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Ammending Taxes

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Ammending Taxes

Ammending taxes Index C Change in classification Disregarded entity to corporation, Subsequent Elections Disregarded entity to partnership, Change in default classification. Ammending taxes , Subsequent Elections Partnership to corporation, Subsequent Elections Partnership to disregarded entity, Change in default classification. Ammending taxes , Subsequent Elections Recognition of gain or loss, Change in default classification. Ammending taxes , Change in default classification. Ammending taxes , Subsequent Elections Classification as a corporation, LLCs Classified as Corporations Classification as a Disregarded Entity, LLCs Classified as Disregarded Entities Classification as a Partnership, LLCs Classified as Partnerships Classification Election, LLCs Classified as Corporations Classification of an LLC Default classification, Classification of an LLC Elected classification, Classification of an LLC Comments on publication, Comments and suggestions. Ammending taxes E Employer identification number (see Taxpayer identification number) Employment tax, Employment tax and certain excise taxes. Ammending taxes Excise taxes, Employment tax and certain excise taxes. Ammending taxes I Information, How to get more, How To Get More Information S Self-employment tax, Self-employment tax rule for disregarded entity LLCs. Ammending taxes Small Business Administration, Small Business Administration Social security number (see Taxpayer identification number) Subchapter S election, LLCs Classified as Corporations Suggestions for publication, Comments and suggestions. Ammending taxes T Tax help (see Information, How to get more) Taxpayer Advocate, Contacting your Taxpayer Advocate. Ammending taxes Taxpayer identification number, Taxpayer identification number. Ammending taxes Prev  Up     Home   More Online Publications
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Questions and Answers on 501(c) Organizations

May 15, 2013

The IRS has received a variety of questions related to the exempt organization issues recently raised. Here are some basics on the issue.

1. What are the issues raised in the recent Treasury Inspector General for Tax Administration (“TIGTA”) report?

The issues relate to the application process for organizations seeking tax-exempt status. Part of the IRS’s responsibility is to review applications of organizations seeking tax-exempt status. Section 501(c)(3) organizations are required to get IRS approval. Others, including section 501(c)(4) organizations, are not required to get IRS approval, but often seek it.

2. Do the issues raised in the recent report relate to audits/ examinations?

No, the issues relate to the approval process of organizations that applied to the IRS for recognition of tax-exempt status. 

3. What does the IRS look for in the approval process? 

The IRS’s role is to determine whether organization meets the legal requirements for tax-exempt status. One requirement relates to the amount of political campaign intervention (“political activity”) that tax-exempt organizations may engage in. Section 501(c)(3) organizations are prohibited from engaging in any political activity. Other organizations, including section 501(c)(4) organizations, may only engage in a limited amount of political activity. 

4. Where does an organization send its application for tax-exemption?

All applications are sent to the IRS Determinations Office in Cincinnati. This office receives approximately 70,000 applications for tax-exempt status of all kinds each year. This includes applications from section 501(c)(3) and section 501(c)(4) organizations. This office, which includes fewer than 200 people working directly on applications, is primarily responsible for working determination applications. Determinations staff may consult with tax law specialists in Washington on how the law applies to their case. 

5. Has the IRS seen an increase in the number of applications in which the organization is potentially engaged in political activity?

Yes, the IRS has seen an increase in the number of section 501(c)(4) applications in general. The number of applications has more than doubled in recent years. In addition, the IRS has seen an increase in the number of tax-exempt organization applications in which the organization is potentially engaged in political activity. This includes both section 501(c)(3) and section 501(c)(4) organizations.

6. How did the IRS handle the increase in the number of applications from organizations that appeared to be engaged in political activity?

As done in the past in other situations, such as credit counseling and down payment assistance), the IRS selected cases using identified criteria so that cases needing further review would be worked consistently. This means that cases meeting the selection criteria were centralized and assigned to designated employees developing expertise in the area so that they could be worked in a fair and consistent manner. 

7. How are decisions made regarding what cases should be centralized in this area?

Cases are selected for centralization if there are indications in the application that the organization may engage in political campaign intervention, lobbying, or advocacy. This was done to ensure that the legal requirements related to these activities are applied in a fair and consistent manner. The set of criteria was revised at a later point in order to avoid centralizing pure lobbying organizations that did not require follow-on development. During certain periods (August 2010 to July 2011 and January 2012 to June 2012), specific names, terms and policies (such as Tea Party and Patriot) were inappropriately used as criteria in determining which cases should be centralized. However, case selection during these periods was not limited to these criteria. 

8. What cases were centralized?

The TIGTA report reflects that 300 cases were centralized. Approximately 70 of those cases included the name Tea Party. The remaining cases included organizations of all political views. The current number of centralized cases is approximately 470.

9. Why did IRS employees look at Tea Party organizations?

IRS employees had seen cases of organizations with the name Tea Party in which political activity was an issue that needed to be reviewed for compliance with legal requirements. Because of the increased inventory of applications, this inappropriate criterion was used as a shortcut to centralize similar cases.

10. Would organizations with Tea Party in the name have been centralized if only appropriate selection criteria had been used?

Yes, in most cases the organization would have been centralized based on the information included in the application. The IRS should have focused on this information instead of using a shortcut.

11. Were centralized cases worked differently depending on which selection criteria was used?

No, centralized cases were not worked differently depending on which selection criteria was used.

12. Did mistakes occur in working the centralized cases?

Yes. Applicants whose cases were centralized unfortunately experienced inappropriate delays and over-expansive information requests in some cases. This was caused by ineffective processes and not related to the selection criteria used for the centralization of a case.

13. Is there any evidence of political bias in selecting cases for centralization or in working those cases?

The TIGTA report included no findings of political bias. In addition, the IRS has found no indication of political bias. 

14. How many centralized applications have been approved?

Since centralization, more than 175 applications have been approved to date. As with all applications for tax-exempt status that are approved, the names of organizations whose applications have been approved are publicly available. 

