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

6. Subtract line 5 from line 1 and enter

7. Multiply the amount on line 1 by the

Self-employment income. If you had

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

1,025

decimal on line 6 . . . . . . . . . . . . .

self-employment income, first complete Section

7. Each following required payment: If

8. Subtract line 7 from line 1. Enter the

B. Use the amounts on line 34c when figuring

the payment on line 4 is due June 16,

result here and on line 10 of Section A

the amount of adjusted gross income to enter on

2003, enter one-half of the amount on

line 1.

line 6 here and on the

Line 12. Use the 2003 Tax Rate Schedules at

payment-vouchers for your payments

Line 4. Be sure to consider all deduction limits

the end of this chapter or in the instructions to

due September 15, 2003, and January

figured on Schedule A.

15, 2004. If the amount on line 4 is

Form 1040 – ES to figure your annualized in-

due September 15, 2003, enter the full

come tax. For the special method that must be

Line 6. Multiply line 4 by line 5 and enter the

amount on line 6 here and on the

used to figure tax on the income of a child under

result on line 6, unless line 3 is more than

payment-voucher for your payment

14 who has more than $1,500 investment in-

$139,500 ($69,750 if married filing separately).

due January 15, 2004 . . . . . . . . . .

$1,025

come, see Tax on Investment Income of Child

In that case, use the following worksheet to

Under 14 in Publication 929, Tax Rules for Chil-

If Mira’s estimated tax does not change again,

figure the amount to enter on line 6. Complete

dren and Dependents.

her required estimated tax payment for the

this worksheet for each period.

fourth payment period will be $1,025.

Capital gains tax computation. The regu-

Worksheet 2.7

lar income tax rates for individuals do not apply

Underpayment penalty. If your estimated

to a net capital gain. Instead, your net capital

1. Enter the amount from line 4 of

tax payment for a previous period is less than

gain is taxed at a lower maximum rate.

Section A . . . . . . . . . . . . . . . . .

one-fourth of your amended estimated tax, you

2. Enter the amount included in line 1

The term “net capital gain” means the

may be charged a penalty for underpayment of

for medical and dental expenses,

amount by which your net long-term capital gain

estimated tax for that period when you file your

investment interest, casualty or theft

for the year is more than your net short-term

tax return. See chapter 4 for more information.

losses, and gambling losses . . . . .

capital loss.

3. Subtract line 2 from line 1 . . . . . . .

Annualized Income

The maximum rate may be 8%, 10%, 20%,

4. Enter the number from line 5 of

25%, or 28%, or a combination of those rates.

Section A . . . . . . . . . . . . . . . . .

Installment Method

5. Multiply the amount on line 1 by the

Use the following worksheet to figure

number on line 4 . . . . . . . . . . . . .

If you do not receive your income evenly

the amount to enter on line 12 if the

Note. If the amount on line 3 is zero,

throughout the year (for example, your income

amount on line 1 includes capital gain.

stop here and enter the amount from

from a repair shop you operate is much larger in

line 5 on line 6 of Section A.

the summer than it is during the rest of the year),

Worksheet 2.9

6. Multiply the amount on line 3 by the

your required estimated tax payment for one or

number on line 4 . . . . . . . . . . . . .

more periods may be less than the amount fig-

7. Multiply the amount on line 6 by .80

1. Enter the amount from line 11 of your

ured using the regular installment method.

8. Enter the amount from line 3 of

2003 Annualized Estimated Tax

Section A . . . . . . . . . . . . . . . . .

To see whether you can pay less for any

Worksheet . . . . . . . . . . . . . . . . .

9. Enter $139,500 ($69,750 if married

2. Enter the net capital gain expected for

period, complete the blank 2003 Annualized Es-

filing separately) . . . . . . . . . . . . .

2003 . . . . . . . . . . . . . . . . . . . . .

timated Tax Worksheet (Worksheet 2.10) later

10. Subtract line 9 from line 8 . . . . . . .

3. Combine the net short-term capital

in this chapter. (Note. You must first complete

11. Multiply the amount on line 10

loss and 28% rate gain or loss

the 2003 Estimated Tax Worksheet through line

by .03 . . . . . . . . . . . . . . . . . . . .

expected for 2003. If zero or less,

16.) The worksheet annualizes your tax at the

12. Enter the smaller of line 7 or line 11

enter 0 . . . . . . . . . . . . . . . . . . . .

end of each period based on a reasonable esti-

13. Subtract line 12 from line 5. Enter the

4. Enter the unrecaptured section 1250

result here and on line 6 of Section A

mate of your income, deductions, and other

gain expected for 2002 . . . . . . . . .

