Publication 505 (2016) TAX WITHHOLDING AND ESTIMATED TAX

 

There is also a criminal penalty for willfully supplying false or fraudulent information on your Form W-4 or for willfully failing to supply information that would increase the amount withheld. The penalty upon conviction can be either a fine of up to $1,000 or imprisonment for up to 1 year, or both.

These penalties will apply if you deliberately and knowingly falsify your Form W-4 in an attempt to reduce or eliminate the proper withholding of taxes. A simple error or an honest mistake will not result in one of these penalties. For example, a person who has tried to figure the number of withholding allowances correctly, but claims seven when the proper number is six, will not be charged a Form W-4 penalty. However, see chapter 4 for information on the penalty for underpaying your tax.

Tips

The tips you receive while working on your job are considered part of your pay. You must include your tips on your tax return on the same line as your regular pay. However, tax is not withheld directly from tip income, as it is from your regular pay. Nevertheless, your employer will take into account the tips you report when figuring how much to withhold from your regular pay.

Reporting tips to your employer. If you receive tips of $20 or more in a month while working for any one employer, you must report to your employer the total amount of tips you receive on the job during the month. The report is due by the 10th day of the following month.

If you have more than one job, make a separate report to each employer. Report only the tips you received while working for that employer, and only if they total $20 or more for the month.

How employer figures amount to withhold. The tips you report to your employer are counted as part of your income for the month you report them. Your employer can figure your withholding in either of two ways.

 

• By withholding at the regular rate on the sum of your pay plus your reported tips.

• By withholding at the regular rate on your pay plus a percentage of your reported tips.

 

Not enough pay to cover taxes.

If your regular pay is not enough for your employer to withhold all the tax (including income tax and social security and Medicare taxes (or the equivalent railroad retirement tax)) due on your pay plus your tips, you can give your employer money to cover the shortage.

If you do not give your employer money to cover the shortage, your employer first withholds as much Medicare tax and social security or railroad retirement tax as possible, up to the proper amount, and then withholds income tax up to the full amount of your pay. If not enough tax is withheld, you may have to pay estimated tax. When you file your return, you also may have to pay any Medicare and social security tax or railroad retirement tax your employer could not withhold.

Tips not reported to your employer. On your tax return, you must report all the tips you receive during the year, even tips you do not report to your employer (this includes the value of any noncash tips you received, such as tickets, passes, or other items of value). Make sure you are having enough tax withheld, or are paying enough estimated tax (see chapter 2), to cover all your tip income.

Allocated tips. If you work in a large food or beverage establishment, your employer may have to report an allocated amount of tips on your Form W-2.

Your employer should not withhold income tax, Medicare tax, and social security or railroad retirement tax on the allocated amount. Withholding is based only on your pay plus your reported tips. Your employer should refund to you any incorrectly withheld tax.

More information. For more information on the reporting and withholding rules for tip income and on tip allocation, see Publication 531, Reporting Tip Income.

Taxable Fringe Benefits

The value of certain noncash fringe benefits you receive from your employer is considered part of your pay. Your employer generally must withhold income tax on these benefits from your regular pay.

Although the value of your personal use of an employer-provided car, truck, or other highway motor vehicle is taxable, your employer can choose not to withhold income tax on that amount. Your employer must notify you if this choice is made.

When benefits are considered paid. Your employer can choose to treat a fringe benefit as paid by the pay period, by the quarter, or on some other basis as long as the benefit is considered paid at least once a year. Your employer can treat the benefit as being paid on one or more dates during the year, even if you get the entire benefit at one time.

Special rule. Your employer can choose to treat a benefit provided during November or December as paid in the next year. Your employer must notify you if this rule is used.

Example. Your employer considers the value of benefits paid from November 1, 2014, through October 31, 2015, as paid to you in 2015. To determine the total value of benefits paid to you in 2016, your employer will add the value of any benefits paid in November and December of 2015 to the value of any benefits paid in January through October of 2016.

Exceptions. Your employer cannot choose when to withhold tax on the transfer of either real property or personal property of a kind normally held for investment (such as stock). Your employer must withhold tax on these benefits at the time of the transfer.

How withholding is figured. Your employer can either add the value of a fringe benefit to your regular pay and figure income tax withholding on the total or withhold a flat 20% of the benefit's value.

If the benefit's actual value cannot be determined when it is paid or treated as paid, your employer can use a reasonable estimate. Your employer must determine the actual value of the benefit by January 31 of the next year. If the actual value is more than the estimate, your employer must pay the IRS any additional withholding tax required. Your employer has until April 1 of that next year to recover from you the additional income tax paid to the IRS for you.

How your employer reports your benefits. Your employer must report on Form W-2 the total of the taxable fringe benefits paid or treated as paid to you during the year and the tax withheld for the benefits. These amounts can be shown either on the Form W-2 for your regular pay or on a separate Form W-2. If your employer provided you with a car, truck, or other motor vehicle and chose to treat all of your use of it as personal, its value must be either separately shown on Form W-2 or reported to you on a separate statement.

More information. For information on fringe benefits, see Fringe Benefits under Employee Compensation in Publication 525, Taxable and Nontaxable Income.

Sick Pay

Sick pay is a payment to you to replace your regular wages while you are temporarily absent from work due to sickness or personal injury. To qualify as sick pay, it must be paid under a plan to which your employer is a party.

If you receive sick pay from your employer or an agent of your employer, income tax must be withheld. An agent who does not pay regular wages to you may choose to withhold income tax at a flat rate.

However, if you receive sick pay from a third party who is not acting as an agent of your employer, income tax will be withheld only if you choose to have it withheld. See Form W-4S.

If you receive payments under a plan in which your employer does not participate (such as an accident or health plan where you paid all the premiums), the payments are not sick pay and usually are not taxable.

Union agreements. If you receive sick pay under a collective bargaining agreement between your union and your employer, the agreement may determine the amount of income tax withholding. See your union representative or your employer for more information.

Form W-4S. If you choose to have income tax withheld from sick pay paid by a third party, such as an insurance company, you must fill out Form W-4S. Its instructions contain a worksheet you can use to figure the amount you want withheld. They also explain restrictions that may apply.

Give the completed form to the payer of your sick pay. The payer must withhold according to your directions on the form.

Form W-4S remains in effect until you change or cancel it, or stop receiving payments. You can change your withholding by giving a new Form W-4S or a written notice to the payer of your sick pay.

Estimated tax. If you do not request withholding on Form W-4S, or if you do not have enough tax withheld, you may have to pay estimated tax. If you do not pay enough tax, either through estimated tax or withholding, or a combination of both, you may have to pay a penalty. See chapter 2 and chapter 4.

Pensions and Annuities

Income tax usually will be withheld from your pension or annuity distributions unless you choose not to have it withheld. This rule applies to distributions from:

 

The amount withheld depends on whether you receive payments spread out over more than 1 year (periodic payments), within 1 year (nonperiodic payments), or as an eligible rollover distribution (ERD). Income tax withholding from an ERD is mandatory. ERDs are discussed under

Eligible Rollover Distributions.

Nontaxable part. The part of your pension or annuity that is a return of your investment in your retirement plan (the amount you paid into the plan or its cost to you) is not taxable. Income tax will not be withheld from the part of your pension or annuity that is not taxable. The tax withheld will be figured on, and cannot be more than, the taxable part.

For information about figuring the part of your pension or annuity that is not taxable, see Publication 575, Pension and Annuity Income.

Periodic Payments

Withholding from periodic payments of a pension or annuity is figured in the same way as withholding from salaries and wages. To tell the payer of your pension or annuity how much you want withheld, fill out Form W-4P or a similar form provided by the payer. Follow the rules discussed under Salaries and Wages to fill out your Form W-4P.

Note. Use Form W-4, not Form W-4P, if you receive any of the following.

 

Withholding rules.

The withholding rules for pensions and annuities differ from those for salaries and wages in the following ways.

 

Effective date of withholding certificate.

If you give your withholding certificate (Form W-4P or a similar form) to the payer on or before the date your payments start, it will be put into effect by the first payment made more than 30 days after you submit the certificate.

If you give the payer your certificate after your payments start, it will be put into effect with the first payment which is at least 30 days after you submit it. However, the payer can elect to put it into effect earlier.

Nonperiodic Payments

Tax will be withheld at a flat 10% rate on any nonperiodic payments you receive, unless you tell the payer not to withhold.