Page Last Reviewed or Updated: 04-Sep-2013

The Ammending Taxes

Ammending taxes 2. Ammending taxes   Estimated Tax for 2014 Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Who Does Not Have To Pay Estimated Tax Who Must Pay Estimated TaxGeneral Rule Married Taxpayers Special Rules Aliens Estates and Trusts How To Figure Estimated Tax2014 Estimated Tax Worksheet When To Pay Estimated TaxWhen To Start Farmers and Fishermen How To Figure Each PaymentRegular Installment Method Annualized Income Installment Method Estimated Tax Payments Not Required How To Pay Estimated TaxCredit an Overpayment Pay Online Pay by Phone Pay by Check or Money Order Using the Estimated Tax Payment Voucher Introduction Estimated tax is the method used to pay tax on income that is not subject to withholding. Ammending taxes This includes income from self-employment, interest, dividends, alimony, rent, gains from the sale of assets, prizes, and awards. Ammending taxes You also may have to pay estimated tax if the amount of income tax being withheld from your salary, pension, or other income is not enough. Ammending taxes Estimated tax is used to pay both income tax and self-employment tax, as well as other taxes and amounts reported on your tax return. Ammending taxes If you do not pay enough tax, either through withholding or estimated tax, or a combination of both, you may have to pay a penalty. Ammending taxes If you do not pay enough by the due date of each payment period (see When To Pay Estimated Tax , later), you may be charged a penalty even if you are due a refund when you file your tax return. Ammending taxes For information on when the penalty applies, see chapter 4. Ammending taxes It would be helpful for you to have a copy of your 2013 tax return and an estimate of your 2014 income nearby while reading this chapter. Ammending taxes Topics - This chapter discusses: Who must pay estimated tax, How to figure estimated tax (including illustrated examples), When to pay estimated tax, How to figure each payment, and How to pay estimated tax. Ammending taxes Useful Items - You may want to see: Form (and Instructions) 1040-ES Estimated Tax for Individuals See chapter 5 for information about how to get this publication and form. Ammending taxes Worksheets. Ammending taxes   You may need to use several of the blank worksheets included in this chapter. Ammending taxes See Worksheets for Chapter 2, later, to locate what you need. Ammending taxes Who Does Not Have To Pay Estimated Tax If you receive salaries and wages, you may be able to avoid paying estimated tax by asking your employer to take more tax out of your earnings. Ammending taxes To do this, file a new Form W-4 with your employer. Ammending taxes See chapter 1. Ammending taxes Estimated tax not required. Ammending taxes   You do not have to pay estimated tax for 2014 if you meet all three of the following conditions. Ammending taxes You had no tax liability for 2013. Ammending taxes You were a U. Ammending taxes S. Ammending taxes citizen or resident alien for the whole year. Ammending taxes Your 2013 tax year covered a 12-month period. Ammending taxes   You had no tax liability for 2013 if your total tax (defined later under Total tax for 2013—line 14b ) was zero or you did not have to file an income tax return. Ammending taxes Please click here for the text description of the image. Ammending taxes Figure 2-A: Do You Have To Pay Estimated Tax? Who Must Pay Estimated Tax If you owed additional tax for 2013, you may have to pay estimated tax for 2014. Ammending taxes You can use the following general rule as a guide during the year to see if you will have enough withholding, or should increase your withholding or make estimated tax payments. Ammending taxes General Rule In most cases, you must pay estimated tax for 2014 if both of the following apply. Ammending taxes You expect to owe at least $1,000 in tax for 2014, after subtracting your withholding and refundable credits. Ammending taxes You expect your withholding and refundable credits to be less than the smaller of: 90% of the tax to be shown on your 2014 tax return, or 100% of the tax shown on your 2013 tax return. Ammending taxes Your 2013 tax return must cover all 12 months. Ammending taxes Note. Ammending taxes The percentages in (2a) or (2b) above may be different if you are a farmer, fisherman, or higher income taxpayer. Ammending taxes See Special Rules , later. Ammending taxes If the result from using the general rule above suggests that you will not have enough withholding, complete the 2014 Estimated Tax Worksheet for a more accurate calculation. Ammending taxes Figure 2-A takes you through the general rule. Ammending taxes You may find this helpful in determining if you must pay estimated tax. Ammending taxes If all your income will be subject to income tax withholding, you probably do not need to pay estimated tax. Ammending taxes Example 1. Ammending taxes Jane Smart uses Figure 2-A and the following information to figure whether she should pay estimated tax for 2014. Ammending taxes She files as head of household claiming her dependent son, takes the standard deduction, and expects no refundable credits for 2014. Ammending taxes Expected adjusted gross income (AGI) for 2014 $82,800 AGI for 2013 $73,700 Total tax on 2013 return (Form 1040,  line 61) $  8,746 Total 2014 estimated tax (line 13c of the 2014 Estimated Tax Worksheet) $11,015 Tax expected to be withheld in 2014 $10,000 Jane's answer to Figure 2-A, box 1, is YES; she expects to owe at least $1,000 for 2014 after subtracting her withholding from her expected total tax ($11,015 − $10,000 = $1,015). Ammending taxes Her answer to box 2a is YES; she expects her income tax withholding ($10,000) to be at least 90% of the tax to be shown on her 2014 return ($11,015 × 90% = $9,913. Ammending taxes 50). Ammending taxes Jane does not need to pay estimated tax. Ammending taxes Example 2. Ammending taxes The facts are the same as in Example 1, except that Jane expects only $8,700 tax to be withheld in 2014. Ammending taxes Because that is less than $9,913. Ammending taxes 50, her answer to box 2a is NO. Ammending taxes Jane's answer to box 2b is also NO; she does not expect her income tax withholding ($8,700) to be at least 100% of the total tax shown on her 2013 return ($8,746). Ammending taxes Jane must increase her withholding or pay estimated tax for 2014. Ammending taxes Example 3. Ammending taxes The facts are the same as in Example 2, except that the total tax shown on Jane's 2013 return was $8,600. Ammending taxes Because she expects to have more than $8,600 withheld in 2014 ($8,700), her answer to box 2b is YES. Ammending taxes Jane does not need to pay estimated tax for 2014. Ammending taxes Married Taxpayers If you qualify to make joint estimated tax payments, apply the rules discussed here to your joint estimated income. Ammending taxes You and your spouse can make joint estimated tax payments even if you are not living together. Ammending taxes However, you and your spouse cannot make joint estimated tax payments if: You are legally separated under a decree of divorce or separate maintenance, You and your spouse have different tax years, Either spouse is a nonresident alien (unless that spouse elected to be treated as a resident alien for tax purposes). Ammending taxes See Choosing Resident Alien Status in Publication 519, or Individuals of the same sex and opposite sex who are in registered domestic partnerships, civil unions, or other similar formal relationships that are not marriages under state law cannot make joint estimated tax payments. Ammending taxes These individuals can take credit only for the estimated tax payments that he or she made. Ammending taxes If you and your spouse cannot make joint estimated tax payments, apply these rules to your separate estimated income. Ammending taxes Making joint or separate estimated tax payments will not affect your choice of filing a joint tax return or separate returns for 2014. Ammending taxes 2013 separate returns and 2014 joint return. Ammending taxes   If you plan to file a joint return with your spouse for 2014, but you filed separate returns for 2013, your 2013 tax is the total of the tax shown on your separate returns. Ammending taxes You filed a separate return if you filed as single, head of household, or married filing separately. Ammending taxes 2013 joint return and 2014 separate returns. Ammending taxes   If you plan to file a separate return for 2014, but you filed a joint return for 2013, your 2013 tax is your share of the tax on the joint return. Ammending taxes You file a separate return if you file as single, head of household, or married filing separately. Ammending taxes   To figure your share of the tax on a joint return, first figure the tax both you and your spouse would have paid had you filed separate returns for 2013 using the same filing status for 2014. Ammending taxes Then multiply the tax on the joint return by the following fraction. Ammending taxes      The tax you would have paid had you filed a separate return   The total tax you and your spouse would have paid had you filed separate returns Example. Ammending taxes Joe and Heather filed a joint return for 2013 showing taxable income of $48,500 and a tax of $6,386. Ammending taxes Of the $48,500 taxable income, $40,100 was Joe's and the rest was Heather's. Ammending taxes For 2014, they plan to file married filing separately. Ammending taxes Joe figures his share of the tax on the 2013 joint return as follows: Tax on $40,100 based on separate return $5,960 Tax on $8,400 based on separate return 843 Total $6,803 Joe's percentage of total ($5,960 ÷ $6,803) 87. Ammending taxes 6% Joe's share of tax on joint return  ($6,386 × 87. Ammending taxes 6%) $5,594 Special Rules There are special rules for farmers, fishermen, and certain higher income taxpayers. Ammending taxes Farmers and Fishermen If at least two-thirds of your gross income for 2013 or 2014 is from farming or fishing, substitute 662/3% for 90% in (2a) under General Rule , earlier. Ammending taxes Gross income. Ammending taxes   Your gross income is all income you receive in the form