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

items relating to events that occurred since the

6. Subtract line 5 from line 2. If zero or

beginning of the tax year through the end of the

Line 7. See the 2003 Standard Deduction Ta-

less, enter 0 . . . . . . . . . . . . . . . .

period. Use the result you figure on line 25d to

bles at the end of this chapter. Find your stan-

7. Subtract line 6 from line 1. If zero or

make your estimated tax payments and com-

dard deduction in the appropriate table.

less, enter 0 . . . . . . . . . . . . . . . .

plete your payment-vouchers.

8. Enter the smaller of line 1 or $47,450

Line 10. Multiply $3,050 by your total ex-

See Example 2.10 for an illustration of the

($28,400 if single; $23,725 if married

pected exemptions, unless line 3 is more than

worksheet.

filing separately; $38,050 if head of

the amount shown for your filing status in the

household) . . . . . . . . . . . . . . . . .

following table.

9. Enter the smaller of line 7 or line 8 . .

Note. If you use the annualized income in-

10. Subtract line 2 from line 1. If zero or

stallment method to figure your estimated tax

Table 2.5

less, enter 0 . . . . . . . . . . . . . . . .

payments, you must file Form 2210 with your

11. Enter the larger of line 9 or line 10 . .

2003 tax return. See Annualized Income Install-

Single . . . . . . . . . . . . . . . . . . $139,500

12. Tax on amount on line 11 from the

ment Method in chapter 4 for more information.

Married filing jointly

2003 Tax Rate Schedule . . . . . . . .

or qualifying widow(er) . . . . . . . . $209,250

Note. If line 7 is more than line 8, go

Married filing separately . . . . . . . $104,625

to line 18.

Head of household . . . . . . . . . . $174,400

Instructions For Worksheet 2.10

13. Subtract line 9 from line 8. If zero or

less, enter 0 . . . . . . . . . . . . . . . .

In that case, use the following worksheet to

The top of the worksheet shows the dates for

14. Multiply line 13 by 10% (.10) . . . . . .

figure the amount to enter on line 10.

15. Enter the amount, if any, of your

each payment period. The periods build; that is,

Worksheet 2.8

qualified 5-year gain. Do not enter

each period includes all previous periods. After

more than the amount on line 13. . . .

the end of each payment period, complete the

1. Multiply $3,050 by your total expected

16. Multiply line 15 by 2% (.02) . . . . . . .

worksheet column for the period from the begin-

exemptions . . . . . . . . . . . . . . . . .

17. Subtract line 16 from line 14 . . . . . .

ning of the tax year through the end of that

2. Enter the amount from line 3 of

Note. If line 13 minus line 15 is more

payment period to figure the payment due for

than zero and equal to line 6, enter 0

Section A . . . . . . . . . . . . . . . . . .

that period.

3. Enter the amount shown for your filing

on lines 20, 25, and 28, and go to line

29.

status from Table 2.5 . . . . . . . . . .

4. Subtract line 3 from line 2 . . . . . . . .

18. Enter the smaller of line 1 or line 6 . .

Line 1. Enter your adjusted gross income for

19. Subtract line 13 from line 18 . . . . . .

5. Divide the amount on line 4 by $2,500

each period. This is your gross income, includ-

($1,250 if married filing separately). If

20. Multiply line 19 by 20% (.20) . . . . . .

ing your share of partnership or S corporation

the result is not a whole number,

Note. If line 4 is zero or blank, skip

income or loss, for the period, minus your adjust-

lines 21 through 25 and read the note

increase it to the next whole number

ments to income for that period. (See Expected

6. Multiply the number on line 5 by .02.

above line 26.

Adjusted Gross Income under How To Figure

Enter the result as a decimal, but not

21. Enter the smaller of line 2 or line 4 . .

Estimated Tax, earlier.)

more than 1 . . . . . . . . . . . . . . . .

22. Add lines 2 and 11 . . . . . . . . . . . .

Chapter 2 Estimated Tax for 2003

Page 23

Publication 505 - Tax Withholding And Estimated Tax Page 23

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