Use Form W-4P, line 3, to specify that an additional dollar amount be withheld. You also can use Form W-4P, line 1, to choose not to have tax withheld. If you want to revoke a choice not to have tax withheld, see Choosing Not To Have Income Tax Withheld.

CAUTION: You may need to use Form W-4P to ask for additional withholding. If you do not have enough tax withheld, you may need to pay estimated tax, as explained in chapter 2.

Eligible Rollover Distributions

A distribution you receive that is eligible to be rolled over tax free into a qualified retirement or annuity plan is called an eligible rollover distribution (ERD). This is the taxable part of any distribution from a qualified pension plan or tax-sheltered annuity that is not any of the following.

 

The payer of a distribution must withhold at a flat 20% rate on any part of an ERD that is distributed rather than rolled over directly to another qualified plan. Withholding on these distributions is mandatory. However, no withholding is required on any part rolled over directly to another plan.

Choosing Not To Have Income Tax Withheld

For payments other than ERDs, you can choose not to have income tax withheld. The payer will tell you how to make this choice. If you use Form W-4P, check the box on line 1 to choose not to have withholding. This choice will remain in effect until you decide you want withholding and inform the payer. See Revoking a choice not to have tax withheld.

The payer must withhold if either of the following applies:

 

If you do not have any income tax withheld from your pension or annuity, or if you do not have enough withheld, you may have to pay estimated tax. See chapter 2.

If you do not pay enough tax, either through estimated tax or withholding, or a combination of both, you may have to pay a penalty. See chapter 4.

Payments delivered outside the United States. You generally must have tax withheld from pension or annuity benefits delivered outside the United States. However, if you are a U.S. citizen or resident alien, you can choose not to have tax withheld if you give the payer of the benefits a home address in the United States or in a U.S. possession. The payer must withhold tax if you provide a U.S. address for a nominee, trustee, or agent to whom the benefits are to be delivered, but do not provide your own home address in the United States or in a U.S. possession.

Notice required of payer. The payer of your pension or annuity must send you a notice telling you about your right to choose not to have tax withheld.

Generally, the payer will not send a notice to you if it is reasonable to believe that the entire amount you will be paid is not taxable.

Revoking a choice not to have tax withheld. The payer of your pension or annuity will tell you how to revoke your choice not to have income tax withheld from periodic or nonperiodic payments. If you use Form W-4P to revoke the choice, enter "Revoked" by the checkbox on line 1 of the form. This will instruct the payer to withhold as if you were married and claiming three allowances. However, you can tell the payer exactly how much to withhold by completing line 2 of the form for periodic payments or line 3 for nonperiodic payments.

Gambling Winnings

Income tax is withheld at a flat 25% rate from certain kinds of gambling winnings.

Gambling winnings of more than $5,000 from the following sources are subject to income tax withholding.

 

It does not matter whether your winnings are paid in cash, in property, or as an annuity. Winnings not paid in cash are taken into account at their fair market value.

Exception. Gambling winnings from bingo, keno, and slot machines generally are not subject to income tax withholding. However, you may need to provide the payer with a social security number to avoid withholding. See Backup withholding on gambling winnings. If you receive gambling winnings not subject to withholding, you may need to pay estimated tax. See chapter 2.

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. See chapter 4.

Form W-2G. If a payer withholds income tax from your gambling winnings, you should receive a Form W-2G, Certain Gambling Winnings, showing the amount you won and the amount withheld.

Report the tax withheld on your 2016 Form 1040, along with all other federal income tax withheld, as shown on Forms W-2 and 1099.

Information to give payer. If the payer asks, you must give the payer all the following information.

 

Identical wagers.

You may have to give the payer a statement of the amount of your winnings, if any, from identical wagers. If this statement is required, the payer will ask you for it. You provide this statement by signing Form W-2G or, if required, Form 5754.

Identical wagers include two bets placed in a pari-mutuel pool on one horse to win a particular race. However, the bets are not identical if one bet is "to win" and one bet is "to place." In addition, they are not identical if the bets were placed in different pari-mutuel pools. For example, a bet in a pool conducted by the racetrack and a bet in a separate pool conducted by an offtrack betting establishment in which the bets are not pooled with those placed at the track are not identical wagers.

Backup withholding on gambling winnings. If you have any kind of gambling winnings and do not give the payer your social security number, the payer may have to withhold income tax at a flat 28% rate. This rule also applies to winnings of at least $1,200 from bingo or slot machines or $1,500 from keno, and to certain other gambling winnings of at least $600.

Unemployment Compensation

You can choose to have income tax withheld from unemployment compensation. To make this choice, fill out Form W-4V (or a similar form provided by the payer) and give it to the payer.

All unemployment compensation is taxable. So, if you do not have income tax withheld, you may have to pay estimated tax. See chapter 2.

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. See chapter 4.

Form 1099-G. If you receive $10 or more in unemployment compensation, you will receive a Form 1099-G, Certain Government Payments. Box 1 will show the amount of unemployment compensation you got for the year. Box 4 will show the amount of federal income tax withheld, if any.

Federal Payments

You can choose to have income tax withheld from certain federal payments you receive. These payments are:

 

To make this choice, fill out Form W-4V (or a similar form provided by the payer) and give it to the payer.

If you do not choose to have income tax withheld, you may have to pay estimated tax. See chapter 2.

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. See chapter 4.

More information. For more information about the tax treatment of social security and railroad retirement benefits, get Publication 915, Social Security and Equivalent Railroad Retirement Benefits. Get Publication 225, Farmer's Tax Guide, for information about the tax treatment of commodity credit corporation loans or crop disaster payments.

Payment to Shareholders of Alaska Native Corporations. If you are a shareholder of an Alaska Native Corporation (ANC) you can request to have income tax withheld from dividends and other distributions you receive from the ANC. To make this request, fill out Form W-4V (or a similar form provided by the payer) and give it to the payer. A request for withholding is not effective until the ANC indicates in writing that it accepts the request or begins withholding. Contact the payer if it is not clear that the payer has accepted your Form W-4V.

If you do not choose to have income tax withheld, or the ANC does not accept your request, you may have to pay estimated tax. See chapter 2.

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. See chapter 4.

Backup Withholding

Banks or other businesses that pay you certain kinds of income must file an information return (Form 1099) with the IRS. The information return shows how much you were paid during the year. It also includes your name and taxpayer identification number (TIN). TINs are explained later in this discussion.

These payments generally are not subject to withholding. However, "backup" withholding is required in certain situations.

Payments subject to backup withholding. Backup withholding can apply to most kinds of payments that are reported on Form 1099. These include:

 

Backup withholding also may apply to gambling winnings. See

Backup withholding on gambling winnings

under

Gambling Winnings.

Payments not subject to backup withholding. Backup withholding does not apply to payments reported on Form 1099-MISC (other than payments by fishing boat operators and royalty payments) unless at least one of the following three situations applies.

 

Form 1099 and backup withholding are generally not required for a payment of less than $10.

Withholding rules. When you open a new account, make an investment, or begin to receive payments reported on Form 1099, the bank or other business will give you Form W-9, Request for Taxpayer Identification Number and Certification, or a similar form. You must enter your TIN on the form and, if your account or investment will earn interest or dividends, you also must certify (under penalties of perjury) that your TIN is correct and that you are not subject to backup withholding.

The payer must withhold at a flat 28% rate in the following situations.

 

Taxpayer identification number.

Your TIN is one of the following three numbers.

 

An ITIN is for tax use only. It does not entitle you to social security benefits or change your employment or immigration status under U.S. law. For more information on ITINs, get

Publication 1915

, Understanding Your IRS Individual Taxpayer Identification Number.

How to prevent or stop backup withholding. If you have been notified by a payer that the TIN you gave is incorrect, you usually can prevent backup withholding from starting or stop backup withholding once it has begun by giving the payer your correct name and TIN. You must certify that the TIN you give is correct.

However, the payer will provide additional instructions if the TIN you gave needs to be validated by the Social Security Administration or by the IRS. This may happen if both the following conditions exist.

 

Underreported interest or dividends.

If you have been notified that you underreported interest or dividends, you must request and receive a determination from the IRS to prevent backup withholding from starting or to stop backup withholding once it has begun. Your request must show that at least one of the following situations applies.