of money, goods, property, and services that is not exempt from tax. Ammending taxes To determine whether two-thirds of your gross income for 2013 was from farming or fishing, use as your gross income the total of the income (not loss) amounts. Ammending taxes Joint returns. Ammending taxes   On a joint return, you must add your spouse's gross income to your gross income to determine if at least two-thirds of your total gross income is from farming or fishing. Ammending taxes Gross income from farming. Ammending taxes   This is income from cultivating the soil or raising agricultural commodities. Ammending taxes It includes the following amounts. Ammending taxes Income from operating a stock, dairy, poultry, bee, fruit, or truck farm. Ammending taxes Income from a plantation, ranch, nursery, range, orchard, or oyster bed. Ammending taxes Crop shares for the use of your land. Ammending taxes Gains from sales of draft, breeding, dairy, or sporting livestock. Ammending taxes   For 2013, gross income from farming is the total of the following amounts. Ammending taxes Schedule F (Form 1040), Profit or Loss From Farming, line 9. Ammending taxes Form 4835, Farm Rental Income and Expenses, line 7. Ammending taxes Your share of the gross farming income from a partnership, S corporation, estate or trust, from: Schedule K-1 (Form 1065), Schedule K-1 (Form 1120S), or Schedule K-1 (Form 1041). Ammending taxes Your gains from sales of draft, breeding, dairy, or sporting livestock shown on Form 4797, Sales of Business Property. Ammending taxes   Wages you receive as a farm employee and wages you receive from a farm corporation are not gross income from farming. Ammending taxes Gross income from fishing. Ammending taxes   This is income from catching, taking, harvesting, cultivating, or farming any kind of fish, shellfish (for example, clams and mussels), crustaceans (for example, lobsters, crabs, and shrimp), sponges, seaweeds, or other aquatic forms of animal and vegetable life. Ammending taxes   Gross income from fishing includes the following amounts. Ammending taxes Schedule C (Form 1040), Profit or Loss From Business. Ammending taxes Income for services as an officer or crew member of a vessel while the vessel is engaged in fishing. Ammending taxes Your share of the gross fishing income from a partnership, S corporation, estate or trust, from: Schedule K-1 (Form 1065), Schedule K-1 (Form 1120S), or Schedule K-1 (Form 1041). Ammending taxes Certain taxable interest and punitive damage awards received in connection with the Exxon Valdez litigation. Ammending taxes Income for services normally performed in connection with fishing. Ammending taxes Services normally performed in connection with fishing include: Shore service as an officer or crew member of a vessel engaged in fishing, and Services that are necessary for the immediate preservation of the catch, such as cleaning, icing, and packing the catch. Ammending taxes Higher Income Taxpayers If your AGI for 2013 was more than $150,000 ($75,000 if your filing status for 2014 is married filing a separate return), substitute 110% for 100% in (2b) under General Rule , earlier. Ammending taxes For 2013, AGI is the amount shown on Form 1040, line 37; Form 1040A, line 21; and Form 1040EZ, line 4. Ammending taxes Note. Ammending taxes This rule does not apply to farmers and fishermen. Ammending taxes Aliens Resident and nonresident aliens also may have to pay estimated tax. Ammending taxes Resident aliens should follow the rules in this publication, unless noted otherwise. Ammending taxes Nonresident aliens should get Form 1040-ES (NR), U. Ammending taxes S. Ammending taxes Estimated Tax for Nonresident Alien Individuals. Ammending taxes You are an alien if you are not a citizen or national of the United States. Ammending taxes You are a resident alien if you either have a green card or meet the substantial presence test. Ammending taxes For more information about withholding, the substantial presence test, and Form 1040-ES (NR), see Publication 519. Ammending taxes Estates and Trusts Estates and trusts also must pay estimated tax. Ammending taxes However, estates (and certain grantor trusts that receive the residue of the decedent's estate under the decedent's will) are exempt from paying estimated tax for the first 2 years after the decedent's death. Ammending taxes Estates and trusts must use Form 1041-ES, Estimated Income Tax for Estates and Trusts, to figure and pay estimated tax. Ammending taxes How To Figure Estimated Tax To figure your estimated tax, you must figure your expected AGI, taxable income, taxes, deductions, and credits for the year. Ammending taxes When figuring your 2014 estimated tax, it may be helpful to use your income, deductions, and credits for 2013 as a starting point. Ammending taxes Use your 2013 federal tax return as a guide. Ammending taxes You can use Form 1040-ES to figure your estimated tax. Ammending taxes Nonresident aliens use Form 1040-ES (NR) to figure estimated tax. Ammending taxes You must make adjustments both for changes in your own situation and for recent changes in the tax law. Ammending taxes Some of these changes are discussed under What's New for 2014 , earlier. Ammending taxes For information about these and other changes in the law, visit the IRS website at IRS. Ammending taxes gov. Ammending taxes The instructions for Form 1040-ES include a worksheet to help you figure your estimated tax. Ammending taxes Keep the worksheet for your records. Ammending taxes 2014 Estimated Tax Worksheet Use Worksheet 2-1 to help guide you through the information about completing the 2014 Estimated Tax Worksheet. Ammending taxes You can also find a copy of the worksheet in the Instructions for Form 1040-ES. Ammending taxes Expected AGI—Line 1 Your expected AGI for 2014 (line 1) is your expected total income minus your expected adjustments to income. Ammending taxes Total income. Ammending taxes   Include in your total income all the income you expect to receive during the year, even income that is subject to withholding. Ammending taxes However, do not include income that is tax exempt. Ammending taxes   Total income includes all income and loss for 2014 that, if you had received it in 2013, would have been included on your 2013 tax return in the total on line 22 of Form 1040, line 15 of Form 1040A, or line 4 of Form 1040EZ. Ammending taxes Social security and railroad retirement benefits. Ammending taxes If you expect to receive social security or tier 1 railroad retirement benefits during 2014, use Worksheet 2-2 to figure the amount of expected taxable benefits you should include on line 1. Ammending taxes Adjustments to income. Ammending taxes   Be sure to subtract from your expected total income all of the adjustments you expect to take on your 2014 tax return. Ammending taxes Self-employed. Ammending taxes If you expect to have income from self-employment, use Worksheet 2-3 to figure your expected self-employment tax and your allowable deduction for self-employment tax. Ammending taxes Include the amount from Worksheet 2-3 in your expected adjustments to income. Ammending taxes If you file a joint return and both you and your spouse have net earnings from self-employment, each of you must complete a separate worksheet. Ammending taxes Expected Taxable Income— Lines 2–5 Reduce your expected AGI for 2014 (line 1) by either your expected itemized deductions or your standard deduction and by your exemptions (lines 2 through 5). Ammending taxes Itemized deductions—line 2. Ammending taxes   If you expect to claim itemized deductions on your 2014 tax return, enter the estimated amount on line 2. Ammending taxes   Itemized deductions are the deductions that can be claimed on Schedule A (Form 1040). Ammending taxes    For 2014, your total itemized deductions may be reduced if your AGI is more than the amount shown next for your filing status. Ammending taxes Single $254,200 Married filing jointly or qualifying widow(er) $305,050 Married filing separately $152,525 Head of household $279,650   If you expect your AGI to be more than this amount, use Worksheet 2-5 to figure the amount to enter on line 2. Ammending taxes Standard deduction—line 2. Ammending taxes   If you expect to claim the standard deduction on your 2014 tax return, enter the amount on line 2. Ammending taxes Use Worksheet 2-4 to figure your standard deduction. Ammending taxes No standard deduction. Ammending taxes   The standard deduction for some individuals is zero. Ammending taxes Your standard deduction will be zero if you: File a separate return and your spouse itemizes deductions, Are a dual-status alien, or File a return for a period of less than 12 months because you change your accounting period. Ammending taxes Exemptions—line 4. Ammending taxes   After you have subtracted either your expected itemized deductions or your standard deduction from your expected AGI, reduce the amount remaining by $3,950 for each exemption you expect to take on your 2014 tax return. Ammending taxes If another person (such as your parent) can claim an exemption for you on his or her tax return, you cannot claim your own personal exemption. Ammending taxes This is true even if the other person will not claim your exemption or the exemption will be reduced or eliminated under the phaseout rule. Ammending taxes    For 2014, your deduction for personal exemption is reduced if your AGI is more than the amount shown next for your filing status. Ammending taxes Single $254,200 Married filing jointly or qualifying widow(er) $305,050 Married filing separately $152,525 Head of household $279,650   If you expect your AGI to be more than this amount, use Worksheet 2-6 to figure the amount to enter on line 4. Ammending taxes Expected Taxes and Credits— Lines 6–13c After you have figured your expected taxable income (line 5), follow the steps next to figure your expected taxes, credits, and total tax for 2014. Ammending taxes Most people will have entries for only a few of these steps. Ammending taxes However, you should check every step to be sure you do not overlook anything. Ammending taxes Step 1. Ammending taxes   Figure your expected