Looking for a Pennsylvania Tax Forms And Templates? Download it for free!

If Line 9 is zero for all payment periods, you do not owe any interest.

In this case, $1,344 is less than both safe harbors.

If you have an underpayment on Line 9 in any payment period, con-

Since the current PA tax liability minus current withholding and cred-

tinue on to Part II, Exception 1 Worksheet.

its is at least $246 (actually $2,255) and the current year withholding

and allowable credits ($1,344) are less than $3,239, the taxpayer

PART II. CALCULATING YOUR EXCEPTIONS

should fill out the REV-1630 to see if there is an underpayment of

Line 11. Enter the result of Exception 1 Worksheet, Line C.

estimated tax.

Line 12. (Exception 1). Exception 1 applies if your 2007 estimated

tax payments and credits equal the tax that would have been due on

DETERMINING IF THERE IS AN UNDERPAYMENT AND HOW

your 2006 income if you figured using the current rate. Does not

THE DEPARTMENT DETERMINES THE DECLARATION

apply if you did not file a return for the prior year or if the prior year’s

A taxpayer makes an underpayment of quarterly estimated tax liabili-

return was filed as a part-year resident.

ty whenever he fails to pay all of the amount that he declares to be his

quarterly estimated payment. The Department will use the smaller

To calculate, multiply your Pennsylvania taxable income from your

dollar amount of 90 percent of the current year’s liability minus with-

2006 return by 3.07 percent (.0307). Enter 25 percent of this amount

holding and credits or the prior year’s income times the current year’s

in column (a), 50 percent in column (b), 75 percent in column (c) and

rate minus current year’s withholding and credits as the declaration.

100 percent in column (d). If the amount on Line 11 is equal to or

greater than the amount on Line 12 in any of the columns, you

DETERMINING THE UNDERPAYMENT AMOUNT UPON WHICH

do not owe interest for that payment period and you should

THE ADDITION OF INTEREST MAY BE ASSESSED

place an X in the applicable Line 14a or 14b for that quarter. If

The amount to be considered is the amount that the taxpayer should

the amount on Line 11 is less than the amount on Line 12 for any

have paid in quarterly estimated taxes if the taxpayer could have

payment period, continue on to Exception 2 for those periods.

used the PA Tax Liability (Line 12) as shown on his PA-40 tax return.

Line 13. (Exception 2). Exception 2 applies if your 2007 estimated tax

The underpayment amount is the difference between the tax liability

payments and credits equal at least 90 percent of the tax on your

times 90 percent minus any credits for the applicable quarter [calcu-

actual taxable income for the periods from: January 1 to March 31;

lated by dividing 90 percent of the PA Tax Liability (Line 12 of the PA-

January 1 to May 31; January 1 to August 31; and January 1 to

40) minus any withholding and credits, by the number of estimated

December 31. Enter 90 percent of Exception 2 Worksheet, Line B. If

payment quarters] and the estimated payments actually paid on time

Line 11 is equal to or greater than Line 13, the exception applies

for that quarter.

for that quarter and you should place an X in the applicable Line

Important

14a or 14b for that quarter.

The amounts calculated in each of the columns on Lines 12 and 13

PART III. FIGURING THE INTEREST

for Exceptions 1 and 2 (respectively) cannot be used to determine

Use this part of the form to calculate the amount of interest due. If

the underpayment penalty. You must use Line 9 in this calculation.

one of the exceptions applies for any of the periods, place an X in the

However, if you had no estimated tax payment requirements for a

boxes under the column for that period. You only have to complete

previous tax year due to the tax liability being below the threshold

Lines 14 and 15 for the periods in which interest is due. The amount

required for estimated tax payments to be made, or due to being eli-

of the underpayment is the amount on Line 9 for the appropriate pay-

gible for 100 percent tax forgiveness, special exceptions apply and

ment period.

you may not owe penalties for the quarters prior to meeting the esti-

Lines 14a, 14b and 14c.

mated payment requirements.