 

If the IRS determines that backup withholding should stop, it will provide you with certification and will notify the payers who were sent notices earlier.

Penalties. There are civil and criminal penalties for giving false information to avoid backup withholding. The civil penalty is $500. The criminal penalty, upon conviction, is a fine of up to $1,000 or imprisonment of up to 1 year, or both.

Worksheets for Chapter 1

 Use the following worksheets to figure your correct withholding and

 

 adjustments.

 

 ----------------------------------------------------------------------

 

 

Use . . .                          To . . .

 

 ----------------------------------------------------------------------

 

 Worksheet 1-1                      Figure your personal allowances if

 

 Personal Allowances Worksheet      your adjusted gross income is over

 

 (Form W-4) Reduction of            the stated threshold.

 

 Personal Allowances if AGI is

 

 above Phaseout Threshold

 

 ----------------------------------------------------------------------

 

 Worksheet 1-2                      Figure your itemized deductions if

 

 Deductions and Adjustments         your adjusted gross income is over

 

 Worksheet                          the stated threshold.

 

 (Forms W-4) -- Line 1

 

 Phaseout of Itemized Deductions

 

 ----------------------------------------------------------------------

 

 Worksheet 1-3 and                  Figure your total expected income

 

 Worksheet 1-4                      for 2016 to determine if you are

 

 Exemption From Withholding for     exempt from withholding. Use

 

 Persons/Dependents Age 65 or       Worksheet 1-3, if in 2015, you had

 

 Older or Blind                     a right to a refund of all federal

 

                                    income tax withheld because of no

 

                                    tax liability. Use Worksheet 1-4,

 

                                    if you are a

dependent

 for 2016,

 

                                    and for 2015, you had a refund of

 

                                    all federal income tax withheld

 

                                    because of no tax liability.

 

 ----------------------------------------------------------------------

 

 Worksheet 1-5                      Project the taxable income you will

 

 Projected Tax for 2016             have for 2016 and figure the amount

 

                                    of tax you will have to pay on that

 

                                    income.

 

 ----------------------------------------------------------------------

 

 Worksheet 1-6                      Figure the amount of tax on your

 

 Tax Computation Worksheets for     projected taxable income.

 

 2016

 

 ----------------------------------------------------------------------

 

 Worksheet 1-7                      Project the amount of federal

 

 Projected Withholding for 2016     income tax that you will have

 

                                    withheld in 2016, compare your

 

                                    projected withholding with your

 

                                    projected tax, and determine

 

                                    whether the amount withheld each

 

                                    payday should be adjusted.

 

 ----------------------------------------------------------------------

 

 Worksheet 1-8                      Figure the adjustment to make to

 

 Converting Credits to Withholding  line 5 of the Form W-4 Deductions

 

 Allowances for 2016 Form W-4       and Adjustments Worksheet to

 

                                    account for your projected tax

 

                                    credits that are not otherwise

 

                                    taken into consideration.

 

 ----------------------------------------------------------------------

 

 

Worksheet 1-3. Exemption From Withholding for Persons Age 65 or Older or Blind

 Use this worksheet only if, for 2015 you had a right to a refund of

 

 

all

 federal income tax withheld because you had

no

 tax liability.

 

 

Caution.

 

This worksheet does not apply if you can be claimed as a

 

 dependent. See Worksheet 1-4 instead.

 

 ----------------------------------------------------------------------

 

 

1.

 Check the boxes below that apply to you.

 

     65 or older [ ]              Blind [ ]

 

 

2.

 Check the boxes below that apply to your spouse if you

 

    will claim your spouse's exemption on your 2016 return.

 

     65 or older [ ]              Blind [ ]

 

 

3.

 Add the number of boxes you checked in

 

    1 and 2 above. Enter the result                              ______

 

 ----------------------------------------------------------------------

 

 You

can

 claim exemption from withholding if:

 

                                                          and your 2016

 

                         and the number on            total income will

 

 Your filing status is:  line 3 above is:              be no more than:

 

 ----------------------------------------------------------------------

 

 Single                          1                              $11,900

 

                                 2                               13,450

 

 ----------------------------------------------------------------------

 

 Head of                         1                              $14,900

 

 household                       2                               16,450

 

 ----------------------------------------------------------------------

 

 Married filing                  1                              $11,600

 

 separately for                  2                               12,850

 

 both 2015 and                   3                               14,100

 

 2016                            4                               15,350

 

 ----------------------------------------------------------------------

 

 Other married                   1                             $21,950*

 

 status                          2                              23,200*

 

                                 3                              24,450*

 

                                 4                              25,700*

 

 *

Include both spouses' income whether you will file separately or

 

 jointly.

 

 ----------------------------------------------------------------------

 

 Qualifying                      1                              $17,900

 

 widow(er)                       2                               19,150

 

 ----------------------------------------------------------------------

 

 You

cannot

 claim exemption from withholding if your total income will

 

 be

more than

 the amount shown for your filing status.

 

 ----------------------------------------------------------------------

 

 

Worksheet 1-4. Exemption From Withholding for Dependents Age 65 or Older or Blind

 Use this worksheet only if, for 2016, you are a dependent and if,

 

 for

2015,

 you had a right to a refund of

all

 federal income tax

 

 withheld because you had

no

 tax liability.

 

 ----------------------------------------------------------------------

 

 

1.

 Enter your expected earned income plus $350            

1.

 ________

 

 

2.

 Minimum amount                                          

2.

 

  $1,050

 

 

3.

 Compare lines 1 and 2. Enter the

larger

 amount          

3.

 ________

 

 

4.

 Limit                                                  

4.

 

   6,300

 

 

5.

 Compare lines 3 and 4. Enter the

smaller

 amount        

5.

 ________

 

 

6.

 Enter the appropriate amount from the following table  

6.

 ________

 

    Single

 

       Either 65 or older or blind          $1,550

 

       Both 65 or older and blind            3,100

 

    Married filing separately

 

       Either 65 or older or blind           1,250

 

       Both 65 or older and blind            2,500

 

 

7.

 Add lines 5 and 6. Enter the result                    

7.

 ________

 

 

8.

 Enter your total expected income                        

8.

 ________

 

 ----------------------------------------------------------------------

 

 You

can

 claim exemption from withholding if line 7 is equal to or

 

 more than line 8. You

cannot

 claim exemption from withholding if

 

 line 8 is more than line 7.

 

 ----------------------------------------------------------------------

 

 

Worksheet 1-5. Projected Tax for 2016

 Keep for Your Records

 

 ----------------------------------------------------------------------

 

 Use this worksheet to figure your projected tax for 2016.

Note.

 Enter

 

 combined amounts if married filing jointly.

 

 ----------------------------------------------------------------------

 

 

1.

 Enter amount of adjusted gross income (AGI) you expect

 

     in 2016. (To determine this, you may want to start

 

     with the AGI on your last year's return, and add or

 

     subtract your expected changes. Also take into account

 

     items listed under

What's New,

 earlier.)

 

     

Note.

 If self-employed, first complete Worksheet 2-3

 

     to figure your expected deduction for self-employment

 

     tax. Subtract the amount from Worksheet 2-3, line 11,

 

     to figure the line 1 entry                              

1.

 ______

 

 

2.

 If you:

 

     • Do not plan to itemize deductions on

 

       Schedule A (Form 1040), use Worksheet 2-4 to figure

 

       your expected standard deduction and enter that

 

       amount here.

 

     • Plan to itemize deductions, and the amount on line 1

 

       is:

 

       • Not more than $311,300 if married filing jointly

 

         or qualifying widow(er), $285,350 if head of

 

         household, $259,400 if single, or $155,650 if

 

         married filing separately, enter the total

 

         itemized deductions you expect after applying any

 

         limits, such as the 10% limit on medical expenses

 

         (7.5% if either you or your spouse was born before

 

         January 2, 1952).

 

       • More than the above limits use Worksheet 1-2 to

 

         figure the amount to enter here                      

2.

 ______

 

 

3.

 Subtract line 2 from line 1 (if zero or less, enter

 

     -0- and go to line 6)                                    

3.

 ______

 

 

4.

 If the amount on line 1 is:

 

     • Not more than the amount shown below for your 2016

 

       filing status, multiply the number of exemptions you

 

       plan to claim on your 2016 tax return by $4,050 and

 

       enter the result here.

