Form Rev-1630a As - Pa Underpayment Of Estimated Tax By Individual Farmers - 2015
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REV-1630A AS (12-15) (FI)
2015
UNDERPAYMENT OF
ESTIMATED TAX BY
INDIVIDUAL FARMERS
BUREAU OF INDIVIDUAL TAXES
INSTRUCTIONS
FARMERS
OTHER SITUATIONS WHEN INTEREST IS APPLIED
There are special estimated tax payment rules that apply to farmers.
Taxpayers not qualifying for the farming exemption will have an under-
payment of their estimated taxes if their 2015 prepayments were not:
These rules apply to those who cultivate, operate or manage a farm for
profit or gain. A farm is a tract of land devoted to agriculture, pas-
90 percent of the estimated tax due for the payment period; or
turage, stock raising or some allied industry. It includes dairy, stock
100 percent of the estimated tax due for the payment period cal-
and poultry farms. For PA personal income tax purposes, a taxpayer is
culated by multiplying the taxable income on Line 11 of 2014 Form
categorized as a farmer if two-thirds or more of his or her gross income
PA-40 by 3.07 percent (0.0307). This provision does not apply if
is derived from farming. See Part A, Line C instructions for additional
you did not file a prior year’s return or if you filed your prior year’s
information regarding the definition of gross income from farming. If
return as a part-year resident.
categorized as a farmer, the taxpayer must make his or her estimated
Taxpayers who fail Test 1 of the farming exemption must file REV-1630,
tax payments by Jan. 15 of the year following the tax year or file his
Underpayment of Estimated Tax by Individuals, to determine the
or her tax return for the year and make the entire payment of tax due
amount of estimated underpayment penalties/interest.
with the return on or before March 1 (or the next business day if March
1 falls on a Saturday, Sunday or holiday) of the year following the tax
FARMING EXCEPTION WORKSHEET
year. Farmers may also make their payments in four equal payments
In order to qualify for the farming exemption, individuals must derive at
as long as the final payment is made on or before Jan. 15 or when the
least two-thirds of their gross income from farming. Complete PART A of
return is filed on or before March 1 (or the next business day if March
the Farming Exception Worksheet to determine if you qualify for this
1 falls on a Saturday or Sunday).
exception. Individuals who qualify as farmers have special rules with
To determine if an individual qualifies as a farmer and will not owe inter-
respect to their estimated tax payments. Complete PART B of the
est for underpaying estimated tax, the following tests must be met:
Farming Exception Worksheet to determine if you met the farmer spe-
cialized rules for estimated taxes.
Test 1)
Your gross income from farming for the taxable year is at
least 2/3 of your gross income from all sources for the
Part A
taxable year; and
Line A. Total gross income from all sources includes income reported
Test 2)
You filed your tax return and paid the entire amount due
on the following:
by March 1 of the following year, or you paid all of your
• PA-40 Lines 1a, 2, 3 and 7;
estimated tax by Jan. 15, 2016.
• PA-40 Line 5, with all selling expenses added back and total net
losses not netted against gross income from all sources (see
Please see the instructions for and complete the "Farming Exception
NOTE below for additional information);
Worksheet" on REV-1630A to determine if you meet the above tests.
• Lines 1 and 2 of PA Schedule E; and
PURPOSE AND USE
• the total of the taxpayer and spouse columns from Line 3 of PA
Under Pennsylvania personal income tax law, any individual who rea-
Schedule T.
sonably expects annual income for the tax year to exceed $8,000,
It also includes gross income amounts for entities reported on PA-40
disregarding income subject to PA withholding, must declare and pay
Line 4 determined as follows:
estimated tax. Failure to pay estimated taxes results in an interest
penalty on the tax amounts that would normally be due.
• Line 5 of PA Schedule C;
Farmers should use this form to determine if they meet both the tests
• Line 12 of PA Schedule F;
for qualifying as a farmer. Farmers who meet Test 1 but fail Test 2 will
• federal form 1065 Schedule K-1, Box 14, Code B (gross farming
calculate their underpayment penalties using this form. Individuals
income) and/or Box 14, Code C (gross non-farming income);
who fail Test 1 are not considered farmers under the exception and are
• federal form 1120S, Schedule K-1, Box 17, Code U (when entry
required to use Form REV-1630, Underpayment of Estimated Tax By
is related to gross farming income); and/or
Individuals, to determine their underpayment penalties. Complete the
• income from other non-farming related partnership, limited lia-
Farming Exception Worksheet to determine if you meet the tests for
bility company and S corporation entities.
qualifying as a farmer.
Income from other non-farming related entities is determined by
NOTE: If using the rules pertaining to farmers you determine you are
adding positive income amounts (not net losses) from the following
exempt from the penalty or use this form to calculate the penalty on
sources:
your 2015 return, enclose a copy of this form (including applicable
worksheets) with your Form PA-40.
• federal form 1120S, Page 1, Line 3, gross profit (use the share-
holder’s proportionate share of gross income reported only);
WHO MUST PAY INTEREST FOR UNDERPAYMENT OF
• PA-20S/PA-65 Schedule RK-1, Line 1 and/or 5 plus Line 12;
ESTIMATED TAXES
• PA-20S/PA-65 Schedule NRK-1, Line 1 and/or 3 plus Line 10
Farmers who meet Test 1 but fail Test 2 must pay interest on the
(use only when no entry appears in federal form 1065 Schedule
amount of estimated tax not paid. If a farmer fails Test 2, the farmer
K-1, Box 14 or when federal form 1120S, Page 1, Line 3 infor-
estimated tax rules and underpayment rules apply. If you did not pay
mation is not available);
any estimated tax, did not pay the correct estimated tax by Jan. 15,
• federal form 1065 Schedule K-1, Boxes 1, 2 and/or 3 plus Box 4
2016, or did not file your return by March 1, 2016, and pay the amount
(use only when PA-20S/PA-65 Schedules RK-1 or NRK-1 are not
of tax due with that return, you may be charged an interest penalty.
available); and/or
This is true even if you are due a refund when you file your PA income
tax return.
• federal form 1120S Schedule K-1, Boxes 1, 2 and/or 3 (use only
when PA-20S/PA-65 Schedules RK-1 or NRK-1 or federal form
NOTE: If you qualified for the Tax Forgiveness Credit for the previous
1120S, Page1, Line 3 information is not available).
tax year and you are not exempt from the interest penalty as a farmer,
you should complete Form REV-1630, Underpayment of Estimated Tax
NOTE: When determining the amount to use from PA Schedule D (PA-
by Individuals, to determine if you are exempt from the underpayment
40 Line 5), selling expenses must be added back in to the net gain or
of estimated tax interest penalty.
loss. Selling expenses include any commissions and other expenses
(Instructions continued on Page 2.)
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