income tax (line 6). Ammending taxes Generally, you will use the 2014 Tax Rate Schedules, later, to figure your expected income tax. Ammending taxes   However, see below for situations where you must use a different method to compute your estimated tax. Ammending taxes Tax on child's investment income. Ammending taxes   You must use a special method to figure tax on the income of the following children who have more than $2,000 of investment income. Ammending taxes Children under age 18 at the end of 2014. Ammending taxes The following children if their earned income is not more than half their support. Ammending taxes Children age 18 at the end of 2014. Ammending taxes Children who are full-time students over age 18 and under age 24 at the end of 2014. Ammending taxes See Publication 929, Tax Rules for Children and Dependents. Ammending taxes Although the ages and dollar amounts in the publication may be different in the 2014 revision, this reference will give you basic information for figuring the tax. Ammending taxes Tax on net capital gain. Ammending taxes   The regular income tax rates for individuals do not apply to a net capital gain. Ammending taxes Instead, your net capital gain is taxed at a lower maximum rate. Ammending taxes   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. Ammending taxes Tax on capital gain and qualified dividends. Ammending taxes If the amount on line 1 includes a net capital gain or qualified dividends, use Worksheet 2-7 to figure your tax. Ammending taxes Note. Ammending taxes For 2014, your capital gains and dividends rate will depend on your income. Ammending taxes Tax if excluding foreign earned income or excluding or deducting foreign housing. Ammending taxes 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 2-8 to figure your estimated tax. Ammending taxes Step 2. Ammending taxes   Total your expected taxes (line 8). Ammending taxes Include on line 8 the sum of the following. Ammending taxes Your tax on line 6. Ammending taxes Your expected alternative minimum tax (AMT) from Form 6251, or included on Form 1040A. Ammending taxes Your expected additional taxes from Form 8814, Parents' Election To Report Child's Interest and Dividends, and Form 4972, Tax on Lump-Sum Distributions. Ammending taxes Any recapture of education credits. Ammending taxes Step 3. Ammending taxes   Subtract your expected credits (line 9). Ammending taxes If you are using your 2013 return as a guide and filed Form 1040, your total credits for 2013 were shown on line 54. Ammending taxes If you filed Form 1040A, your total credits for 2013 were on line 34. Ammending taxes   If your credits on line 9 are more than your taxes on line 8, enter “-0-” on line 10 and go to Step 4. Ammending taxes Step 4. Ammending taxes   Add your expected self-employment tax (line 11). Ammending taxes You already should have figured your self-employment tax (see Self-employed under Expected AGI—Line 1, earlier). Ammending taxes Step 5. Ammending taxes   Add your expected other taxes (line 12). Ammending taxes   Other taxes include the following. Ammending taxes Additional tax on early distributions from: An IRA or other qualified retirement plan, A tax-sheltered annuity, or A modified endowment contract entered into after June 20, 1988. Ammending taxes Household employment taxes if: You will have federal income tax withheld from wages, pensions, annuities, gambling winnings, or other income, or You would be required to make estimated tax payments even if you did not include household employment taxes when figuring your estimated tax. Ammending taxes Amounts written on Form 1040 on the line for “other taxes” (line 60 on the 2013 Form 1040). Ammending taxes 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 and Medicare tax or RRTA tax on tips or group-term life insurance; or additional tax on advance payments of health coverage tax credit when not eligible. Ammending taxes Repayment of the first-time homebuyer credit. Ammending taxes See Form 5405. Ammending taxes Additional Medicare Tax. Ammending taxes A 0. Ammending taxes 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. Ammending taxes 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) $200,000 Medicare wages and self-employment income are combined to determine if your income exceeds the threshold. Ammending taxes A self-employment loss should not be considered for purposes of this tax. Ammending taxes RRTA compensation should be separately compared to the threshold. Ammending taxes Your employer is responsible for withholding the 0. Ammending taxes 9% Additional Medicare Tax on Medicare wages or RRTA compensation it pays to you in excess of $200,000 in 2014. Ammending taxes You should consider this withholding, if applicable, in determining whether you need to make an estimated payment. Ammending taxes For more information on Additional Medicare Tax, go to IRS. Ammending taxes gov and enter “Additional Medicare Tax” in the search box. Ammending taxes Net Investment Income Tax (NIIT). Ammending taxes The NIIT is 3. Ammending taxes 8% of the lesser of your net investment income or the excess of your modified adjusted gross income over the amount listed in the following chart, based on your filing status. Ammending taxes 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 For more information on Net Investment Income Tax, go to IRS. Ammending taxes gov and enter “Net Investment Income Tax” in the search box. Ammending taxes Step 6. Ammending taxes   Subtract your refundable credit (line 13b). Ammending taxes   To figure your expected fuel tax credit, do not include fuel tax for the first three quarters of the year that you expect to have refunded to you. Ammending taxes   The result of steps 1 through 6 is your total estimated tax for 2014 (line 13c). Ammending taxes Required Annual Payment— Line 14c On lines 14a through 14c, figure the total amount you must pay for 2014, through withholding and estimated tax payments, to avoid paying a penalty. Ammending taxes General rule. Ammending taxes   The total amount you must pay is the smaller of: 90% of your total expected tax for 2014, or 100% of the total tax shown on your 2013 return. Ammending taxes Your 2013 tax return must cover all 12 months. Ammending taxes Special rules. Ammending taxes   There are special rules for higher income taxpayers and for farmers and fishermen. Ammending taxes Higher income taxpayers. Ammending taxes   If your AGI for 2013 was more than $150,000 ($75,000 if your filing status for 2014 is married filing separately), substitute 110% for 100% in (2) above. Ammending taxes This rule does not apply to farmers and fishermen. Ammending taxes For 2013, AGI is the amount shown on Form 1040, line 37; Form 1040A, line 21; and Form 1040EZ, line 4. Ammending taxes Example. Ammending taxes   Jeremy Martin's total tax on his 2013 return was $42,581, and his expected tax for 2014 is $71,253. Ammending taxes His 2013 AGI was $180,000. Ammending taxes Because Jeremy had more than $150,000 of AGI in 2013, he figures his required annual payment as follows. Ammending taxes He determines that 90% of his expected tax for 2014 is $64,128 (. Ammending taxes 90 × $71,253). Ammending taxes Next, he determines that 110% of the tax shown on his 2013 return is $46,839 (1. Ammending taxes 10 x $42,581). Ammending taxes Finally, he determines that his required annual payment is $46,839, the smaller of the two. Ammending taxes Farmers and fishermen. Ammending taxes   If at least two-thirds of your gross income for 2013 or 2014 is from farming or fishing, your required annual payment is the smaller of: 662/3% (. Ammending taxes 6667) of your total tax for 2014, or 100% of the total tax shown on your 2013 return. Ammending taxes (Your 2013 tax return must cover all 12 months. Ammending taxes )   For definitions of “gross income from farming” and “gross income from fishing,” see Farmers and Fishermen , under Special Rules discussed earlier. Ammending taxes Total tax for 2013—line 14b. Ammending taxes   Your 2013 total tax, if you filed Form 1040, is the amount on line 61 reduced by the following. Ammending taxes Unreported social security and Medicare tax or RRTA tax from Forms 4137 or 8919 (line 57). Ammending taxes The following amounts from Form 5329 included on line 58. Ammending taxes Any tax on excess contributions to IRAs, Archer MSAs, Coverdell education savings accounts, and health savings accounts. Ammending taxes Any tax on excess accumulations in qualified retirement plans. Ammending taxes The following write-ins on line 60. Ammending taxes Excise tax on excess golden parachute payments (identified as “EPP”). Ammending taxes Excise tax on insider stock compensation from an expatriated corporation (identified as “ISC”). Ammending taxes Look-back interest due under section 167(g) (identified as “From Form 8866”). Ammending taxes Look-back interest due under section 460(b) (identified as “From Form 8697”). Ammending taxes Recapture of federal mortgage subsidy (identified as “FMSR”). Ammending taxes Additional tax on advance payments of health coverage tax credit when not eligible (identified as “HCTC”). Ammending taxes Uncollected social security and Medicare tax or RRTA tax on tips or group-term life insurance (identified as “UT”). Ammending taxes Any refundable credit amounts. Ammending taxes   If you filed Form 1040A, your 2013 total tax is the amount on line 35 reduced by any refundable credits. Ammending taxes   If you filed Form 1040EZ, your 2013 total tax is the amount on line 10 reduced by the amount on line 8a. Ammending taxes Total Estimated Tax Payments Needed—Line 16a Use lines 15 and 16a to figure the total estimated tax you may be required to pay for 2014. Ammending taxes Subtract your expected withholding from your required annual payment (line 14c). Ammending taxes You usually must pay this difference in four equal installments. Ammending taxes See When To Pay Estimated Tax and How To Figure Each Payment . Ammending taxes You do not have to pay estimated tax if: Line 14c minus line 15 is zero or less, or Line 13c minus line 15 is less than $1,000. Ammending taxes Withholding—line 15. Ammending taxes   Your expected