 

     • More than the amount shown below for your 2016

 

       filing status, use Worksheet 2-6 to figure the

 

       amount to enter here.

 

       • Married filing jointly or Qualifying widow(er) --

 

         $311,300

 

       • Head of household -- $285,350

 

       • Single -- $259,400

 

       • Married filing separately -- $155,650                

4.

 ______

 

 

5. Expected taxable income.

 Subtract line 4 from line 3

 

     (if zero or less, enter -0- here and on line 6, then

 

     go to line 7)                                            

5.

 ______

 

 

6.

 If the amount on line 1:

 

     • Does not include a net capital gain or qualified

 

       dividends and you did not exclude foreign earned

 

       income or exclude or deduct foreign housing in

 

       arriving at the amount on line 1, use the

 

       appropriate section of Worksheet 1-6 to figure the

 

       tax to enter here.

 

     • Includes a net capital gain or qualified dividends,

 

       use Worksheet 2-7 to figure the tax to enter here.

 

     • Was figured by excluding foreign earned income or

 

       excluding or deducting foreign housing, use

 

       Worksheet 2-8 to figure the tax to enter here          

6.

 ______

 

 

7.

 Enter any expected additional taxes from an election

 

     to report your child's interest and dividends

 

     (Form 4972),

 

     recapture of education credits, and alternative

 

     minimum tax (Form 6251 or the Alternative Minimum Tax

 

     Worksheet in the Instructions for Form 1040A)            

7.

 ______

 

 

8.

 Add lines 6 and 7                                        

8.

 ______

 

 

9.

 Enter the amount of any expected tax credits. See

 

     Table 1-2.                                              

9.

 ______

 

 

10.

 Subtract line 9 from line 8 (if zero or less, enter

 

     -0-)                                                    

10.

 ______

 

 

11.

 Self-employment tax. Enter the amount from Worksheet

 

     2-3, line 10. (If you expect to file jointly and both

 

     of you are self-employed, figure the self-employment

 

     tax for each of you separately and enter the total on

 

     line 11.)                                              

11.

 ______

 

 

12.

 Enter the total of any other expected taxes*            

12.

 ______

 

 

13. Projected tax for 2016.

 Add lines 10 through 12. Enter

 

     the total here and on Worksheet 1-7, line 1            

13.

 ______

 

 ----------------------------------------------------------------------

 

 * Use the instructions for the 2015 Form 1040 to determine if you

 

 expect to owe, for 2016, any of the taxes that would have been entered

 

 on your 2015 Form 1040, lines 59, 60 (boxes a or b), and any write-in

 

 amounts on line 62.

 

 ======================================================================

 

 

Worksheet 1-6. Tax Computation Worksheets for 2016

 Keep for Your Records

 

 

Note.

 If you are figuring the tax on an amount from Worksheet 2-7

 

 (line 1 or 14), or Worksheet 2-8 (line 2 or 3), enter the amount from

 

 that worksheet in column (a) of the row that applies to that amount of

 

 income. Enter the result on the appropriate line of the worksheet you

 

 are completing.

 

 ----------------------------------------------------------------------

 

 

a. Single.

 Use this worksheet to figure the amount to enter on

 

 Worksheet 1-5, line 6, if you expect your filing status for 2016 to be

 

 

Single.

 

 ----------------------------------------------------------------------

 

 

Expected Taxable

 

      Income

 

  If Worksheet 1-5,          

(a)

 

    line 5* is --        Enter amount

 

                             from              

(b)             (c)

 

             

But not

    Worksheet 1-5,    Multiplication     Multiply

 

 

Over          over

         line 5*            amount        (a) by (b)

 

 ----------------------------------------------------------------------

 

      $0       $9,275                       × 10% (0.10)

 

 ----------------------------------------------------------------------

 

   9,275       37,650                       × 15% (0.15)

 

 ----------------------------------------------------------------------

 

  37,650       91,150                       × 25% (0.25)

 

 ----------------------------------------------------------------------

 

  91,150      190,150                       × 28% (0.28)

 

 ----------------------------------------------------------------------

 

 190,150      413,350                       × 33% (0.33)

 

 ----------------------------------------------------------------------

 

 413,350      415,050                       × 35% (0.35)

 

 ----------------------------------------------------------------------

 

 415,050      -------                     × 39.6% (0.396)

 

 ----------------------------------------------------------------------

 

 

[Table Continued]

 

 ----------------------------------------------------------------------

 

 

Expected Taxable

 

      Income

 

  If Worksheet 1-5,

 

    line 5* is --                                      

(e)

 

                                 

(d)

           Subtract (d) from (c).

 

             

But not

         Subtraction     Enter the result here and

 

 

Over          over

             amount        on Worksheet 1-5, line 6*

 

 ----------------------------------------------------------------------

 

      $0       $9,275                  $0

 

 ----------------------------------------------------------------------

 

   9,275       37,650              463.75

 

 ----------------------------------------------------------------------

 

  37,650       91,150            4,228.75

 

 ----------------------------------------------------------------------

 

  91,150      190,150            6,963.25

 

 ----------------------------------------------------------------------

 

 190,150      413,350           16,470.75

 

 ----------------------------------------------------------------------

 

 413,350      415,050           24,737.75

 

 ----------------------------------------------------------------------

 

 415,050      -------           43,830.05

 

 ----------------------------------------------------------------------

 

 * If you are using Worksheet 2-7, for column (a) above use the amount

 

 from line 1 or line 14 and enter the result (from column (e)) on line

 

 37 or line 39, as appropriate.

 

 If you are using Worksheet 2-8, for column (a) above use the amount

 

 from line 2 or line 3 and enter the result (from column (e)) on line 4

 

 or line 5, as appropriate.

 

 ======================================================================

 

 ----------------------------------------------------------------------

 

 

b. Head of Household.

 Use this worksheet to figure the amount to enter

 

 on Worksheet 1-5, line 6, if you expect your filing status for 2016

 

 to be

Head of Household.

 

 ----------------------------------------------------------------------

 

 

Expected Taxable

 

      Income

 

  If Worksheet 1-5,          

(a)

 

    line 5* is --        Enter amount

 

                             from              

(b)             (c)

 

             

But not

    Worksheet 1-5,    Multiplication     Multiply

 

 

Over          over

         line 5*            amount        (a) by (b)

 

 ----------------------------------------------------------------------

 

      $0      $13,250                       × 10% (0.10)

 

 ----------------------------------------------------------------------

 

  13,250       50,400                       × 15% (0.15)

 

 ----------------------------------------------------------------------

 

  50,400      130,150                       × 25% (0.25)

 

 ----------------------------------------------------------------------

 

 130,150      210,800                       × 28% (0.28)

 

 ----------------------------------------------------------------------

 

 210,800      413,350                       × 33% (0.33)

 

 ----------------------------------------------------------------------

 

 413,350      441,000                       × 35% (0.35)

 

 ----------------------------------------------------------------------

 

 441,000      -------                     × 39.6% (0.396)

 

 ----------------------------------------------------------------------

 

 

[Table Continued]

 

 ----------------------------------------------------------------------

 

 

Expected Taxable

 

       Income

 

  If Worksheet 1-5,

 

    line 5* is --                                      

(e)

 

                                 

(d)

           Subtract (d) from (c).

 

             

But not

         Subtraction     Enter the result here and

 

 

Over          over

             amount        on Worksheet 1-5, line 6*

 

 ----------------------------------------------------------------------

 

      $0      $13,250                  $0

 

 ----------------------------------------------------------------------

 

  13,250       50,400              662.50

 

 ----------------------------------------------------------------------

 

  50,400      130,150            5,702.50

 

 ----------------------------------------------------------------------

 

 130,150      210,800            9,607.00

 

 ----------------------------------------------------------------------

 

 210,800      413,350           20,147.00

 

 ----------------------------------------------------------------------

 

 413,350      441,000           28,414.00

 

 ----------------------------------------------------------------------

 

 441,000      -------           48,700.00

 

 ----------------------------------------------------------------------

 

 * If you are using Worksheet 2-7, for column (a) above use the amount

 

 from line 1 or line 14 and enter the result (from column (e)) on line

 

 37 or line 39, as appropriate.

 

 If you are using Worksheet 2-8, for column (a) above use the amount

 

 from line 2 or line 3 and enter the result (from column (e)) on line 4

 

 or line 5, as appropriate.

