Publication 505 - Tax Withholding And Estimated Tax (Page 24 of 49) in pdf

23. Subtract line 1 from line 22. If zero or

2) 50% (.50) for the second period,

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

How To Pay

3) 75% (.75) for the third period, or

24. Subtract line 23 from line 21. If zero

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

4) 100% (1.00) for the fourth period.

Estimated Tax

25. Multiply line 24 by 25% (.25) . . . . . .

Note. If line 3 is zero or blank, go to

You may choose to include your actual with-

line 29 . . . . . . . . . . . . . . . . . . . .

holding through the due date for each period on

There are five ways to pay estimated tax.

26. Add lines 11, 13, 19, and 24 . . . . . .

line 25c. You can make this choice separately

27. Subtract line 26 from line 1. If zero or

for the taxes withheld from your wages and all

1) By crediting an overpayment on your

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

other withholding. For an explanation of what to

2002 return to your 2003 estimated tax.

28. Multiply line 27 by 28% (.28) . . . . . .

include in withholding, see Total Estimated Tax

29. Add lines 12, 17, 20, 25, and 28 . . . .

2) By sending in your payment with a

Payments under How To Figure Estimated Tax,

30. Tax on the amount on line 1 from the

payment-voucher from Form 1040 – ES.

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

earlier.

31. Tax. Enter the smaller of line 29 or

3) By paying electronically using the Elec-

line 30 here and on line 12 of the

Section B. If you had income from self-em-

tronic Federal Tax Payment System

2003 Annualized Estimated Tax

ployment during any period, complete the work-

(EFTPS). For EFTPS information, call

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

sheet column for that period to figure your

1 – 800 – 945 – 8400 or 1 – 800 – 555 – 4477.

annualized self-employment tax before you

4) By electronic funds withdrawal if you

A collectibles gain or loss is any gain or

complete the worksheet column for that period

are filing Form 1040 or Form 1040A elec-

loss from the sale or exchange of a work of art,

in Section A.

tronically.

rug, antique, metal, gem, stamp, coin, or alco-

holic beverage or other collectible that is a capi-

Nonresident aliens. If you will file Form

5) By credit card using a pay-by-phone sys-

tal asset and that was held more than one year.

1040NR and you do not receive wages as an

tem or the Internet.

employee subject to U.S. income tax withhold-

Line 13. Enter your self-employment tax for

In addition, if you are a beneficiary of an estate

ing, the instructions for the worksheet are modi-

each period from line 34a.

or trust, and the trustee elects to credit 2003

fied as follows.

trust payments of estimated tax to you, you can

Line 14. Include all the taxes you will owe

treat the amount credited as paid by you on

1) Skip the first column.

(other than income tax and self-employment tax)

January 15, 2004.

because of events that occurred during the pe-

2) On line 1, enter your income for the period

riod.

that is effectively connected with a U.S.

Crediting an Overpayment

If you filed a 2002 Form 1040, these include:

trade or business.

1) Taxes on qualified plans, including IRAs,

3) On line 17, increase your entry by the

When you file your Form 1040 or Form 1040A

and other tax favored accounts,

amount determined by multiplying your in-

for 2002 and you have an overpayment of tax,

come for the period that is not effectively

you can apply part or all of it to your estimated

2) Advance earned income credit,

connected with a U.S. trade or business by

tax for 2003. On line 72 of Form 1040, or line 46

3) Household employment taxes that are re-

the following:

of Form 1040A, write the amount you want

ported on your income tax return, and

credited to your estimated tax rather than re-

a) 72% for the second column,

funded. The amount you have credited should

4) Write-in amounts on line 61of Form 1040.

b) 45% for the third column, and

be taken into account when figuring your esti-

Do not include tax on recapture of a federal

mated tax payments.

c) 30% for the fourth column. However, if

mortgage subsidy, social security and Medicare

you can use a treaty rate lower than

You can use all the credited amount toward

tax on unreported tip income, and any uncol-

30%, use the percentages determined

your first payment, or you can spread it out in

lected social security, Medicare, or railroad re-

by multiplying your treaty rate by 2.4,

any way you choose among any or all of your

tirement tax.

1.5, and 1, respectively, instead of the

If you filed a 2002 Form 1040A, “other tax” is

payments.

above percentages.

any advance earned income credit payments on

If you ask that an overpayment be credited to

line 37 of that form.

your estimated tax for the next year, the pay-

4) On line 22, enter one-half of the amount

ment is considered to have been made on the

Line 16. Include all the credits (other than

from line 16c of the Form 1040 – ES(NR)

due date of the first estimated tax installment

withholding credits) you can claim because of

2002 Estimated Tax Worksheet in the sec-

(April 15 for calendar year taxpayers). You can-

events that occurred during the period. If you are

ond column, and one-fourth in the third

not have any of that amount refunded to you

using your 2002 return as a guide and filed Form

and fourth columns.

after that due date until the close of that tax year.

1040, your 2002 credits included the credits on

5) On lines 20 and 23, skip column (b).

lines 64, 66, and 68 box b, and the credits that

You also cannot use that overpayment in any

are included in the total on line 54. If you filed

other way after that date.

6) On line 25c, if you do not use the actual

Form 1040A, your 2002 credits included the

withholding method, include one-third of

credits on lines 41 and 42.

Example 2.8. When Kathleen finished filling

your total expected withholding in the sec-

out her 2002 tax return, she saw that she had

ond column and two-thirds in the third and

Line 25a. If line 24 is smaller than line 21 and

overpaid her taxes by $750. Kathleen knew she

fourth columns.

you are not certain of the estimate of your 2003

would owe additional tax in 2003. She credited

tax, you can avoid a penalty by entering the

See Publication 519 for more information.

$600 of the overpayment to her 2003 estimated

amount from line 21 on line 25a.

tax and had the remaining $150 refunded to her.

Estimated Tax

Line 25c. Include all estimated tax payments

In September, she amended her 2002 return

Payments Not Required

credited to 2003 and federal income tax with-

by filing Form 1040X, Amended U.S. Individual

holding through the payment due date for the

Income Tax Return. It turned out that she owed

You do not have to make estimated tax pay-

period. Also include excess social security and

$250 more in tax than she had thought. This

ments if your withholding in each payment pe-

excess railroad retirement for the period.

reduced her 2002 overpayment from $750 to

riod is at least one-fourth of your required annual

Your withholding is considered paid in four

$500. Because the $750 had already been ap-

payment or at least your required annualized

equal installments, one on the due date of each

plied to her 2003 estimated tax or refunded to

income installment for that period. You also do

payment period. To figure the amount to include

her, the IRS billed her for the additional $250

not have to make estimated tax payments if you

on line 25c for each period, multiply your total

she owed, plus penalties and interest. Kathleen

will pay enough through withholding to keep the

expected withholding for 2003 by:

could not use any of the $600 she had credited

amount you will owe with your return under

1) 25% (.25) for the first period,

$1,000.

to her 2003 estimated tax to pay this bill.

Page 24

Chapter 2 Estimated Tax for 2003

Publication 505 - Tax Withholding And Estimated Tax Page 24

Related Articles

Related forms

Related Categories