Publication 505 - Tax Withholding And Estimated Tax Page 18
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49Figure B. Do You Have To Pay Estimated Tax?
Start Here
Will you owe $1000 or
Will your income tax
Will your income tax withholding
Yes
No
No
more for 2002 after
withholding and credits be at
and credits be at least 90%
subtracting income tax
*
least 100%
of the tax shown
(66-2/3% for farmers and
withholding and credits
on your 2001 tax return?
fishermen) of the tax shown on
from your total tax? (Do
your 2002 tax return?
not subtract any estimated
Note: Your 2001 return must
tax payments.)
have covered a 12-month
period.
Yes
No
Yes
You are NOT required to pay
estimated tax.
You MUST make estimated
tax payment(s) by the
required due date(s).
See When To Pay
Estimated Tax.
* 112% if less than two-thirds of your gross income for 2001 and 2002 is from farming or fishing and your 2001 adjusted gross income
was more than $150,000 ($75,000 if your filing status for 2002 is married filing a separate return).
Farmers and Fishermen
single, head of household, or married filing sep-
Estimated tax payments not required. You
arately.
do not have to pay estimated tax for 2002 if you
If at least two-thirds of your gross income for
To figure your share of the tax on a joint
meet all three of the following conditions.
2001 or 2002 is from farming or fishing, substi-
return, first figure the tax both you and your
1) You had no tax liability for 2001.
tute 66
2
/
% for 90% in 2a) under General Rule,
spouse would have paid had you filed separate
3
earlier.
returns for 2001 using the same filing status as
2) You were a U.S. citizen or resident for the
for 2002. Then multiply the tax on the joint return
For definitions of gross income from farming
whole year.
by the following fraction:
and gross income from fishing, see Farmers and
3) Your 2001 tax year covered a 12-month
Fishermen later under When To Pay Estimated
The tax you would have paid had
period.
you filed a separate return
Tax.
You had no tax liability for 2001 if your total
The total tax you and your spouse
tax (defined later under Required Annual Pay-
would have paid had you filed
Higher Income Taxpayers
separate returns
ment) was zero or you did not have to file an
income tax return.
If your adjusted gross income (AGI) for 2001
was more than $150,000 ($75,000 if your filing
Example 2.4. Joe and Heather filed a joint
Estates and Trusts
status for 2002 is married filing a separate re-
return for 2001 showing taxable income of
turn), substitute 112% for 100% in 2b) under
$48,000 and a tax of $7,557. Of the $48,000
Estates and trusts also must make estimated tax
taxable income, $40,000 was Joe’s and the rest
General Rule, earlier. This rule does not apply to
payments. However, estates (and certain gran-
was Heather’s. For 2002, they plan to file mar-
farmers and fishermen.
tor trusts that receive the residue of the
ried filing separately. Joe figures his share of the
For 2001, AGI is the amount shown on Form
decedent’s estate under the decedent’s will) are
tax on the 2001 joint return as follows:
1040, line 34; Form 1040A, line 20; and Form
exempt from paying estimated tax for the first
1040EZ, line 4.
two years after the decedent’s death.
Tax on $40,000 based on a separate return
$8,172
Estates and trusts must use Form
Tax on $8,000 based on a separate return
1,204
Aliens
Total . . . . . . . . . . . . . . . . . . . . . . . .
$9,376
1041 – ES, Estimated Income Tax for Estates
Joe’s percentage of total ($8,172 ÷ $9,376)
87%
and Trusts, to figure and pay estimated tax.
Joe’s share of tax on joint return tax ($7,557
Resident and nonresident aliens may also have
× 87%) . . . . . . . . . . . . . . . . . . . . . . .
$6,575
to make estimated tax payments. Resident
aliens should follow the rules in this publication,
How To Figure
Special Rules for Farmers
unless noted otherwise. Nonresident aliens
should get Form 1040 – ES(NR), U.S. Estimated
and Fishermen and Higher
Estimated Tax
Tax for Nonresident Alien Individuals.
Income Taxpayers
Avoiding Estimated Tax
To figure your estimated tax, you must figure
There are special rules for farmers, fishermen,
your expected adjusted gross income, taxable
and certain higher income taxpayers.
If you receive salaries and wages, you can avoid
income, taxes, deductions, and credits for the
having to make estimated tax payments by ask-
year.
ing your employer to take more tax out of your
When figuring your 2002 estimated tax, it
earnings. To do this, file a new Form W – 4 with
may be helpful to use your income, deductions,
your employer. See chapter 1.
and credits for 2001 as a starting point. Use your
Page 18
Chapter 2 Estimated Tax for 2002
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