 

 ======================================================================

 

 ----------------------------------------------------------------------

 

 

c. Married Filing Jointly or Qualifying Widow(er).

 Use this worksheet

 

 to figure the amount to enter on Worksheet 1-5, line 6, if you expect

 

 your filing status for 2016 to be

Married Filing Jointly

 or

Qualifying

 

 Widow(er).

 

 ----------------------------------------------------------------------

 

 

Expected Taxable

 

      Income

 

  If Worksheet 1-5,          

(a)

 

    line 5* is --        Enter amount

 

                            from                

(b)             (c)

 

           

But not

      Worksheet 1-5,    Multiplication     Multiply

 

 

Over        over

           line 5*            amount        (a) by (b)

 

 ----------------------------------------------------------------------

 

      $0      $18,550                       × 10% (0.10)

 

 ----------------------------------------------------------------------

 

  18,550       75,300                       × 15% (0.15)

 

 ----------------------------------------------------------------------

 

  75,300      151,900                       × 25% (0.25)

 

 ----------------------------------------------------------------------

 

 151,900      231,450                       × 28% (0.28)

 

 ----------------------------------------------------------------------

 

 231,450      413,350                       × 33% (0.33)

 

 ----------------------------------------------------------------------

 

 413,350      466,950                       × 35% (0.35)

 

 ----------------------------------------------------------------------

 

 466,950      -------                     × 39.6% (0.396)

 

 ----------------------------------------------------------------------

 

 

[Table Continued]

 

 ----------------------------------------------------------------------

 

 

Expected Taxable

 

       Income

 

  If Worksheet 1-5,

 

    line 5* is --                                      

(e)

 

                                 

(d)

           Subtract (d) from (c).

 

             

But not

         Subtraction     Enter the result here and

 

 

Over          over

             amount        on Worksheet 1-5, line 6*

 

 ----------------------------------------------------------------------

 

      $0      $18,550                  $0

 

 ----------------------------------------------------------------------

 

  18,550       75,300              927.50

 

 ----------------------------------------------------------------------

 

  75,300      151,900            8,457.50

 

 ----------------------------------------------------------------------

 

 151,900      231,450           13,014.50

 

 ----------------------------------------------------------------------

 

 231,450      413,350           24,587.00

 

 ----------------------------------------------------------------------

 

 413,350      466,950           32,854.00

 

 ----------------------------------------------------------------------

 

 466,950      -------           54,333.70

 

 ----------------------------------------------------------------------

 

 * If you are using Worksheet 2-7, for column (a) above use the amount

 

 from line 1 or line 14 and enter the result (from column (e)) on line

 

 37 or line 39, as appropriate.

 

 If you are using Worksheet 2-8, for column (a) above use the amount

 

 from line 2 or line 3 and enter the result (from column (e)) on line 4

 

 or line 5, as appropriate.

 

 ======================================================================

 

 ----------------------------------------------------------------------

 

 

d. Married Filing Separately.

 Use this worksheet to figure the amount

 

 to enter on Worksheet 1-5, line 6, if you expect your filing status

 

 for 2016 to be

Married Filing Separately.

 

 ----------------------------------------------------------------------

 

 

Expected Taxable

 

      Income

 

 If Worksheet 1-5,          

(a)

 

   line 5* is --         Enter amount

 

                             from              

(b)             (c)

 

             

But not

    Worksheet 1-5,    Multiplication     Multiply

 

 

Over          over

         line 5*            amount        (a) by (b)

 

 ----------------------------------------------------------------------

 

      $0       $9,275                       × 10% (0.10)

 

 ----------------------------------------------------------------------

 

   9,275       37,650                       × 15% (0.15)

 

 ----------------------------------------------------------------------

 

  37,650       75,950                       × 25% (0.25)

 

 ----------------------------------------------------------------------

 

  75,950      115,725                       × 28% (0.28)

 

 ----------------------------------------------------------------------

 

 115,725      206,675                       × 33% (0.33)

 

 ----------------------------------------------------------------------

 

 206,675      233,475                       × 35% (0.35)

 

 ----------------------------------------------------------------------

 

 233,475      -------                     × 39.6% (0.396)

 

 ----------------------------------------------------------------------

 

 

[Table Continued]

 

 ----------------------------------------------------------------------

 

 

Expected Taxable

 

       Income

 

  If Worksheet 1-5,

 

    line 5* is --                                      

(e)

 

                                 

(d)

           Subtract (d) from (c).

 

             

But not

         Subtraction     Enter the result here and

 

 

Over          over

             amount        on Worksheet 1-5, line 6*

 

 ----------------------------------------------------------------------

 

      $0       $9,275                  $0

 

 ----------------------------------------------------------------------

 

   9,275       37,650              463.75

 

 ----------------------------------------------------------------------

 

  37,650       75,950            4,228.75

 

 ----------------------------------------------------------------------

 

  75,950      115,725            6,507.25

 

 ----------------------------------------------------------------------

 

 115,725      206,675           12,293.50

 

 ----------------------------------------------------------------------

 

 206,675      233,475           16,427.00

 

 ----------------------------------------------------------------------

 

 233,475      -------           27,166.85

 

 ----------------------------------------------------------------------

 

 * If you are using Worksheet 2-7, for column (a) above use the amount

 

 from line 1 or line 14 and enter the result (from column (e)) on line

 

 37 or line 39, as appropriate.

 

 If you are using Worksheet 2-8, for column (a) above use the amount

 

 from line 2 or line 3 and enter the result (from column (e)) on line 4

 

 or line 5, as appropriate.

 

 ======================================================================

 

 

Worksheet 1-7. Projected Withholding for 2016

 Keep for Your Records

 

 ----------------------------------------------------------------------

 

 Use this worksheet to figure the amount of your projected withholding

 

 for 2016, compare it to your projected tax for 2016, and, if

 

 necessary, figure an additional amount to have withheld each payday.

 

 

Note.

 If married filing jointly, enter combined amounts.

 

 ----------------------------------------------------------------------

 

 

1.

 Enter your

projected tax for 2016

 from Worksheet 1-5,

 

    line 13                                                  

1.

  ______

 

 

2.

 Enter your total federal income tax withheld to date in

 

    2016 from all sources of income. (For wages, you should

 

    be able to find the withholding-to-date on your last

 

    pay slip or statement.)                                  

2.

  ______

 

 

3.

 Enter the federal tax withholding you expect for the

 

    rest of 2016:

 

   

a.

 For each source of wages, multiply the amount of

 

       federal income tax now being withheld each payday by

 

       the number of paydays remaining in the year and

 

       enter the combined amount for all jobs                

3a.

 ______

 

   

b.

 For all other sources of recurring taxable income,

 

       multiply the withholding amount by the remaining

 

       number of times the income is expected. For example,

 

       if you have federal income tax withheld from your

 

       monthly pension and you will receive nine more

 

       payments this year, multiply your monthly

 

       withholding amount by 9                              

3b.

 ______

 

 

4.

 Add lines 2, 3a, and 3b. This is your

projected

 

    withholding for 2016                                     4.

  ______

 

 

5.

 Compare the amounts on lines 1 and 4.

 

     • If line 1 is more than line 4, subtract line 4 from

 

       line 1. Enter the result here and go to line 6        

5.

  ______

 

     • If line 4 is more than line 1,

stop here

 and see

How

 

       Do You Decrease Your Withholding?

 

 

6.

 Divide line 5 by the number of paydays (or other

 

    withholding events) remaining in 2016 and enter the

 

    result.

This is the additional amount you should have

 

    withheld from each remaining payment.

 Enter this amount

 

    on Form W-4, line 6                                      

6.

  ______

 

 ----------------------------------------------------------------------

 

 

Worksheet 1-8. Converting Credits to Withholding Allowances for 2016 Form W-4

 Keep for Your Records

 

 ----------------------------------------------------------------------

 

 Use this worksheet to figure an additional amount to enter on the

 

 Form W-4 Deductions and Allowances Worksheet, line 5. For more

 

 information on these credits, see

Converting Credits to Withholding

 

 Allowances.

 

 

Caution.

 If you enter an amount on line 1 below, enter -0- on line F

 

 of the Form W-4 Personal Allowances Worksheet. If you enter an amount

 

 on line 3 below, enter -0- on line G of the Form W-4 Personal

 

 Allowances Worksheet.