Line 14a. Applies to first, second and third quarters for calendar

The special exceptions only apply if you file an original or amended PA-

year filers and any fiscal filer payments that were due on or

40ESR(I), Declaration of Estimated or Estimated Withholding Income,

before December 31. If no estimated payments were made during

and make the full amount of the estimated tax payment due in the first

the year, use the number of days after the due date of the estimated

estimated payment period in which it is determined that the estimated

payment to and including the date of the annual payment or

payment requirements have been met for a year following a year in

December 31, whichever is earlier. If December 31 is earlier, enter

which no estimated payments were due or required to be made.

258 in column (a), 199 in column (b) and 105 in column (c). Fiscal fil-

If the PA-40ESR is not filed in the correct quarter or if the full amount

ers adjust according to estimated payment due dates.

of the estimated tax payment is not made in that quarter, the special

Line 14b. If no estimated payment was made for the fourth quarter,

exception does not apply for any quarters, and the estimated under-

use the number of days after due date of estimated payment to and

payment penalty will apply for all quarters in which the estimated tax

including date of annual payment or April 15, 2008, whichever is ear-

underpayment exists.

lier. If April 15 is earlier, enter 91 in column (d). Fiscal filers adjust

In situations where the conditions exist for the exception to apply, you

according to due date of annual return.

should complete the Exception 2 worksheet to indicate the quarters

14c. Applies to first, second and third quarters for calendar year

in which the income (Line A) was earned and the tax liability (Line B)

filers and any fiscal filer payments that were due after December

for those periods. Place an X in the applicable box on Line 14a to

31. If no estimated payments were made, use the number of days

indicate that you do not owe a penalty for each quarter the special

after December 31, 2007 to and including date of annual payment or

exception applies. You must also complete the “SPECIAL

April 15, 2008, whichever is earlier. If April 15 is earlier, enter 106 in

EXCEPTION INFORMATION” section in PART III by entering the

each column. Fiscal filers adjust according to due date of annual

information requested for Lines A and B.

return.

BILLING THE ADDITION OF INTEREST.

If a taxpayer fully pays an underpayment after a required due date

The interest to be added to the taxpayer’s tax liability for an under-

but prior to or on the next due date, then "the number of days after

payment is to be billed per quarter. The interest to be added is based

due date of estimated payment" in Lines 14a, 14b or 14c will need to

upon the amount of the underpayment per quarter.

be adjusted. To make the adjustment, count the days from the due

date to the date of payment.

Interest is assessed upon the underpayment amount until the tax-

payer has made payments for the applicable quarter that equal the

If the taxpayer partially pays an underpayment after a required due

date but prior to or on the next due date, that partial payment is

amount of the declared quarterly estimated payment liability.

deemed to be a reduction, on the payment date, to the oldest quar-

However, interest may not be imposed beyond the 15th day of the

ter’s underpayment. For such situation, the taxpayer will need to

fourth month of the close of the taxpayer’s taxable year (typically this

adjust this part accordingly.

will be April 15th) for any quarter.

Lines 15a, 15b, 15c and 16. Self-explanatory.

If a taxpayer makes a late payment for a quarter in which an under-

payment exists and his total payments for that quarter are less than

EXAMPLE OF WHEN ESTIMATED UNDERPAYMENT APPLIES:

the amount of the declared estimated tax liability or the required esti-

Tax liability for current tax year

$3,599.00

mated amount, interest is billed upon the underpayment amount.

Less current tax year’s withholding & credits

1,344.00

However, as soon as a taxpayer makes a late payment for a quarter

$2,255.00

in which an underpayment exists, the underpayment is reduced by

Current withholding and credits must be less than the smaller of the

the late payment amount even if the total payment amount is less

following to be penalized for estimated underpayment:

than the amount of the taxpayer’s declared estimated tax liability.

•

$3,239.00 (90 percent of the tax liability on the current return); or

When the taxpayer has made payments for the underpayment quar-

•

$3,502.00 (PA taxable income on prior year’s return multiplied by

ter equal to his declared quarterly estimated tax liability, the

the current year’s tax rate).

Department stops imposing interest for that quarter.

Instructions For Form Rev-1630 - Underpayment Of Estimated Tax Dy Individuals - 2007 Page 2

Related Articles

Related forms

Related Categories