Form 500 Uet - Underpayment Of Estimated Tax By Individuals/fiduciary Page 2

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Page 2

Instructions for 500 UET Underpayment of

Example (

continued)

Annualized taxable income .......................................... 29,600.00

Estimated Tax by Individuals/Fiduciary

Total Income Tax ........................................................

1,516.00

Individual or fiduciary taxpayers may use this form to determine whether

If your withheld tax and estimated tax payment for the first installment

income tax was sufficiently paid throughout the year by withholding or by install-

period of the current year was at least 265.00 (70% x 25% x $1,516.00)

ment payments. If sufficient tax was not paid you may owe a penalty of 9 percent

you do not owe a penalty for that period.

a year on the unpaid amount. This form will help you determine whether you are

Exception 3, Tax on Current Year’s Income over Periods of 3, 5, and 8 Months:

subject to a penalty, or whether you are excepted from a penalty.

This exception applies if your current year’s tax payments equal or exceeds

FILING AN ESTIMATE AND PAYING THE TAX, CALENDAR YEAR TAX-

90 percent of the tax on your taxable income for periods starting from the

PAYERS. – If you file a return on a calendar year basis and are required to file

first of the year to the end of the month preceding that in which an install-

Form 500ES, you are generally required to file estimated tax by April 15, and to

ment is due. To see if this exception applies, figure your taxable income

pay tax in four installments. (If you are not required to file estimated tax until later

from January 1, of the current year to the end of the month preceding that in

in the year because of change in income or exemptions, you may be required to

which an installment is due. Then compute your tax on that amount as

pay in fewer installments.) The chart below shows the due date for estimated

though it represented your taxable income for the current year.

tax, and maximum number of installments.

Example

(Joint return)

Period

Due Date

Maximum Number

Requirements

of Installments

(1)

(2)

(3)

(4)

(5)

First Met

Payment

Required

Computation

Taxable

Tax

90 Percent

Tax Withheld or

Between Jan. 1 and March 31

April 15

Period

Income

of Tax

Paid Directly on

Between Apr. 1 and May 31

June 15

Installment Dates

Between June 1 and August 31

Sept. 15

On or after September 1

Jan. 15

Jan. 1 to March 31

$0.00

$-0-

$108.99

If any date shown falls on a Saturday, Sunday, or legal holiday, substitute

Jan. 1 to May 31

$1,800.00

$26.00

$23.40

$181.65

the next regular workday.

FISCAL YEAR TAXPAYERS. - Fiscal year taxpayers should contact the

Jan. 1 to Aug. 31

$5,800.00

$142.00 $127.80

$290.64

Income Tax Division at (1-877-423-6711) for information on the penalty for under-

payment of estimated taxes.

Jan. 1 to Dec. 31

$15,000.00

$640.00

$435.96

EXCEPTIONS FROM THE PENALTY. – You will not be liable for a penalty

Since the amounts in column (5) are greater than those in column (4) for

if your current year tax payments (amount shown on Line 13) equals or exceeds

each of the first three computation periods, there is not a penalty for the first

any amount determined for the same period under the following exception provi-

three installment periods. However, although the law does not permit the

sions. You may apply a different exception to each underpayment but you must

use of exception 3 for the fourth installment period, no penalty is owed for

attach a separate computation page. If none of the exceptions apply, complete

that period because there is no underpayment. The 145.32 tax withheld for

Lines 17 through 21 to figure your penalty.

that period (435.96 minus 290.64 shown in column 5 above) is more than

70 percent of the tax that would have been due for the fourth installment if

Exception 1, Tax on Prior Tax Year’s Income Using Current Year’s Rates and

the total tax for the year had been spread equally over the four installment

Exemptions: This exception applies if your current year’s withheld tax and esti-

periods.

mated payments equal or exceed what would have been due on your prior year’s

Exception 4. Estate of a Decedent or a Testamentary Trust. Estimated tax

income if you had computed it at the current year’s rates. To determine this

payments are not required for any taxable year ending before the date two

exception, use the personal exemption allowed for the current year but use the

years after the date of the decedent's death for: 1) An estate of a decedent;

other facts and the law applicable to your prior year’s return.

or 2) A testamentary trust as defined in Section 6654(I)(2)(B) of the Internal

Exception 2, Tax on Annualized Current Year’s Income: This exception applies if

Revenue Code. For those estates and testamentary trusts meeting this

your current year’s tax payments equal or exceed 70 percent of the tax on your

exception:

annualized taxable income for periods from the first of the year to the end of the

a) Enter $0 on Line 21 of Form 500 UET and

month preceding that in which an installment is due.

b) Check the box at the top of Form 500 UET.

To annualize your taxable income, follow these four steps:

c) Check the “500 UET Exception Attached” box on Form 501.

Figure your adjusted gross income less itemized deductions or stan-

OVERPAYMENT. – Apply as a credit against the next installment any

dard deduction from the first of your taxable year up to and including

installment overpayment on Line 10 that is greater than all prior underpay-

the month prior to that in which an installment is due.

ments.

Multiply the result of Step (a) by 12

INSTALLMENT PAYMENTS. – If you made more than one payment

Divide the result of Step (b) by the number of months in your compu-

for an installment attach a separate computation for each payment. If you

tation period.

filed your return and paid the balance of tax by January 31st of the following

Subtract the deduction for personal exemptions. The result is your

year consider the balance paid as of January 15

annualized taxable income.

FARMERS AND FISHERMAN. – If (1) your gross income from farm-

Example

ing or fishing is at least two-thirds of your annual gross income and (2) you

(Joint return, using itemized deductions)

filed Form 500 / 501 and paid the tax on or before March 1, of the following

Wages received during Jan., Feb., and March .............

3,500.00

year you may be exempt from penalties for underpayment of estimated tax.

Self-employment income during Jan., Feb., and March

6,000.00

If so, enter $0 on line 21 of Form 500UET and check the "500 UET Ex ce ption

Adjusted gross income ................................................

9,500.00

Attached" box on Form 500 and do not complete rest of this form.

Less: Itemized Deductions ........... ...............................

750.00

If you meet this gross income test but did not file a return or pay the tax

Line 3 less Line 4......................................................... 8,750.00

when due, compute the penalty on the tax due for the last quarter only by

Annualized income (8,750.00 x 12 = 105,000 / 3) ...... . 35,000.00

using the following schedule:

Exemption...................................................................

5,400.00

HOW TO FIGURE THE PENALTY FOR FARMERS AND FISHERMEN (Complete Lines 1 through 6)

Enter amount listed on Line 3, Page 1

_____________________________________

Enter 66 2/3% of the amount shown on Line 1

_____________________________________

Amount withheld during current year and amounts paid or credited by January 15 of the following year

_____________________________________

Underpayment of Estimated Tax (subtract Line 3 from Line 2)

_____________________________________

Number of days from January 15 to date of payment or April 15 whichever is earlier

_____________________________________

Penalty (9 percent a year on the amount shown on Line 4, for the number of days shown on Line 5)

_____________________________________

Enter the amount of penalty in the space provided on Form 500 / 501 as “Penalty for underpayment of estimated tax,” then increase the balance or decrease the amount “overpaid” accordingly.