 

 ----------------------------------------------------------------------

 

 For lines 1 through 9, enter the projected amount for each credit you

 

 expect to take.

 

 

1.

 Credit for child and dependent care expenses (see

 

     

Caution

 above)                                          

1.

 ______

 

 

2.

 Credit for the elderly or the disabled                  

2.

 ______

 

 

3.

 Child tax credit (including additional child tax

 

     credit) (see

Caution

 above)                              

3.

 ______

 

 

4.

 Education credits                                        

4.

 ______

 

 

5.

 Adoption credit                                          

5.

 ______

 

 

6.

 Foreign tax credit                                      

6.

 ______

 

 

7.

 Retirement savings contributions credit                  

7.

 ______

 

 

8.

 Earned income credit                                    

8.

 ______

 

 

9.

 Other credits (see Table 1-2)                            

9.

 ______

 

 

10.

 Add lines 1 through 9. This is your total estimated

 

     tax credits                                            

10.

 ______

 

 

11.

 Using the table below that matches your filing status,

 

     find the line in the table that matches your combined

 

     income from all sources. Then, enter on line 11 the

 

     multiplication factor shown next to your income.

 

     ----------------------------  ------------------------

 

       

Married Filing Jointly

 

        or Qualifying Widow(er)      Head of Household

 

     ----------------------------  ------------------------

 

                                                      Mult-

 

                                                      iply

 

     If your combined    Multiply  If your combined   cred-

 

     income from all     credits   income from all    its

 

     sources is:         by:       sources is:        by:

 

           $0 - $43,000      10.0       $0 - $30,000   10.0

 

       43,001 - 100,000       6.7   30,001 -  68,000    6.7

 

      100,001 - 185,000       4.0   68,001 - 155,000    4.0

 

      185,001 - 275,000       3.6  155,001 - 245,000    3.6

 

      275,001 - 450,000       3.0  245,001 - 445,000    3.0

 

      450,001 - 505,000       2.9  445,001 - 475,000    2.9

 

      505,001                 2.5  475,001              2.5

 

      and over                     and over

 

     ----------------------------  ------------------------

 

     ----------------------------  ------------------------

 

                                   

Married Filing Separate-

 

                Single             ly

 

     ----------------------------  ------------------------

 

                                                      Mult-

 

                                                      iply

 

     If your combined    Multiply  If your combined   cred-

 

     income from all     credits   income from all    its

 

     sources is:         by:       sources is:        by:

 

           $0 - $20,000      10.0       $0 - $21,500   10.0

 

       20,001 -  48,000       6.7   21,501 -  50,000    6.7

 

       48,001 - 105,000       4.0   50,001 -  92,500    4.0

 

      105,001 - 215,000       3.6   92,501 - 137,500    3.6

 

      215,001 - 445,000       3.0  137,501 - 225,000    3.0

 

      445,001                 2.5  225,001 - 252,500    2.9

 

      and over                     252,501

 

                                   and over             2.5  

11.

 ______

 

    -----------------------------  ------------------------

 

 

12.

 Multiply line 10 by line 11. Enter the result here and

 

     include it in the total on line 5 of the Form W-4

 

     Deductions and Adjustments Worksheet                    

12.

 ______

 

 ----------------------------------------------------------------------

 

 

2. Estimated Tax for 2016

Introduction

Estimated tax is the method used to pay tax on income that is not subject to withholding. This includes income from self-employment, interest, dividends, alimony, rent, gains from the sale of assets, prizes, and awards. 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.

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. 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. If you do not pay enough by the due date of each payment period (see When To Pay Estimated Tax), you may be charged a penalty even if you are due a refund when you file your tax return. For information on when the penalty applies, see chapter 4.

TIP: It would be helpful for you to have a copy of your 2015 tax return and an estimate of your 2016 income nearby while reading this chapter.

Topics

This chapter discusses:

 

Useful Items

You may want to see:

Form (and Instructions)

 

See chapter 5 for information about how to get this publication and form.

Worksheets. You may need to use several of the blank worksheets included in this chapter. See Worksheets for Chapter 2 to locate what you need.

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. To do this, file a new Form W-4 with your employer. See chapter 1.

Estimated tax not required. You do not have to pay estimated tax for 2016 if you meet all three of the following conditions.

 

You had no tax liability for 2015 if your total tax (defined later under

Total tax for 2015--line 14b

) was zero or you did not have to file an income tax return.

Who Must Pay Estimated Tax

If you owed additional tax for 2015, you may have to pay estimated tax for 2016.

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.

General Rule

In most cases, you must pay estimated tax for 2016 if both of the following apply.

Note.

The percentages in (2a) or (2b) just listed may be different if you are a farmer, fisherman, or higher income taxpayer. See

Special Rules.

CAUTION: If the result from using the general rule above suggests that you will not have enough withholding, complete the 2016 Estimated Tax Worksheet for a more accurate calculation.

Figure 2-A takes you through the general rule. You may find this helpful in determining if you must pay estimated tax.

 

TIP: If all your income will be subject to income tax withholding, you probably do not need to pay estimated tax.

Example 1. Jane Smart uses Figure 2-A and the following information to figure whether she should pay estimated tax for 2016. She files as head of household claiming her dependent son, takes the standard deduction, and expects no refundable credits for 2016.

 Expected adjusted gross income (AGI)

 

   for 2016                                 $95,250

 

 AGI for 2015                               $74,325

 

 Total tax on 2015 return (Form 1040,

 

   line 63)                                  $8,591

 

 Total 2016 estimated tax (line 13c of

 

   the 2015 Estimated Tax

 

   Worksheet)                               $11,015

 

 Tax expected to be withheld in

 

 2016                                       $10,000

 

 

Jane's answer to Figure 2-A, box 1, is YES; she expects to owe at least $1,000 for 2016 after subtracting her withholding from her expected total tax ($11,015 - $10,000 = $1,015). 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 2016 return ($11,015 × 90% (0.90) = $9,913.50). Jane does not need to pay estimated tax.

Example 2. The facts are the same as in Example 1, except that Jane expects only $8,500 tax to be withheld in 2016. Because that is less than $9,913.50, her answer to box 2a is NO.

Jane's answer to box 2b is also NO; she does not expect her income tax withholding ($8,500) to be at least 100% of the total tax shown on her 2015 return ($8,591). Jane must increase her withholding or pay estimated tax for 2016.

Example 3. The facts are the same as in Example 2, except that the total tax shown on Jane's 2015 return was $8,400. Because she expects to have more than $8,400 withheld in 2016 ($8,500), her answer to box 2b is YES. Jane does not need to pay estimated tax for 2016.

Married Taxpayers

If you qualify to make joint estimated tax payments, apply the rules discussed here to your joint estimated income.

You and your spouse can make joint estimated tax payments even if you are not living together.

However, you and your spouse cannot make joint estimated tax payments if:

 

Note.

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. These individuals can take credit only for the estimated tax payments that he or she made.

If you and your spouse cannot make joint estimated tax payments, apply these rules to your separate estimated income.

Making joint or separate estimated tax payments will not affect your choice of filing a joint tax return or separate returns for 2016.

2015 separate returns and 2016 joint return. If you plan to file a joint return with your spouse for 2016, but you filed separate returns for 2015, your 2015 tax is the total of the tax shown on your separate returns. You filed a separate return if you filed as single, head of household, or married filing separately.

2015 joint return and 2016 separate returns. If you plan to file a separate return for 2016, but you filed a joint return for 2015, your 2015 tax is your share of the tax on the joint return. You file a separate return if you file as single, head of household, or married filing separately.

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 2015 using the same filing status for 2016. Then multiply the tax on the joint return by the following fraction.

                      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.

Joe and Heather filed a joint return for 2015 showing taxable income of $48,500 and a tax of $6,356. Of the $48,500 taxable income, $40,100 was Joe's and the rest was Heather's. For 2016, they plan to file married filing separately. Joe figures his share of the tax on the 2015 joint return as follows:

 Tax on $40,100 based on separate

 

   return                                   $5,825

 

 Tax on $8,400 based on separate

 

   return                                      843

 

                                            ------

 

 Total                                      $6,888

 

 Joe's percentage of total ($5,825 ÷

 

   $6,888)                                   87.4%

 

 Joe's share of tax on joint return

 

   ($6,356 × 87.4% (0.874))                 $5,555

 

                                            ======

 

 

 

Special Rules

 

 

There are special rules for farmers, fishermen, and certain higher income taxpayers.