withholding for 2014 (line 15) includes the income tax you expect to be withheld from all sources (wages, pensions and annuities, etc. Ammending taxes ). Ammending taxes It includes excess social security, and tier 1 railroad retirement tax you expect to be withheld from your wages and compensation. Ammending taxes For this purpose, you will have excess social security or tier 1 railroad retirement tax withholding for 2014 only if your wages and compensation from two or more employers are more than $117,000. Ammending taxes See Excess Social Security or Railroad Retirement Tax Withholding in chapter 3. Ammending taxes   It also includes Additional Medicare Tax you expect to be withheld from your wages or compensation. Ammending taxes Your employer is responsible for withholding the 0. Ammending taxes 9% Additional Medicare Tax on Medicare wages or RRTA compensation it pays to you in excess of $200,000. Ammending taxes When To Pay Estimated Tax For estimated tax purposes, the year is divided into four payment periods. Ammending taxes Each period has a specific payment due date. Ammending taxes If you do not pay enough tax by the due date of each of the payment periods, you may be charged a penalty even if you are due a refund when you file your income tax return. Ammending taxes If a payment is mailed, the date of the U. Ammending taxes S. Ammending taxes postmark is considered the date of payment. Ammending taxes The payment periods and due dates for estimated tax payments are shown next. Ammending taxes For exceptions to the dates listed, see Saturday, Sunday, holiday rule below. Ammending taxes For the period: Due date: Jan. Ammending taxes 11 – March 31 April 15 April 1 – May 31 June 16 June 1 – August 31 September 15 Sept. Ammending taxes 1 – Dec. Ammending taxes 31 January 15  next year2 1If your tax year does not begin on January 1,  see Fiscal year taxpayers . Ammending taxes 2See January payment . Ammending taxes Saturday, Sunday, holiday rule. Ammending taxes   If the due date for an estimated tax payment falls on a Saturday, Sunday, or legal holiday, the payment will be on time if you make it on the next day that is not a Saturday, Sunday, or a holiday. Ammending taxes January payment. Ammending taxes   If you file your 2014 Form 1040 or Form 1040A by February 2, 2015, and pay the rest of the tax you owe, you do not need to make the payment due on January 15, 2015. Ammending taxes Example. Ammending taxes Janet Adams does not pay any estimated tax for 2014. Ammending taxes She files her 2014 income tax return and pays the balance due shown on her return on January 26, 2015. Ammending taxes Janet's estimated tax for the fourth payment period is considered to have been paid on time. Ammending taxes However, she may owe a penalty for not making the first three estimated tax payments, if required. Ammending taxes Any penalty for not making those payments will be figured up to January 26, 2015. Ammending taxes Fiscal year taxpayers. Ammending taxes   If your tax year does not start on January 1, your payment due dates are: The 15th day of the 4th month of your fiscal year, The 15th day of the 6th month of your fiscal year, The 15th day of the 9th month of your fiscal year, and The 15th day of the 1st month after the end of your fiscal year. Ammending taxes   You do not have to make the last payment listed above if you file your income tax return by the last day of the first month after the end of your fiscal year and pay all the tax you owe with your return. Ammending taxes When To Start You do not have to make estimated tax payments until you have income on which you will owe income tax. Ammending taxes If you have income subject to estimated tax during the first payment period, you must make your first payment by the due date for the first payment period. Ammending taxes You have several options when paying estimated taxes. Ammending taxes You can: apply an overpayment from the previous tax year, pay all your estimated tax by the due date of your first payment, or pay it in installments. Ammending taxes If you choose to pay in installments, make your first payment by the due date for the first payment period. Ammending taxes Make your remaining installment payments by the due dates for the later periods. Ammending taxes To avoid any estimated tax penalties, all installments must be paid by their due date and for the required amount. Ammending taxes No income subject to estimated tax during first period. Ammending taxes   If you do not have income subject to estimated tax until a later payment period, you must make your first payment by the due date for that period. Ammending taxes You can pay your entire estimated tax by the due date for that period or you can pay it in installments by the due date for that period and the due dates for the remaining periods. Ammending taxes Table 2-1 shows the dates for making installment payments. Ammending taxes    Table 2-1. Ammending taxes Due Dates for Estimated Tax Installment Payments If you first have income on which you must pay estimated tax: Make a payment  by:* Make later  installments  by:* Before April 1 April 15 June 16     Sept. Ammending taxes 15     Jan. Ammending taxes 15 next year April 1–May 31 June 16 Sept. Ammending taxes 15     Jan. Ammending taxes 15 next year June 1–Aug. Ammending taxes 31 Sept. Ammending taxes 15 Jan. Ammending taxes 15 next year After Aug. Ammending taxes 31 Jan. Ammending taxes 15 next year (None) *See January payment and Saturday, Sunday, holiday rule . Ammending taxes How much to pay to avoid penalty. Ammending taxes   To determine how much you should pay by each payment due date, see How To Figure Each Payment , later. Ammending taxes Farmers and Fishermen If at least two-thirds of your gross income for 2013 or 2014 is from farming or fishing, you have only one payment due date for your 2014 estimated tax, January 15, 2015. Ammending taxes The due dates for the first three payment periods, discussed under When To Pay Estimated Tax , earlier, do not apply to you. Ammending taxes If you file your 2014 Form 1040 by March 2, 2015, and pay all the tax you owe at that time, you do not need to make an estimated tax payment. Ammending taxes Fiscal year farmers and fishermen. Ammending taxes   If you are a farmer or fisherman, but your tax year does not start on January 1, you can either: Pay all your estimated tax by the 15th day after the end of your tax year, or File your return and pay all the tax you owe by the 1st day of the 3rd month after the end of your tax year. Ammending taxes How To Figure Each Payment After you have figured your total estimated tax, figure how much you must pay by the due date of each payment period. Ammending taxes You should pay enough by each due date to avoid a penalty for that period. Ammending taxes 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. Ammending taxes The penalty is discussed in chapter 4. Ammending taxes Regular Installment Method If your first estimated tax payment is due April 15, 2014, you can figure your required payment for each period by dividing your annual estimated tax due (line 16a of the 2014 Estimated Tax Worksheet (Worksheet 2-1)) by 4. Ammending taxes Enter this amount on line 17. Ammending taxes However, use this method only if your income is basically the same throughout the year. Ammending taxes Change in estimated tax. Ammending taxes   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. Ammending taxes 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. Ammending taxes If you do not receive your income evenly throughout the year, your required estimated tax payments may not be the same for each period. Ammending taxes See Annualized Income Installment Method . Ammending taxes Amended estimated tax. Ammending taxes If you refigure your estimated tax during the year, or if your first estimated tax payment is due after April 15, 2014, figure your required payment for each remaining payment period using Worksheet 2-14. Ammending taxes Example. Ammending taxes Early in 2014, Mira Roberts figures that her estimated tax due is $1,800. Ammending taxes She makes estimated tax payments on April 15 and June 16 of $450 each ($1,800 ÷ 4). Ammending taxes On July 10, she sells investment property at a gain. Ammending taxes Her refigured estimated tax is $4,100. Ammending taxes Her required estimated tax payment for the third payment period is $2,175, as shown in her filled-in Worksheet 2-14. Ammending taxes If Mira's estimated tax does not change again, her required estimated tax payment for the fourth payment period will be $1,025. Ammending taxes Worksheet 2-14. Ammending taxes Amended Estimated Tax Worksheet—Illustrated               1. Ammending taxes Amended total estimated tax due 1. Ammending taxes $4,100 2. Ammending taxes Multiply line 1 by:           50% (. Ammending taxes 50) if next payment is due June 16, 2014           75% (. Ammending taxes 75) if next payment is due September 15,  2014           100% (1. Ammending taxes 00) if next payment is due January 15,  2015 2. Ammending taxes 3,075     3. Ammending taxes Estimated tax payments for all previous periods 3. Ammending taxes 900     4. Ammending taxes 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. Ammending taxes $2,175       Note. Ammending taxes If the payment on line 4 is due January 15, 2015, stop here. Ammending taxes Otherwise, go to line 5. Ammending taxes         5. Ammending taxes Add lines 3 and 4 5. Ammending taxes 3,075 6. Ammending taxes Subtract line 5 from line 1 and enter the result (but not less than zero) 6. Ammending taxes 1,025 7. Ammending taxes Each following required payment: If the payment on line 4 is due June 16, 2014, enter one-half of the amount on line 6 here and on the payment vouchers for your payments due September 15, 2014, and January 15, 2015. Ammending taxes If the amount on line 4 is due September 15, 2014, enter the amount from line 6 here and on the payment voucher for your payment due January 15, 2015 7. Ammending taxes $1,025 Worksheet 2-14. Ammending taxes Amended Estimated Tax Worksheet—Blank               1. Ammending taxes Amended total estimated tax due 1. Ammending taxes   