Publication 505

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## How To Figure Each Payment(p29) |

After you have figured your total estimated tax, figure how much you must pay by the due date of each payment period. You should pay enough by each due date to avoid a penalty for that period. If you do not pay enough during any payment period, you may be charged a penalty even if you are due a refund when you file your tax return. The penalty is discussed in
chapter 4.

taxmap/pubs/p505-014.htm#en_us_publink1000194659## Regular Installment Method(p29) |

If your first estimated tax payment is due April 18, 2017, you can figure your required payment for each period by dividing your annual estimated tax due (line 16a of the 2017 Estimated Tax Worksheet (Worksheet 2-1)) by 4. Enter this amount on line 17. However, use this method only if your income is basically the same throughout the
year.

taxmap/pubs/p505-014.htm#en_us_publink1000194660## Change in estimated tax.(p29) |

After you make an estimated tax payment, changes in your income, adjustments,
deductions, credits, or exemptions may make it necessary for you to refigure
your estimated tax. Pay the unpaid balance of your amended estimated tax by the
next payment due date after the change or in installments by that date and the
due dates for the remaining payment periods.

If you do not receive your income evenly throughout the year, your required estimated tax payments may not be the same for each period. See
*Annualized Income Installment Method*.

. If you refigure your estimated tax during the year, or if your first estimated tax payment is due after April 18, 2017, figure your required payment for each remaining payment period using
Worksheet 2-14.Amended estimated tax |

Early in 2017, Mira Roberts figures that her estimated tax due is $1,800. She
makes estimated tax payments on April 18 and June 15 of $450 each ($1,800 ÷
4).

On July 10, she sells investment property at a gain. Her refigured estimated tax is $4,100. Her required estimated tax payment for the third payment period is $2,175, as shown in her filled-in
Worksheet 2-14.

If Mira's estimated tax does not change again, her required estimated tax payment for the fourth payment period will be $1,025.

taxmap/pubs/p505-014.htm#en_us_publink1000194667Underpayment penalty.(p29) |

The penalty is figured separately for each payment period. If you figure your
payments using the regular installment method and later refigure your payments
because of an increase in income, you may be charged a penalty for underpayment
of estimated tax for the period(s) before you changed your payments. To see how
you may be able to avoid or reduce this penalty, see
*Annualized Income Installment Method (Schedule AI)* in chapter 4.

taxmap/pubs/p505-014.htm#en_us_publink1000194666

taxmap/pubs/p505-014.htm#en_us_publink1000194669Worksheet 2-14. Amended Estimated Tax Worksheet—Illustrated

taxmap/pubs/p505-014.htm#en_us_publink10003090561. | Amended total estimated tax due | 1. | $4,100 | |||

2. | Multiply line 1 by: | |||||

50% (0.50) if next payment is due June 15, 2017 | ||||||

75% (0.75) if next payment is due September 15,
2017 | ||||||

100% (1.00) if next payment is due January 16,
2018 | 2. | 3,075 | ||||

3. | Estimated tax payments for all previous periods | 3. | 900 | |||

4. | Next required payment: Subtract line 3 from line 2 and enter the result (but not less than zero) here and on your payment voucher for your next required payment
| 4. | $2,175 | |||

Note.
If the payment on line 4 is due January 16, 2018,
stop here. Otherwise, go to line 5. | ||||||

5. | Add lines 3 and 4 | 5. | 3,075 | |||

6. | Subtract line 5 from line 1 and enter the result (but not less than zero) | 6. | 1,025 | |||

7. | Each following required payment: If the payment on line 4 is due June 15, 2017, enter one-half of the amount on line 6 here and on the payment vouchers for your payments due September 15, 2017, and January 16, 2018. If the amount on line 4 is due September 15, 2017, enter the amount from line 6 here and on the payment voucher for your payment due January 16, 2018
| 7. | $1,025 |

Worksheet 2-14. Amended Estimated Tax Worksheet—Blank

1. | Amended total estimated tax due | 1. | ||||

2. | Multiply line 1 by: | |||||

50% (0.50) if next payment is due June 15, 2017 | ||||||

75% (0.75) if next payment is due September 16,
2017 | ||||||

100% (1.00) if next payment is due January 16,
2018 | 2. | |||||

3. | Estimated tax payments for all previous periods | 3. | ||||

4. | Next required payment: Subtract line 3 from line 2 and enter the result (but not less than zero) here and on your payment voucher for your next required payment
| 4. | ||||

Note.
If the payment on line 4 is due January 16, 2018,
stop here. Otherwise, go to line 5. | ||||||

5. | Add lines 3 and 4 | 5. | ||||

6. | Subtract line 5 from line 1 and enter the result (but not less than zero) | 6. | ||||

7. | Each following required payment: If the payment on line 4 is due June 15, 2017, enter one-half of the amount on line 6 here and on the payment vouchers for your payments due September 15, 2017, and January 16, 2018. If the amount on line 4 is due September 15, 2017, enter the amount from line 6 here and on the payment voucher for your payment due January 16, 2018
| 7. |

## Annualized Income Installment Method(p31) |

If you do not receive your income evenly throughout the year (for example, your income from a repair shop you operate is much larger in the summer than it is during the rest of the year), your required estimated tax payment for one or more periods may be less than the amount figured using the regular installment
method.