Farmers and Fishermen

If at least two-thirds of your gross income for 2015 or 2016 is from farming or fishing, substitute 66 2/3% for 90% in (2a) under General Rule.

Gross income. Your gross income is all income you receive in the form of money, goods, property, and services that is not exempt from tax. To determine whether two-thirds of your gross income for 2015 was from farming or fishing, use as your gross income the total of the income (not loss) amounts.

Joint returns. 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.

Gross income from farming. This is income from cultivating the soil or raising agricultural commodities. It includes the following amounts.

 

For 2015, gross income from farming is the total of the following amounts.

 

Wages you receive as a farm employee and wages you receive from a farm corporation are not gross income from farming.

Gross income from fishing. 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.

Gross income from fishing includes the following amounts.

 

Services normally performed in connection with fishing include:

 

Higher Income Taxpayers

If your AGI for 2015 was more than $150,000 ($75,000 if your filing status for 2016 is married filing a separate return), substitute 110% for 100% in (2b) under General Rule.

For 2015, AGI is the amount shown on Form 1040, line 37; Form 1040EZ, line 4.

Note. This rule does not apply to farmers and fishermen.

Aliens

Resident and nonresident aliens also may have to pay estimated tax. Resident aliens should follow the rules in this publication, unless noted otherwise. Nonresident aliens should get Form 1040-ES (NR), U.S. Estimated Tax for Nonresident Alien Individuals.

You are an alien if you are not a citizen or national of the United States. You are a resident alien if you either have a green card or meet the substantial presence test.

For more information about withholding, the substantial presence test, and Form 1040-ES (NR), see Publication 519.

Estates and Trusts

Estates and trusts also must pay estimated tax. 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.

Estates and trusts must use Form 1041-ES, Estimated Income Tax for Estates and Trusts, to figure and pay estimated tax.

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.

When figuring your 2016 estimated tax, it may be helpful to use your income, deductions, and credits for 2015 as a starting point. Use your 2015 federal tax return as a guide. You can use Form 1040-ES to figure your estimated tax. Nonresident aliens use Form 1040-ES (NR) to figure estimated tax.

You must make adjustments both for changes in your own situation and for recent changes in the tax law. Some of these changes are discussed under What's New for 2016. For information about these and other changes in the law, visit the IRS website at IRS.gov.

The instructions for Form 1040-ES include a worksheet to help you figure your estimated tax. Keep the worksheet for your records.

2016 Estimated Tax Worksheet

Use Worksheet 2-1 to help guide you through the information about completing the 2016 Estimated Tax Worksheet. You can also find a copy of the worksheet in the instructions for Form 1040-ES.

Expected AGI--Line 1

Your expected AGI for 2016 (line 1) is your expected total income minus your expected adjustments to income.

Total income. Include in your total income all the income you expect to receive during the year, even income that is subject to withholding. However, do not include income that is tax exempt.

Total income includes all income and loss for 2016 that, if you had received it in 2015, would have been included on your 2015 tax return in the total on line 22 of Form 1040, line 15 of Form 1040EZ.

Social security and railroad retirement benefits. If you expect to receive social security or tier 1 railroad retirement benefits during 2016, use Worksheet 2-2 to figure the amount of expected taxable benefits you should include on line 1.

Adjustments to income. Be sure to subtract from your expected total income all of the adjustments you expect to take on your 2016 tax return.

Self-employed. 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. Include the amount from Worksheet 2-3 in your expected adjustments to income. 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.

Expected Taxable Income--Lines 2-5

Reduce your expected AGI for 2016 (line 1) by either your expected itemized deductions or your standard deduction and by your exemptions (lines 2 through 5).

Itemized deductions--line 2. If you expect to claim itemized deductions on your 2016 tax return, enter the estimated amount on line 2.

Itemized deductions are the deductions that can be claimed on Schedule A (Form 1040).

CAUTION: For 2016, your total itemized deductions may be reduced if your AGI is more than the amount shown next for your filing status.

 Single                                 $259,400

 

 Married filing jointly or qualifying

 

   widow(er)                            $311,300

 

 Married filing separately              $155,650

 

 Head of household                      $285,350

 

 

If you expect your AGI to be more than this amount, use Worksheet 2-5 to figure the amount to enter on line 2.

Standard deduction--line 2. If you expect to claim the standard deduction on your 2016 tax return, enter the amount on line 2. Use Worksheet 2-4 to figure your standard deduction.

No standard deduction. The standard deduction for some individuals is zero. Your standard deduction will be zero if you:

 

Exemptions--line 4.

After you have subtracted either your expected itemized deductions or your standard deduction from your expected AGI, reduce the amount remaining by $4,050 for each exemption you expect to take on your 2016 tax return. 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. 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.

CAUTION: For 2016, your deduction for personal exemption is reduced if your AGI is more than the amount shown next for your filing status.

 Single                                  $259,400

 

 Married filing jointly or qualifying

 

  widow(er)                              $311,300

 

 Married filing separately               $155,650

 

 Head of household                       $285,350

 

 

If you expect your AGI to be more than this amount, use Worksheet 2-6 to figure the amount to enter on line 4.

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 2016. Most people will have entries for only a few of these steps. However, you should check every step to be sure you do not overlook anything.

Step 1. Figure your expected income tax (line 6). Generally, you will use the 2016 Tax Rate Schedules to figure your expected income tax.

However, see below for situations where you must use a different method to compute your estimated tax.

Tax on child's investment income. 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.

See

Publication 929

, Tax Rules for Children and Dependents. Although the ages and dollar amounts in the publication may be different in the 2016 revision, this reference will give you basic information for figuring the tax.

Tax on net capital gain. 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.

Tax on capital gain and qualified dividends. If the amount on line 1 includes a net capital gain or qualified dividends, use Worksheet 2-7 to figure your tax.

Note. For 2016, your capital gains and dividends rate will depend on your income.

Tax if excluding foreign earned income or excluding or deducting foreign housing. 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.

Step 2. Total your expected taxes (line 8). Include on line 8 the sum of the following.

 

Step 3.

Subtract your expected credits (line 9). If you are using your 2015 return as a guide and filed Form 1040, your total credits for 2015 were shown on line 55. If you filed Form 1040A, your total credits for 2015 were on line 36.

If your credits on line 9 are more than your taxes on line 8, enter "-0-" on line 10 and go to Step 4.

Step 4. Add your expected self-employment tax (line 11). You already should have figured your self-employment tax (see Self-employed under Expected AGI--Line 1).

Step 5. Add your expected other taxes (line 12).

Other taxes include the following. The total of these taxes are entered on line 12.

 

 ------------------------------------------------

 

     

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 to you in excess of $200,000 in 2016. 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 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

 

 ------------------------------------------------

 

 

Step 6.

Subtract your refundable credits (line 13b). These include the earned income credit, additional child tax credit, fuel tax credit, net premium tax credit, refundable American opportunity credit and refundable amount from Form 8885.

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.

The result of steps 1 through 6 is your total estimated tax for 2016 (line 13c).

Required Annual Payment--Line 14c

On lines 14a through 14c, figure the total amount you must pay for 2016, through withholding and estimated tax payments, to avoid paying a penalty.

General rule. The total amount you must pay is the smaller of:

 

Special rules.

There are special rules for higher income taxpayers and for farmers and fishermen.

Higher income taxpayers. If your AGI for 2015 was more than $150,000 ($75,000 if your filing status for 2016 is married filing separately), substitute 110% for 100% in (2) above. This rule does not apply to farmers and fishermen.

For 2015, AGI is the amount shown on Form 1040, line 37; Form 1040EZ, line 4.

Example. Jeremy Martin's total tax on his 2015 return was $42,581, and his expected tax for 2016 is $71,253. His 2015 AGI was $180,000. Because Jeremy had more than $150,000 of AGI in 2015, he figures his required annual payment as follows. He determines that 90% of his expected tax for 2016 is $64,128 (0.90 × $71,253). Next, he determines that 110% of the tax shown on his 2015 return is $46,839 (1.10 × $42,581). Finally, he determines that his required annual payment is $46,839, the smaller of the two.

