Publication 505 - Tax Withholding And Estimated Tax (Page 38 of 49) in pdf

returns you originally filed by the due date, use

you file Form 2210. You must file Form 2210

road retirement tax withholding included in the

the tax shown on the joint return to figure your

with your return if any of the following applies.

total on line 41. On Form 1040EZ, it is the

required estimated tax payments. This rule ap-

amount on line 8.

•

You request a waiver. See Waiver of Pen-

plies only if both original separate returns were

alty, later.

filed on time.

No Tax Liability Last Year

•

You use the annualized income install-

2000 separate returns and 2001 joint return.

ment method. See the explanation of this

You do not owe a penalty if you had no tax

If you file a joint return with your spouse for

method under Figuring Your Underpay-

liability last year and you were a U.S. citizen or

2001, but you filed separate returns for 2000,

ment, later.

resident for the whole year. For this rule to apply,

your 2000 tax is the total of the tax shown on

•

your tax year must have included all 12 months

You use your actual withholding for each

your separate returns. You filed a separate re-

of the year.

payment period for estimated tax pur-

turn if you filed as single, head of household, or

You had no tax liability for 2000 if your total

poses. See Actual withholding method

married filing separately.

tax was zero or you did not need to file an

under Figuring Your Underpayment, later.

income tax return.

•

2000 joint return and 2001 separate returns.

You base any of your required install-

If you file a separate return for 2001, but you

ments on the tax shown on your 2000 re-

Example 4.3. Ray, who is single and 22

filed a joint return with your spouse for 2000,

turn and you filed or are filing a joint return

years old, was unemployed for most of 2000. He

your 2000 tax is your share of the tax on the joint

for either 2000 or 2001 but not for both

earned $2,700 in wages before he was laid off,

return. You filed a separate return if you filed as

years.

and he received $2,500 in unemployment com-

single, head of household, or married filing sep-

pensation afterwards. He had no other income.

arately.

Even though he had gross income of $5,200, he

To figure your share of the taxes on a joint

did not have to pay income tax because his

return, first figure the tax both you and your

gross income was less than the filing require-

Exceptions

spouse would have paid had you filed separate

ment for a single person under age 65 ($7,200

returns for 2000 using the same filing status as

for 2000). He filed a return only to have his

Generally, you do not have to pay an underpay-

for 2001. Then multiply the tax on the joint return

withheld income tax refunded to him.

ment penalty if either of the following conditions

by the following fraction:

In 2001, Ray began regular work as an inde-

apply:

The tax you would have paid had

pendent contractor. Ray made no estimated tax

•

you filed a separate return

payments in 2001. Even though he did owe tax

Your total tax is less than $1,000, or

at the end of the year, Ray does not owe the

The total tax you and your spouse

•

You had no tax liability last year.

would have paid had you filed

underpayment penalty for 2001 because he had

separate returns

no tax liability in 2000.

Less Than $1,000 Due

Total tax for 2000. For 2000, your total tax on

Example 4.2. Lisa and Paul filed a joint re-

Form 1040 is the amount on line 57 reduced by

You do not owe a penalty if the total tax shown

turn for 2000 showing taxable income of

the total of the following amounts.

on your return minus the amount you paid

$48,000 and a tax of $7,747. Of the $48,000

through withholding (including excess social se-

1) Any recapture of a federal mortgage sub-

taxable income, $40,000 was Lisa’s and the rest

curity and railroad retirement tax withholding) is

sidy from Form 8828 included on line 57.

was Paul’s. For 2001, they file married filing

less than $1,000.

separately. Lisa figures her share of the tax on

2) Any social security or Medicare tax on tips

the 2000 joint return as follows:

Total tax for 2001. For 2001, your total tax on

not reported to your employer on line 53.

Form 1040 is the amount on line 58 reduced by

2000 Tax on $40,000 based on a separate

3) Any tax on excess contributions to IRAs

the total of the following amounts.

return

$ 8,357

and medical savings accounts, and any

2000 Tax on $8,000 based on a separate

tax on excess accumulations in qualified

1) Any recapture of a federal mortgage sub-

return

1,204

retirement plans from Form 5329 included

sidy from Form 8828 included on line 58.

Total . . . . . . . . . . . . . . . . . . . . . . .

$ 9,561

on line 54.

Lisa’s percentage of total

2) Any social security or Medicare tax on tips

($8,357 ÷ $ 9,561) . . . . . . . . . . . . . . .

87.41%

4) Any uncollected social security, Medicare,

not reported to your employer on line 54.

Lisa’s percentage of tax on joint return

or railroad retirement tax included on line

($7,747 × 87.41%) . . . . . . . . . . . . . . .

$ 6,772

3) Any tax on excess contributions to IRAs

57.

and medical savings accounts, and any

Form 2210. In most cases, you do not need to

5) Any earned income credit on line 60a.

tax on excess accumulations in qualified

file Form 2210. The IRS will figure the penalty for

retirement plans from Form 5329 included

6) Any additional child tax credit on line 62.

you and send you a bill. If you want us to figure

on line 55.

the penalty for you, leave the penalty line on

7) Any credit for federal tax on fuels from

4) Any uncollected social security, Medicare,

your return blank. Do not file Form 2210. If you

Form 4136 included on line 64.

or railroad retirement tax included on line

want to figure your penalty, complete Part I, Part

Your total tax on Form 1040A is the amount

58.

II, and either Part III or Part IV of Form 2210. See

on line 35 minus the amount on lines 38a and

Reasons for filing to determine whether you

5) Any earned income credit on line 61a.

39. Your total tax on Form 1040EZ is the amount

should file Form 2210. If you use Form 2210,

on line 10 minus the amount on line 8a.

6) Any additional child tax credit on line 63.

you cannot file Form 1040EZ.

On Form 1040, enter the amount of your

7) Any credit for federal tax on fuels from

penalty on line 71. If you owe tax on line 70, add

Form 4136 included on line 65.

the penalty to your tax due and show your total

Figuring Your Required

Your total tax on Form 1040A is the amount

payment on line 70. If you are due a refund,

on line 36 minus the amount on lines 39a and

subtract the penalty from the overpayment you

Annual Payment

40. Your total tax on Form 1040EZ is the amount

show on line 67.

on line 11 minus the amount on line 9a.

On Form 1040A, enter the amount of your

Figure your required annual payment in Part II of

penalty on line 46. If you owe tax on line 45, add

Paid through withholding. For 2001, the

Form 2210, following the line-by-line instruc-

the penalty to your tax due and show your total

amount you paid through withholding on Form

tions. If you rounded the entries on your return to

payment on line 45. If you are due a refund,

1040 is the amount on line 59 plus any excess

whole dollars, you can round on Form 2210.

subtract the penalty from the overpayment you

social security or railroad retirement tax with-

show on line 42.

holding on line 62. On Form 1040A, the amount

Example 4.4. The tax on Ivy Fields’ 2000

Lowering or eliminating the penalty. You

you paid through withholding is the amount on

return was $10,000 (her AGI was not more than

may be able to lower or eliminate your penalty if

line 37, plus any excess social security or rail-

$150,000). The tax on her 2001 return (Form

Page 38

Chapter 4 Underpayment Penalty for 2001

Publication 505 - Tax Withholding And Estimated Tax Page 38

Related Articles

Related forms

Related Categories