The annualized income installment method annualizes your tax at the end of each period based on a reasonable estimate of your income, deductions, and other items relating to events that occurred from the beginning of the tax year through the end of the period. To see whether you can pay less for any period, complete the 2017 Annualized Estimated Tax Worksheet
(Worksheet 2-9).

You first must complete the 2017 Estimated Tax Worksheet (Worksheet 2-1) through line
16b. |

Use the result you figure on line 32 of Worksheet 2-9 to make your estimated tax payments and complete your payment
vouchers.

## Instructions for the 2017 Annualized Estimated Tax Worksheet (Worksheet 2-9)(p31) |

Use
Worksheet 2-9 to help you follow these instructions. |

The purpose of this worksheet is to determine your estimated tax liability as your income accumulates throughout the year, rather than dividing your entire year's estimated tax liability by four as if your income was earned equally throughout the year. The top of the worksheet shows the dates for each payment period. The periods build; that is, each period includes all previous periods. After the end of each payment period, complete the corresponding worksheet column to figure the payment due for that
period.

taxmap/pubs/p505-014.htm#en_us_publink1000194678## Line 1.(p31) |

Enter your AGI for the period. This is your gross income for the period,
including your share of partnership or S corporation income or loss, minus your
adjustments to income for that period. See
*Expected AGI—Line 1*.

taxmap/pubs/p505-014.htm#en_us_publink1000194680Self-employment income.(p31) |

If you had self-employment income, first complete Section B of this worksheet.
Use the amounts on line 43 when figuring your expected AGI to enter in each
column of Section A, line 1.

taxmap/pubs/p505-014.htm#en_us_publink1000194681## Line 4.(p31) |

Be sure to consider all deduction limits figured on Schedule A (Form 1040), such
as reducing your medical expenses by 10% or reducing certain miscellaneous
deductions by 2% of your AGI. Figure your deduction limits using your expected
AGI in the corresponding column of line 1 (2017 Annualized Estimated Tax
Worksheet (Worksheet 2-9)).

taxmap/pubs/p505-014.htm#en_us_publink1000194683## Line 6.(p31) |

Multiply line 4 by line 5 and enter the result on line 6 unless line 3 is more
than $313,800 if married filing jointly or qualifying widow(er), $287,650 if
head of household, $261,500 if single, or $156,900 if married filing separately.
In that case, use Worksheet 2-10 to figure the amount to enter on line 6.
Complete Worksheet 2–10 for each period, as necessary.

taxmap/pubs/p505-014.htm#en_us_publink1000194684## Line 7.(p31) |

If you will not itemize your deductions, use Worksheet 2-4 to figure your
standard deduction.

taxmap/pubs/p505-014.htm#en_us_publink1000194686## Line 10.(p31) |

Multiply $4,050 by your total expected exemptions and enter the result on line
10 unless line 3 is more than $313,800 if married filing jointly or qualifying
widow(er), $287,650 if head of household, $261,500 if single, or $156,900 if
married filing separately.

In that case, use Worksheet 2-11 to figure the amount to enter on line
10.

taxmap/pubs/p505-014.htm#en_us_publink1000194687## Line 12.(p31) |

Generally, you will use the
Tax Rate Schedules
to figure the tax on your annualized income. However, see below for situations
where you must use a different method to compute your estimated tax.

taxmap/pubs/p505-014.htm#en_us_publink1000194689Tax on child's investment income.(p31) |

You must use a special method to figure tax on the income of the following
children who have more than $2,100 of investment income.

taxmap/pubs/p505-014.htm#en_us_publink1000194690- Children under age 18 at the end of 2017.
- The following children if their earned income is not more than half their support.

Tax on net capital gain.(p31) |

The regular income tax rates for individuals do not apply to a net capital gain.
Instead, your net capital gain is taxed at a lower maximum rate.

The term "net capital gain" means the amount by which your net long-term capital gain for the year is more than your net short-term capital
loss.

taxmap/pubs/p505-014.htm#en_us_publink1000194691Tax on qualified dividends and capital gains.(p31) |

For 2017, your capital gain and dividends rate will depend on your income.

. If the amount on line 1 includes a net capital gain or qualified dividends, use
Worksheet 2-12 to figure the amount to enter on line 12.Tax on capital gain or qualified dividends |

. If you expect to claim the foreign earned income exclusion or the housing exclusion or deduction on Form 2555 or Form 2555-EZ, use
Worksheet 2-13 to figure the amount to enter on line 12.Tax if excluding foreign earned income or excluding or deducting foreign
housing |

## Line 13.(p31) |

If you file Form 1040, add the tax from Forms 8814, 4972, and 6251 for the
period. If you file Form 1040A, add the amount from the Alternative Minimum Tax
Worksheet found in the instructions. Also include any recapture of an education
credit for each period. You may owe this tax if you claimed an education credit
in an earlier year and you received either tax-free educational assistance or a
refund of qualifying expenses for the same student after filing your 2016
return.