2. Ammending taxes Multiply line 1 by:           50% (. Ammending taxes 50) if next payment is due June 16, 2014           75% (. Ammending taxes 75) if next payment is due September 15,  2014           100% (1. Ammending taxes 00) if next payment is due January 15,  2015 2. Ammending taxes       3. Ammending taxes Estimated tax payments for all previous periods 3. Ammending taxes       4. Ammending taxes 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. Ammending taxes         Note. Ammending taxes If the payment on line 4 is due January 15, 2015, stop here. Ammending taxes Otherwise, go to line 5. Ammending taxes         5. Ammending taxes Add lines 3 and 4 5. Ammending taxes   6. Ammending taxes Subtract line 5 from line 1 and enter the result (but not less than zero) 6. Ammending taxes   7. Ammending taxes Each following required payment: If the payment on line 4 is due June 16, 2014, enter one-half of the amount on line 6 here and on the payment vouchers for your payments due September 15, 2014, and January 15, 2015. Ammending taxes If the amount on line 4 is due September 15, 2014, enter the amount from line 6 here and on the payment voucher for your payment due January 15, 2015 7. Ammending taxes   Underpayment penalty. Ammending taxes   The penalty is figured separately for each payment period. Ammending taxes 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. Ammending taxes To see how you may be able to avoid or reduce this penalty, see Annualized Income Installment Method (Schedule AI) in chapter 4. Ammending taxes Annualized Income Installment Method 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. Ammending taxes 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. Ammending taxes To see whether you can pay less for any period, complete the 2014 Annualized Estimated Tax Worksheet (Worksheet 2-9). Ammending taxes You first must complete the 2014 Estimated Tax Worksheet (Worksheet 2-1) through line 16b. Ammending taxes Use the result you figure on line 32 of Worksheet 2-9 to make your estimated tax payments and complete your payment vouchers. Ammending taxes Note. Ammending taxes If you use the annualized income installment method to figure your estimated tax payments, you must file Form 2210 with your 2014 tax return. Ammending taxes See Annualized Income Installment Method (Schedule AI) in chapter 4 for more information. Ammending taxes Instructions for the 2014 Annualized Estimated Tax Worksheet (Worksheet 2-9) Use Worksheet 2-9 to help you follow these instructions. Ammending taxes 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. Ammending taxes The top of the worksheet shows the dates for each payment period. Ammending taxes The periods build; that is, each period includes all previous periods. Ammending taxes After the end of each payment period, complete the corresponding worksheet column to figure the payment due for that period. Ammending taxes Line 1. Ammending taxes   Enter your AGI for the period. Ammending taxes 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. Ammending taxes See Expected AGI—Line 1 , earlier. Ammending taxes Self-employment income. Ammending taxes   If you had self-employment income, first complete Section B of this worksheet. Ammending taxes Use the amounts on line 43 when figuring your expected AGI to enter in each column of Section A, line 1. Ammending taxes Line 4. Ammending taxes   Be sure to consider all deduction limits figured on Schedule A (Form 1040), such as reducing your medical expenses by 10% (7. Ammending taxes 5% if either you or your spouse was born before January 2, 1950) or reducing certain miscellaneous deductions by 2% of your AGI. Ammending taxes Figure your deduction limits using your expected AGI in the corresponding column of line 1 (2014 Annualized Estimated Tax Worksheet (Worksheet 2-9)). Ammending taxes Line 6. Ammending taxes   Multiply line 4 by line 5 and enter the result on line 6 unless line 3 is more than $305,050 if married filing jointly or qualifying widow(er), $279,650 if head of household, $254,200 if single, or $152,525 if married filing separately. Ammending taxes In that case, use Worksheet 2-10 to figure the amount to enter on line 6. Ammending taxes Complete Worksheet 2–10 for each period, as necessary. Ammending taxes Line 7. Ammending taxes   If you will not itemize your deductions, use Worksheet 2-4 to figure your standard deduction. Ammending taxes Line 10. Ammending taxes   Multiply $3,950 by your total expected exemptions and enter the result on line 10 unless line 3 is more than $305,050 if married filing jointly or qualifying widow(er), $279,650 if head of household, $254,200 if single, or $152,525 if married filing separately. Ammending taxes   In that case, use Worksheet 2-11 to figure the amount to enter on line 10. Ammending taxes Line 12. Ammending taxes   Generally, you will use the Tax Rate Schedules to figure the tax on your annualized income. Ammending taxes However, see below for situations where you must use a different method to compute your estimated tax. Ammending taxes Tax on child's investment income. Ammending taxes   You must use a special method to figure tax on the income of the following children who have more than $2,000 of investment income. Ammending taxes Children under age 18 at the end of 2014. Ammending taxes The following children if their earned income is not more than half their support. Ammending taxes Children age 18 at the end of 2014. Ammending taxes Children who are full-time students over age 18 and under age 24 at the end of 2014. Ammending taxes See Publication 929. Ammending taxes Tax on net capital gain. Ammending taxes   The regular income tax rates for individuals do not apply to a net capital gain. Ammending taxes Instead, your net capital gain is taxed at a lower maximum rate. Ammending taxes   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. Ammending taxes Tax on qualified dividends and capital gains. Ammending taxes   For 2014, your capital gain and dividends rate will depend on your income. Ammending taxes Tax on capital gain or qualified dividends. Ammending taxes 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. Ammending taxes Tax if excluding foreign earned income or excluding or deducting foreign housing. Ammending taxes 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. Ammending taxes Line 13. Ammending taxes   If you file Form 1040, add the tax from Forms 8814, 4972, and 6251 for the period. Ammending taxes If you file Form 1040A, add the amount from the Alternative Minimum Tax Worksheet found in the instructions. Ammending taxes Also include any recapture of an education credit for each period. Ammending taxes 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 2013 return. Ammending taxes   Use the 2013 forms or worksheets to see if you will owe any of the taxes discussed above. Ammending taxes Figure the tax based on your income and deductions during the period shown in the column headings. Ammending taxes Multiply this amount by the annualization amounts shown for each column on line 2 of the 2014 Annualized Estimated Tax Worksheet (Worksheet 2-9). Ammending taxes Enter the result on line 13 of this worksheet. Ammending taxes Line 15. Ammending taxes   Include all the nonrefundable credits you expect to claim because of events that will occur during the period. Ammending taxes Note. Ammending taxes When figuring your credits for each period, annualize any item of income or deduction to figure each credit. Ammending taxes For example, if you need to use your AGI to figure a credit, use line 3 of Worksheet 2-9 to figure the credit for each column. Ammending taxes Line 18. Ammending taxes   Add your expected other taxes. Ammending taxes   Other taxes include the following. Ammending taxes Additional tax on early distributions from: An IRA or other qualified retirement plan, A tax-sheltered annuity, or A modified endowment contract entered into after June 20, 1988. Ammending taxes Household employment taxes if: You will have federal income tax withheld from wages, pensions, annuities, gambling winnings, or other income, or You would be required to make estimated tax payments even if you did not include household employment taxes when figuring your estimated tax. Ammending taxes Amounts on Form 1040 written on the line for “other taxes” (line 60 on the 2013 Form 1040). Ammending taxes 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; or additional tax on advance payments of health coverage tax credit when not eligible. Ammending taxes Repayment of the first-time homebuyer credit if the home will cease to be your main home in 2014. Ammending taxes See Form 5405 for exceptions. Ammending taxes Additional Medicare Tax. Ammending taxes A 0. Ammending taxes 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. Ammending taxes 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) $200,000 Medicare wages and self-employment income are combined to determine if your income exceeds the threshold. Ammending taxes A self-employment loss should not be considered for purposes of this tax. Ammending taxes RRTA compensation should be separately compared to the threshold. Ammending taxes Your employer is responsible for withholding the 0. Ammending taxes 9% Additional Medicare Tax on Medicare wages or RRTA compensation it pays you in excess of $200,000 in 2014. Ammending taxes You should consider this withholding, if applicable, in determining whether you need to make an estimated payment. Ammending taxes For more information on Additional Medicare Tax, go to IRS. Ammending taxes gov and enter “Additional Medicare Tax” in the search box. Ammending taxes Net Investment Income Tax (NIIT). Ammending taxes The NIIT is 3. Ammending taxes 8% of the lesser of your net investment income or the excess of your modified adjusted gross income over a specified threshold amount. Ammending taxes 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 For more information on Net Investment Income Tax, go to IRS. Ammending taxes gov and enter “Net Investment Income Tax” in the search box. Ammending taxes Line 20. Ammending taxes   Include all the refundable credits (other than