-

10) Form 4797, line 2, column g (gains only),

enter one-half of the amount on line 6 here

ber of a vessel engaged in fishing, and

and line 6 (gains only).

and on the payment-vouchers for your

•

payments due September 16, 2002, and

Services that are necessary for the imme-

11) Form 6252, line 26 or line 37 (gains only).

January 15, 2003. If the amount on line 4

diate preservation of the catch, such as

is due September 16, 2002, enter the full

12) Form 6781, line 8 (gain only) and line 9

cleaning, icing, and packing the catch.

amount on line 6 here and on the

(gain only).

payment-voucher for your payment due

January 15, 2003 . . . . . . . . . . . . . . . .

13) Form 8824, line 22 (unless the installment

Fiscal year farmers and fishermen. If you

method applies).

are a farmer or fisherman, but your tax year

Example 2.7. Early in 2002, Mira figures her

14) Form 4835, line 7.

does not start on January 1, you can either:

estimated tax due is $1,800. She makes esti-

15) Schedule K – 1 (Form 1065), lines 15b and

mated tax payments on April 15 and June 17 of

1) Pay all your estimated tax by the 15th day

$450 each ($1,800 ÷ 4).

15c (less any partnership amounts in-

after the end of your tax year, or

cluded in (1) through (14)).

On July 10, she sells investment property at

2) File your return and pay all the tax you

a gain. Her refigured estimated tax is $4,100.

Also add your pro rata share of S corporation

owe by the 1st day of the 3rd month after

Her required estimated tax payment for the third

gross income (less any S corporation amounts

included in (1) through (14)).

the end of your tax year.

payment period is $2,175, figured as follows.

Chapter 2 Estimated Tax for 2002

Page 23

Publication 505 - Tax Withholding And Estimated Tax Page 23

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