Use the 2016 forms or worksheets to see if you will owe any of the taxes just discussed. Figure the tax based on your income and deductions during the period shown in the column headings. Multiply this amount by the annualization amounts shown for each column on line 2 of the 2017 Annualized Estimated Tax Worksheet
(Worksheet 2-9). Enter the result on line 13 of this worksheet.

taxmap/pubs/p505-014.htm#en_us_publink1000194698## Line 15.(p31) |

Include all the nonrefundable credits you expect to claim because of events that
will occur during the period.

## Line 18.(p31) |

Add your expected other taxes.

Other taxes include the following.

taxmap/pubs/p505-014.htm#en_us_publink1000194703- Additional tax on early distributions from:
- Household employment taxes if:
- Amounts on Form 1040 written on the line for "other taxes" (line 62 on the 2016 Form 1040). But
**do not include**recapture of a federal mortgage subsidy; tax on excess golden parachute payments; look-back interest due under section 167(g) or 460(b) of the Internal Revenue Code; excise tax on insider stock compensation from an expatriated corporation; uncollected social security, Medicare, or RRTA tax on tips or group-term life insurance. - Repayment of the first-time homebuyer credit if the home will cease to be your main home in 2017. See Form 5405 for exceptions.
- Additional Medicare Tax. A 0.9% Additional Medicare Tax applies to your combined Medicare wages and self-employment income and/or your RRTA compensation that exceeds the amount listed in the following chart, based on your filing
status.
**Filing Status****Threshold Amount**Married filing jointly $250,000 Married filing separately $125,000 Single $200,000 Head of household $200,000 Qualifying Widow(er) $250,000

Medicare wages and self-employment income are combined to determine if your income exceeds the threshold. A self-employment loss should not be considered for purposes of this tax. RRTA compensation should be separately compared to the threshold.

Your employer is responsible for withholding the 0.9% Additional Medicare Tax on Medicare wages or RRTA compensation it pays you in excess of $200,000 in 2017. You should consider this withholding, if applicable, in determining whether you need to make an estimated payment. - Net Investment Income Tax (NIIT). The NIIT is 3.8% of the lesser of your net investment income or the excess of your modified adjusted gross income over a specified threshold amount. Threshold
amounts:
**Filing Status****Threshold Amount**Married filing jointly $250,000 Married filing separately $125,000 Single $200,000 Head of household $200,000 Qualifying Widow(er) $250,000

## Line 20.(p32) |

Include all the refundable credits (other than withholding credits) you can
claim because of events that occurred during the period. These include the
earned income credit, additional child tax credit, fuel tax credit, net premium
tax credit, any refundable credit from Form 8885, and refundable American
opportunity credit.

## Line 29.(p32) |

If line 28 is smaller than line 25 and you are not certain of the estimate of
your 2017 tax, you can avoid a penalty by entering the amount from line 25 on
line 29.

taxmap/pubs/p505-014.htm#en_us_publink1000194706## Line 31.(p32) |

For each period, include estimated tax payments made and any excess social
security and railroad retirement tax.

Also include estimated federal income tax withholding. One-fourth of your estimated withholding is considered withheld on the due date of each payment period. To figure the amount to include on line 31 for each period, multiply your total expected withholding for 2017 by:

However, you may choose to include your withholding according to the actual dates on which the amounts will be withheld. For each period, include withholding made from the beginning of the period up to and including the payment due date. You can make this choice separately for the taxes withheld from your wages and all other withholding. For an explanation of what to include in withholding, see
*Total Estimated Tax Payments Needed—Line 16a*.

taxmap/pubs/p505-014.htm#en_us_publink1000194708## Nonresident aliens.(p32) |

If you will file Form 1040NR and you do not receive wages as an employee subject
to U.S. income tax withholding, the instructions for the worksheet are modified
as follows.

taxmap/pubs/p505-014.htm#en_us_publink1000194709- Skip column (a).
- On line 1, enter your income for the period that is effectively connected with a U.S. trade or business.
- On line 21, increase your entry by the amount determined by multiplying your income for the period that is not effectively connected with a U.S. trade or business by the
following.However, if you can use a treaty rate lower than 30%, use the percentages determined by multiplying your treaty rate by 2.4, 1.5, and 1,
respectively.
- On line 26, enter one-half of the amount from line 16c of the Form 1040-ES (NR) 2017 Estimated Tax Worksheet in column (b), and one-fourth in columns (c) and (d) of Worksheet 2-9.
- On lines 24 and 27, skip column (b).
- On line 31, if you do not use the actual withholding method, include one-half of your total expected withholding in column (b) and one-fourth in columns (c) and (d).

## Estimated Tax Payments Not Required(p32) |

You do not have to pay estimated tax if your withholding in each payment period is at least as much as:

You also do not have to pay estimated tax if you will pay enough through withholding to keep the amount you will owe with your return under $1,000.

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