withholding credits) you can claim because of events that occurred during the period. Ammending taxes Note. Ammending taxes When figuring your refundable credits for each period, annualize any item of income or deduction used to figure each credit. Ammending taxes Line 29. Ammending taxes   If line 28 is smaller than line 25 and you are not certain of the estimate of your 2014 tax, you can avoid a penalty by entering the amount from line 25 on line 29. Ammending taxes Line 31. Ammending taxes   For each period, include estimated tax payments made and any excess social security and railroad retirement tax. Ammending taxes   Also include estimated federal income tax withholding. Ammending taxes One-fourth of your estimated withholding is considered withheld on the due date of each payment period. Ammending taxes To figure the amount to include on line 31 for each period, multiply your total expected withholding for 2014 by: 25% (. Ammending taxes 25) for the first period, 50% (. Ammending taxes 50) for the second period, 75% (. Ammending taxes 75) for the third period, and 100% (1. Ammending taxes 00) for the fourth period. Ammending taxes   However, you may choose to include your withholding according to the actual dates on which the amounts will be withheld. Ammending taxes For each period, include withholding made from the beginning of the period up to and including the payment due date. Ammending taxes You can make this choice separately for the taxes withheld from your wages and all other withholding. Ammending taxes For an explanation of what to include in withholding, see Total Estimated Tax Payments Needed—Line 16a , earlier. Ammending taxes Nonresident aliens. Ammending taxes   If you will file Form 1040NR and you do not receive wages as an employee subject to U. Ammending taxes S. Ammending taxes income tax withholding, the instructions for the worksheet are modified as follows. Ammending taxes Skip column (a). Ammending taxes On line 1, enter your income for the period that is effectively connected with a U. Ammending taxes S. Ammending taxes trade or business. Ammending taxes 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. Ammending taxes S. Ammending taxes trade or business by the following. Ammending taxes 72% for column (b). Ammending taxes 45% for column (c). Ammending taxes 30% for column (d). Ammending taxes However, if you can use a treaty rate lower than 30%, use the percentages determined by multiplying your treaty rate by 2. Ammending taxes 4, 1. Ammending taxes 5, and 1, respectively. Ammending taxes On line 26, enter one-half of the amount from line 16c of the Form 1040-ES (NR) 2014 Estimated Tax Worksheet in column (b), and one-fourth in columns (c) and (d) of Worksheet 2-9. Ammending taxes On lines 24 and 27, skip column (b). Ammending taxes 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). Ammending taxes See Publication 519 for more information. Ammending taxes Estimated Tax Payments Not Required You do not have to pay estimated tax if your withholding in each payment period is at least as much as: One-fourth of your required annual payment, or Your required annualized income installment for that period. Ammending taxes 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. Ammending taxes How To Pay Estimated Tax There are several ways to pay estimated tax. Ammending taxes Credit an overpayment on your 2013 return to your 2014 estimated tax. Ammending taxes Pay by direct transfer from your bank account, or pay by credit or debit card using a pay-by-phone system or the Internet. Ammending taxes Send in your payment (check or money order) with a payment voucher from Form 1040-ES. Ammending taxes Credit an Overpayment If you show an overpayment of tax after completing your Form 1040 or Form 1040A for 2013, you can apply part or all of it to your estimated tax for 2014. Ammending taxes On Form 1040, or Form 1040A, enter the amount you want credited to your estimated tax rather than refunded. Ammending taxes Take the amount you have credited into account when figuring your estimated tax payments. Ammending taxes If you timely file your 2013 return, treat the credit as a payment made on April 15, 2014. Ammending taxes If you are a beneficiary of an estate or trust, and the trustee elects to credit 2014 trust payments of estimated tax to you, you can treat the amount credited as paid by you on January 15, 2015. Ammending taxes If you choose to have an overpayment of tax credited to your estimated tax, you cannot have any of that amount refunded to you until you file your tax return for the following year. Ammending taxes You also cannot use that overpayment in any other way. Ammending taxes Example. Ammending taxes When Kathleen finished filling out her 2013 tax return, she saw that she had overpaid her taxes by $750. Ammending taxes Kathleen knew she would owe additional tax in 2014. Ammending taxes She credited $600 of the overpayment to her 2014 estimated tax and had the remaining $150 refunded to her. Ammending taxes In September, she amended her 2013 return by filing Form 1040X, Amended U. Ammending taxes S. Ammending taxes Individual Income Tax Return. Ammending taxes It turned out that she owed $250 more in tax than she had thought. Ammending taxes This reduced her 2013 overpayment from $750 to $500. Ammending taxes Because the $750 had already been applied to her 2014 estimated tax or refunded to her, the IRS billed her for the additional $250 she owed, plus penalties and interest. Ammending taxes Kathleen could not use any of the $600 she had credited to her 2014 estimated tax to pay this bill. Ammending taxes Pay Online Paying online is convenient and secure and helps make sure we get your payments on time. Ammending taxes You can make your estimated tax payments online when you e-file or at any time during the year. Ammending taxes You can pay using either of the following electronic payment methods. Ammending taxes Direct transfer from your bank account. Ammending taxes Credit or debit card. Ammending taxes To pay your taxes online or for more information, go to www. Ammending taxes irs. Ammending taxes gov/e-pay. Ammending taxes Pay by Phone Paying by phone is another safe and secure method of paying electronically. Ammending taxes Use one of the following methods. Ammending taxes Direct transfer from your bank account. Ammending taxes Credit or debit card. Ammending taxes To pay by direct transfer from your bank account, call EFTPS Customer Service at 1-800-555-4477 (English), 1-800-244-4829 (Espanol), or TTY/TDD 1-800-733-4829. Ammending taxes To pay using a credit or debit card, you can call one of the following service providers. Ammending taxes There is a convenience fee charged by these providers that varies by provider, card type, and payment amount. Ammending taxes WorldPay 1-888-9-PAY-TAXTM (1-888-972-9829) www. Ammending taxes payUSAtax. Ammending taxes com Official Payments Corporation 1-888-UPAY-TAXTM (1-888-872-9829) www. Ammending taxes officialpayments. Ammending taxes com Link2GOV Corporation 1-888-PAY-1040TM (1-888-729-1040) www. Ammending taxes PAY1040. Ammending taxes com For the latest details on how to pay by phone, go to www. Ammending taxes irs. Ammending taxes gov/e-pay. Ammending taxes Pay by Check or Money Order Using the Estimated Tax Payment Voucher Each payment of estimated tax by check or money order must be accompanied by a payment voucher from Form 1040-ES. Ammending taxes If you use your own envelopes (and not the window envelope that comes with the 1040-ES package), make sure you mail your payment vouchers to the address shown in the Form 1040-ES instructions for the place where you live. Ammending taxes Do not use the address shown in the Form 1040 or Form 1040A instructions. Ammending taxes If you did not pay estimated tax last year, get a copy of Form 1040-ES from the IRS (see chapter 5). Ammending taxes Follow the instructions to make sure you use the vouchers correctly. Ammending taxes Joint estimated tax payments. Ammending taxes    If you file a joint return and are making joint estimated tax payments, enter the names and social security numbers on the payment voucher in the same order as they will appear on the joint return. Ammending taxes Change of address. Ammending taxes    You must notify the IRS if you are making estimated tax payments and you changed your address during the year. Ammending taxes Complete Form 8822, Change of Address, and mail it to the address shown in the instructions for that form. Ammending taxes Worksheets for Chapter 2 Use the following worksheets and tables to figure your correct estimated tax. Ammending taxes IF you need. Ammending taxes . Ammending taxes . Ammending taxes THEN use. Ammending taxes . Ammending taxes . Ammending taxes 2014 Tax Rate Schedules   the 2014 Estimated Tax Worksheet Worksheet 2-1 to estimate your taxable social security and railroad retirement benefits—line 1 of ES Worksheet (or Annualized ES Worksheet (Worksheet 2-9)) Worksheet 2-2 to estimate your self-employment (SE) tax and your deduction for SE tax—lines 1 and 11 of ES Worksheet (lines 1 and 17 of Annualized ES Worksheet (Worksheet 2-9)) Worksheet 2-3 to estimate your standard deduction—line 2 of ES Worksheet (line 7 of Annualized ES Worksheet (Worksheet 2-9)) Worksheet 2-4 to reduce your itemized deductions because your estimated AGI is more than $152,525—line 2 of ES Worksheet Worksheet 2-5 to reduce your exemption amount because your estimated AGI is more than $152,525—line 4 of ES Worksheet Worksheet 2-6 to estimate your income tax if line 1 of your ES Worksheet includes a net capital gain or qualified dividends—line 6 of ES Worksheet Worksheet 2-7 to estimate your income tax if you expect to claim a foreign earned income exclusion or foreign housing exclusion or deduction on Form 2555 or Form 2555-EZ—line 6 of ES Worksheet Worksheet 2-8 the 2014 Annualized Estimated Tax Worksheet (Annualized ES Worksheet) Worksheet 2-9 to reduce your itemized deductions because your estimated annualized AGI is more than $152,525—line 6 of Annualized ES Worksheet Worksheet 2-10 to reduce your exemption amount because your estimated annualized AGI is more than $152,525—line 10 of Annualized ES Worksheet Worksheet 2-11 to estimate your income tax if line 1 of your Annualized ES Worksheet includes a net capital gain or qualified dividends—line 12 of Annualized ES Worksheet Worksheet 2-12 to estimate your income tax if you expect to claim a foreign earned income exclusion or foreign housing exclusion or deduction on Form 2555 or Form 2555-EZ—line 12 of Annualized ES Worksheet Worksheet 2-13 to refigure (amend) your estimated tax during the year Worksheet 2-14 2014 Tax Rate Schedules Do not use these Tax Rate Schedules to figure your 2013 taxes. Ammending taxes Use them only to figure your 2014 estimated taxes. Ammending taxes Schedule X—Use if your 2014 filing status is  Single Schedule Z—Use if your 2014 filing status is Head of household If line 5 is: The tax is:     If line 5 is: The tax is:     Over— But not  over—         of the  amount  over— Over— But not  over—         of the  amount  over— $0 $9,075     10. Ammending taxes 0%   $0 $0 $12,950     10. Ammending taxes 0%   $0 9,075 36,900 $907. Ammending taxes 50 + 15. Ammending taxes 0%   9,075 12,950 49,400 $1,295. Ammending taxes 00 + 15. Ammending taxes 0%   12,950 36,900 89,350 5,081. Ammending taxes 25 + 25. Ammending taxes 0%   36,900 49,400 127,550 6,762. Ammending taxes 50 + 25. Ammending taxes 0%   49,400 89,350 186,350 18,193. Ammending taxes 75 + 28. Ammending taxes 0%   89,350 127,550 206,600 26,300. Ammending taxes 00 + 28. Ammending taxes 0%   127,550 186,350 405,100 45,353. Ammending taxes 75 + 33. Ammending taxes 0%   186,350 206,600 405,100 48,434. Ammending taxes 00 + 33. Ammending taxes 0%   206,600 405,100 406,750 117,541. Ammending taxes 25 + 35. Ammending taxes 0%   405,100 405,100 432,200 113,939. Ammending taxes 00 + 35. Ammending taxes 0%   405,100 406,750 - - - - - - 118,118. Ammending taxes 75 + 39. Ammending taxes 6%   406,750 432,200 - - - - - - 123,424. Ammending taxes 00 + 39. Ammending taxes 6%   432,200 Schedule Y-1—Use if your 2014 filing status is Married filing jointly or Qualifying widow(er) Schedule Y-2—Use if your 2014 filing status is  Married filing separately If line 5 is: The tax is:     If line 5 is: The tax is:     Over— But not  over—         of the  amount  over— Over— But not  over—         of the  amount  over— $0 $18,150     10. Ammending taxes 0%   $0 $0 $9,075     10. Ammending taxes 0%   $0 18,150 73,800 $1,815. Ammending taxes 00 + 15. Ammending taxes 0%   18,150 9,075 36,900 $907. Ammending taxes 50 + 15. Ammending taxes 0%   9,075 73,800 148,850 10,162. Ammending taxes 50 + 25. Ammending taxes 0%   73,800 36,900 74,425 5,081. Ammending taxes 25 + 25. Ammending taxes 0%   36,900 148,850 226,850 28,925. Ammending taxes 00 + 28. Ammending taxes 0%   148,850 74,425 113,425 14,462. Ammending taxes 50 + 28. Ammending taxes 0%   74,425 226,850 405,100 50,765. Ammending taxes 00 + 33. Ammending taxes 0%   226,850 113,425 202,550 25,382. Ammending taxes 50 + 33. Ammending taxes 0%   113,425 405,100 457,600 109,587. Ammending taxes 50 + 35. Ammending taxes 0%   405,100 202,550 228,800 54,793. Ammending taxes 75 + 35. Ammending taxes 0%   202,550 457,600 - - - - - - 127,962. Ammending taxes 50 + 39. Ammending taxes 6%   457,600 228,800 - - - - - - 63,981. Ammending taxes 25 + 39. Ammending taxes 6%   228,800                             Worksheet 2-1. Ammending taxes 2014 Estimated Tax Worksheet When this worksheet refers you to instructions, you can find those instructions in the Instructions for 2014 Form 1040-ES. Ammending taxes 1 Adjusted gross income you expect in 2014 (see instructions) 1     2 If you plan to itemize deductions, enter the estimated total of your itemized deductions. Ammending taxes  Caution: If line 1 is over $152,525, your deduction may be reduced. Ammending taxes See Worksheet 2-5. Ammending taxes If you do not plan to itemize deductions, enter your standard deduction. Ammending taxes 2     3 Subtract line 2 from line 1 3     4 Exemptions. Ammending taxes Multiply $3,950 by the number of personal exemptions. Ammending taxes  Caution: If line 1 is over $152,525, the amount of your personal exemptions may be limited. Ammending taxes See Worksheet 2-6. Ammending taxes 4     5 Subtract line 4 from line 3 5     6 Tax. Ammending taxes Figure your tax on the amount on line 5 by using the 2014 Tax Rate Schedules Caution: If you will have qualified dividends or a net capital gain, or expect to exclude or deduct foreign earned income or housing, see Worksheets 2-7 and 2-8 to figure the tax 6     7 Alternative minimum tax from Form 6251 or included on Form 1040A, line 28 7     8 Add lines 6 and 7. Ammending taxes Add to this amount any other taxes you expect to include in the total on Form 1040, line 44 8     9 Credits (see instructions). Ammending taxes Do not include any income tax withholding on this line 9     10 Subtract line 9 from line 8. Ammending taxes If zero or less, enter -0- 10     11 Self-employment tax (see instructions) 11     12 Other taxes including, if applicable, Additional Medicare Tax and/or NIIT (see instructions) 12     13a Add lines 10 through 12 13a     b Earned income credit, additional child tax credit, fuel tax credit, and refundable American opportunity credit 13b     c Total 2014 estimated tax. Ammending taxes Subtract line 13b from line 13a. Ammending taxes If zero or less, enter -0- ▶ 13c     14a Multiply line 13c by 90% (662/3% for farmers and fishermen) 14a           b Required annual payment based on prior year's tax (see instructions) 14b           c Required annual payment to avoid a penalty. Ammending taxes Enter the smaller of line 14a or 14b ▶ 14c        Caution: Generally, if you do not prepay (through income tax withholding and estimated tax payments) at least the amount on line 14c, you may owe a penalty for not paying enough estimated tax. Ammending taxes To avoid a penalty, make sure your estimate on line 13c is as accurate as possible. Ammending taxes Even if you pay the required annual payment, you may still owe tax when you file your return. Ammending taxes If you prefer, you can pay the amount shown on line 13c. Ammending taxes                         15 Income tax withheld and estimated to be withheld during 2014 (including income tax withholding on pensions, annuities, certain deferred income, etc. Ammending taxes ) 15     16a Subtract line 15 from line 14c 16a             Is the result zero or less? □ Yes. Ammending taxes Stop here. Ammending taxes You are not required to make estimated tax payments. Ammending taxes  □ No. Ammending taxes Go to line 16b. Ammending taxes             b Subtract line 15 from line 13c 16b             Is the result less than $1,000? □ Yes. Ammending taxes Stop here. Ammending taxes You are not required to make estimated tax payments. Ammending taxes  □ No. Ammending taxes Go to line 17 to figure your required payment. Ammending taxes                         17 If the first payment you are required to make is due April 15, 2014, enter ¼ of line 16a (minus any 2013 overpayment that you are applying to this installment) here, and on your estimated tax payment voucher(s) if you are paying by check or money order 17     Worksheet 2-2. Ammending taxes 2014 Estimated Tax Worksheet—Line 1 Estimated Taxable Social Security and Railroad Retirement Benefits Note. Ammending taxes If you are using this worksheet to estimate your taxable social security or railroad retirement benefits for Worksheet 2-9, 2014 Annualized Estimated Tax Worksheet, multiply the expected amount of benefits for each period by the annualization amount shown on Worksheet 2-9, line 2, for the same period before entering it on line 1 below. Ammending taxes     1. Ammending taxes Enter your expected social security and railroad retirement benefits 1. Ammending taxes   2. Ammending taxes Enter one-half of line 1 2. Ammending taxes   3. Ammending taxes Enter your expected total income. Ammending taxes Do not include any social security and railroad retirement benefits, nontaxable interest income, nontaxable IRA distributions, or nontaxable pension distributions 3. Ammending taxes   4. Ammending taxes Enter your expected nontaxable interest income 4. Ammending taxes   5. Ammending taxes Enter (as a positive amount) the total of any expected exclusions or deductions for: U. Ammending taxes S. Ammending taxes savings bond interest used for higher education expenses (Form 8815) Employer-provided adoption benefits (Form 8839) Foreign earned income or housing (Form 2555 or 2555-EZ) Income by bona fide residents of American Samoa (Form 4563) or Puerto Rico 5. Ammending taxes   6. Ammending taxes Add lines 2, 3, 4, and 5 6. Ammending taxes   7. Ammending taxes Enter your expected adjustments to income. Ammending taxes Do not include any student loan interest deduction 7. Ammending taxes   8. Ammending taxes Subtract line 7 from line 6. Ammending taxes If zero or less, stop here. Ammending taxes  Note. Ammending taxes Do not include any social security or railroad retirement benefits in the amount on line 1 of your 2014 Estimated Tax Worksheet (Worksheet 2-1) (or Annualized Estimated Tax Worksheet (Worksheet 2-9)) 8. Ammending taxes   9. Ammending taxes Enter $25,000 ($32,000 if you expect to file married filing jointly; $0 if you expect to file married filing separately and expect to live with your spouse at any time during the year) 9. Ammending taxes   10. Ammending taxes Subtract line 9 from line 8. Ammending taxes If zero or less, stop here. Ammending taxes  Note. Ammending taxes Do not include any social security or railroad retirement benefits in the amount on line 1 of your Worksheet 2-1 (or Annualized Estimated Tax Worksheet (Worksheet 2-9)) 10. Ammending taxes   11. Ammending taxes Enter $9,000 ($12,000 if you expect to file married filing jointly; $0 if you expect to file married filing separately and expect to live with your spouse at any time during the year) 11. Ammending taxes   12. Ammending taxes Subtract line 11 from line 10. Ammending taxes If zero or less, enter -0- 12. Ammending taxes   13. Ammending taxes Enter the smaller of line 10 or line 11 13. Ammending taxes   14. Ammending taxes Enter one-half of line 13 14. Ammending taxes   15