Form Rev-1630a As - Underpayment Of Estimated Tax By Individual Farmers - 2012

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REV-1630A AS (01-13) (FI)
UNDERPAYMENT OF
2012
ESTIMATED TAX BY
INDIVIDUAL FARMERS
BUREAU OF INDIVIDUAL TAXES
INSTRUCTIONS
FARMERS
you did not file a prior year’s return or if you filed your prior year’s
return as a part-year resident.
There are special estimated tax payment rules that apply to farmers.
These rules apply to those who cultivate, operate or manage a farm for
Taxpayers who fail Test 1 of the farming exemption must file REV-1630,
profit or gain. A farm is a tract of land devoted to agriculture, pas-
Underpayment of Estimated Tax by Individuals, to determine the
turage, stock raising or some allied industry. It includes dairy, stock
amount of estimated underpayment penalties/interest.
and poultry farms. For PA personal income tax purposes, a taxpayer is
FARMING EXCEPTION WORKSHEET
categorized as a farmer if two-thirds or more of his or her gross income
is derived from farming. See Part A, Line C instructions for additional
In order to qualify for the farming exemption, individuals must derive at
information regarding the definition of gross income from farming. If
least two-thirds of their gross income from farming. Complete PART A of
categorized as a farmer, the taxpayer must make his or her estimated
the Farming Exception Worksheet to determine if you qualify for this
tax payments by Jan. 15 of the year following the tax year or file his
exception. Individuals who qualify as farmers have special rules with
or her tax return for the year and make the entire payment of tax due
respect to their estimated tax payments. Complete PART B of the
with the return on or before March 1 of the year following the tax year.
Farming Exception Worksheet to determine if you met the farmer spe-
Farmers may also make their payments in four equal payments as long
cialized rules for estimated taxes.
as the final payment is made on or before Jan. 15 or when the return
Part A
is filed on or before March 1.
Line A. Total gross income from all sources includes income reported
To determine if an individual qualifies as a farmer and will not owe inter-
on the following:
est for underpaying estimated tax, the following tests must be met:
• PA-40 Lines 1a, 2, 3 and 7;
Test 1)
Your gross income from farming for the taxable year is at
least 2/3 of your gross income from all sources for the
• PA-40 Line 5, with all selling expenses added back and total net
taxable year; and
losses not netted against gross income from all sources (see
NOTE below for additional information);
Test 2)
You filed your tax return and paid the entire amount due
• Lines 1 and 2 of PA Schedule E; and
by March 1 of the following year, or you paid all of your
estimated tax by Jan. 15, 2013.
• the total of the taxpayer and spouse columns from Line 3 of PA
Schedule T.
Please see the instructions for and complete the "Farming Exception
It also includes gross income amounts for entities reported on PA-40
Worksheet" on REV-1630A to determine if you meet the above tests.
Line 4 determined as follows:
PURPOSE AND USE
• Line 5 of PA Schedule C;
Under Pennsylvania personal income tax law, any individual who rea-
• Line 12 of PA Schedule F;
sonably expects annual income for the tax year to exceed $8,000,
• federal form 1065 Schedule K-1, Box 14, Code B (gross farming
disregarding income subject to PA withholding, must declare and pay
income) and/or Box 14, Code C (gross non-farming income);
estimated tax. Failure to pay estimated taxes results in an interest
penalty on the tax amounts that would normally be due.
• federal form 1120S, Schedule K-1, Box 17, Code U (when entry
is related to gross farming income); and/or
Farmers should use this form to determine if they meet both the tests
for qualifying as a farmer. Farmers who meet Test 1 but fail Test 2 will
• income from other non-farming related partnership, limited lia-
calculate their underpayment penalties using this form. Individuals
bility company and S corporation entities.
who fail Test 1 are not considered farmers under the exception and are
Income from other non-farming related entities is determined by
required to use Form REV-1630, Underpayment of Estimated Tax By
adding positive income amounts (not net losses) from the following
Individuals, to determine their underpayment penalties. Complete the
sources:
Farming Exception Worksheet to determine if you meet the tests for
• federal form 1120S, Page 1, Line 3, gross profit (use the share-
qualifying as a farmer.
holder’s proportionate share of gross income reported only);
NOTE: If using the rules pertaining to farmers you determine you are
• PA-20S/PA-65 Schedule RK-1, Line 1 and/or 5 plus Line 12;
exempt from the penalty or use this form to calculate the penalty on
your 2012 return, enclose a copy of this form (including applicable
• PA-20S/PA-65 Schedule NRK-1, Line 1 and/or 3 plus Line 10
worksheets) with your Form PA-40.
(use only when no entry appears in federal form 1065 Schedule
K-1, Box 14 or when federal form 1120S, Page 1, Line 3 infor-
WHO MUST PAY INTEREST FOR UNDERPAYMENT OF
mation is not available);
ESTIMATED TAXES
• federal form 1065 Schedule K-1, Boxes 1, 2 and/or 3 plus Box 4
Farmers who meet Test 1 but fail Test 2 must pay interest on the
(use only when PA-20S/PA-65 Schedules RK-1 or NRK-1 are not
amount of estimated tax not paid. If a farmer fails Test 2, the farmer
available); and/or
estimated tax rules and underpayment rules apply. If you did not pay
• federal form 1120S Schedule K-1, Boxes 1, 2 and/or 3 (use only
any estimated tax, did not pay the correct estimated tax by Jan. 15,
when PA-20S/PA-65 Schedules RK-1 or NRK-1 or federal form
2013, or did not file your return by March 1, 2013, and pay the amount
1120S, Page1, Line 3 information is not available).
of tax due with that return, you may be charged an interest penalty.
This is true even if you are due a refund when you file your PA income
NOTE: When determining the amount to use from PA Schedule D (PA-
tax return.
40 Line 5), selling expenses must be added back in to the net gain or
loss. Selling expenses include any commissions and other expenses
OTHER SITUATIONS WHEN INTEREST IS APPLIED
incurred at the time of the sale that reduce net gains or increase net
Taxpayers not qualifying for the farming exemption will have an under-
losses. After selling expenses are added back to the gain or loss, if an
payment of their estimated taxes if their 2012 prepayments were not:
overall net loss still remains for Line 5, it is not permitted to be used
90 percent of the estimated tax due for the payment period; or
to reduce gross income from all sources.
100 percent of the estimated tax due for the payment period cal-
IMPORTANT: Net losses in any class of income as determined for
culated by multiplying the taxable income on Line 11 of 2011 Form
Line 4, 5, 6 or 8 of the PA-40 cannot be used to reduce gross income
PA-40 by 3.07 percent (0.0307). This provision does not apply if
from all sources.
(Instructions continued on Page 2.)
1

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