Farmers and fishermen. If at least two-thirds of your gross income for 2015 or 2016 is from farming or fishing, your required annual payment is the smaller of:

 

For definitions of "gross income from farming" and "gross income from fishing," see

Farmers and Fishermen,

under

Special Rules.

Total tax for 2015--line 14b. Your 2015 total tax, if you filed Form 1040, is the amount on line 63 reduced by the following.

 

If you filed Form 1040A, your 2015 total tax is the amount on line 39 reduced by the amount on line 38, and any refundable credits on lines 42a, 43, 44, and 45.

If you filed Form 1040EZ, your 2015 total tax is the amount on line 12 reduced by the amount on line 8a and 11.

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 2016. Subtract your expected withholding from your required annual payment (line 14c). You usually must pay this difference in four equal installments. See When To Pay Estimated Tax and How To Figure Each Payment.

You do not have to pay estimated tax if:

 

Withholding--line 15.

Your expected withholding for 2016 (line 15) includes the income tax you expect to be withheld from all sources (wages, pensions and annuities, etc.). It includes excess social security, and tier 1 railroad retirement tax you expect to be withheld from your wages and compensation. For this purpose, you will have excess social security or tier 1 railroad retirement tax withholding for 2016 only if your wages and compensation from two or more employers are more than $118,500. See

Excess Social Security or Railroad Retirement Tax Withholding

in chapter 3.

It also includes Additional Medicare Tax you expect to be withheld from your wages or compensation. Your employer is responsible for withholding the 0.9% Additional Medicare Tax on Medicare wages or RRTA compensation it pays to you in excess of $200,000.

When To Pay Estimated Tax

For estimated tax purposes, the year is divided into four payment periods. Each period has a specific payment due date. 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.

If a payment is mailed, the date of the U.S. postmark is considered the date of payment. The payment periods and due dates for estimated tax payments are shown next. For exceptions to the dates listed, see Saturday, Sunday, holiday rule.

 For the period:                  Due date:

 

 Jan. 1

¹

 - March 31               April 18

 

 April 1 - May 31                 June 15

 

 June 1 - Aug. 31                 Sept. 15

 

 Sept. 1 - Dec. 31                Jan. 17, next year

²

 

 

¹

 If your tax year does not begin on January 1,

 

 see

Fiscal year taxpayers.

 

 

²

 See

January payment.

 

 ====================================================

 

 

Saturday, Sunday, holiday rule.

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.

January payment. If you file your 2016 Form 1040 or Form 1040A by January 31, 2017, and pay the rest of the tax you owe, you do not need to make the payment due on January 17, 2017.

Example. Janet Adams does not pay any estimated tax for 2016. She files her 2016 income tax return and pays the balance due shown on her return on January 26, 2017.

Janet's estimated tax for the fourth payment period is considered to have been paid on time. However, she may owe a penalty for not making the first three estimated tax payments, if required. Any penalty for not making those payments will be figured up to January 26, 2017.

Fiscal year taxpayers. If your tax year does not start on January 1, your payment due dates are:

 

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.

When To Start

You do not have to make estimated tax payments until you have income on which you will owe income tax. 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.

You have several options when paying estimated taxes. You can:

 

If you choose to pay in installments, make your first payment by the due date for the first payment period. Make your remaining installment payments by the due dates for the later periods.

To avoid any estimated tax penalties, all installments must be paid by their due date and for the required amount.

No income subject to estimated tax during first period. 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. 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. Table 2-1 shows the general due dates for making installment payments when the due date does not fall on a Saturday, Sunday, or holiday.

Table 2-1. General Due Dates for Estimated Tax Installment Payments

 -------------------------------------------------

 

 

If you first have

 

 income on which    Make a       Make later

 

 you must pay       payment      installments

 

 estimated tax:     by:*         by:*

 

 -------------------------------------------------

 

 Before April 1     April 15     June 15

 

                                 Sept. 15

 

                                 Jan. 15 next year

 

 -------------------------------------------------

 

 April 1-May 31     June 15      Sept. 15

 

                                 Jan. 15 next year

 

 -------------------------------------------------

 

 June 1-Aug. 31     Sept. 15     Jan. 15 next year

 

 -------------------------------------------------

 

 After Aug. 31      Jan. 15      (None)

 

                     next year

 

 -------------------------------------------------

 

 * See

January payment

 and

Saturday, Sunday,

 

 holiday rule.

 

 =================================================

 

 

How much to pay to avoid penalty.

To determine how much you should pay by each payment due date, see

How To Figure Each Payment.

Farmers and Fishermen

If at least two-thirds of your gross income for 2015 or 2016 is from farming or fishing, you have only one payment due date for your 2016 estimated tax, January 17, 2017. The due dates for the first three payment periods, discussed under When To Pay Estimated Tax do not apply to you.

If you file your 2016 Form 1040 by March 1, 2017, and pay all the tax you owe at that time, you do not need to make an estimated tax payment.

Fiscal year farmers and fishermen. If you are a farmer or fisherman, but your tax year does not start on January 1, you can either:

 

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. 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.

Regular Installment Method

If your first estimated tax payment is due April 18, 2016, you can figure your required payment for each period by dividing your annual estimated tax due (line 16a of the 2016 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.

Change in estimated tax. 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.

Amended estimated tax. If you refigure your estimated tax during the year, or if your first estimated tax payment is due after April 18, 2016, figure your required payment for each remaining payment period using Worksheet 2-14.

Example. Early in 2016, 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.

Underpayment penalty. 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.

Worksheet 2-14. Amended Estimated Tax Worksheet--Illustrated

 Keep for Your Records

 

 ----------------------------------------------------------------------

 

 

1.

 Amended total estimated tax due                          

1.

 

 

$4,100

 

 

2.

 Multiply line 1 by:

 

      50% (0.50) if next payment is due June

 

       15, 2016

 

      75% (0.75) if next payment is due

 

       September 15, 2016

 

      100% (1.00) if next payment is due

 

       January 17, 2017                        

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 17, 2017,

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, 2016, enter one-half of the

 

    amount on line 6 here and on the payment vouchers

 

    for your payments due September 15, 2016, and

 

    January 17, 2017. If the amount on line 4 is due

 

    September 15, 2016, enter the amount from line 6

 

    here and on the payment voucher for your payment due

 

    January 17, 2017                                        

7.

 

$1,025

 

                                                                =======

 

 ----------------------------------------------------------------------

 

 

Worksheet 2-14. Amended Estimated Tax Worksheet--Blank

 Keep for Your Records

 

 ---------------------------------------------------------------------

 

 

1.

 Amended total estimated tax due                          

1.

 ______

 

 

2.

 Multiply line 1 by:

 

      50% (0.50) if next payment is due June

 

       15, 2016

 

      75% (0.75) if next payment is due

 

        September 16, 2016

 

      100% (1.00) if next payment is due

 

        January 17, 2017                        

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 17, 2017,

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, 2016, enter one-half of the

 

    amount on line 6 here and on the payment vouchers

 

    for your payments due September 15, 2016, and January

 

    17, 2017. If the amount on line 4 is due September

 

    15, 2016, enter the amount from line 6 here and on

 

    the payment voucher for your payment due January 17,

 

    2017                                                    

7.

 

                                                                ======

 

 ---------------------------------------------------------------------

 

 

 

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.

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 2016 Annualized Estimated Tax Worksheet (Worksheet 2-9).

CAUTION: You first must complete the 2016 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.

Note. If you use the annualized income installment method to figure your estimated tax payments, you must file Form 2210 with your 2016 tax return. See Annualized Income Installment Method (Schedule AI) in chapter 4 for more information.

Instructions for the 2016 Annualized Estimated Tax Worksheet (Worksheet 2-9)

TIP: 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.

Line 1. 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.

Self-employment income. 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.

Line 4. Be sure to consider all deduction limits figured on Schedule A (Form 1040), such as reducing your medical expenses by 10% (7.5% if either you or your spouse was born before January 2, 1952) 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 (2016 Annualized Estimated Tax Worksheet (Worksheet 2-9)).

Line 6. Multiply line 4 by line 5 and enter the result on line 6 unless line 3 is more than $311,300 if married filing jointly or qualifying widow(er), $285,350 if head of household, $259,400 if single, or $155,650 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.

Line 7. If you will not itemize your deductions, use Worksheet 2-4 to figure your standard deduction.

Line 10. Multiply $4,050 by your total expected exemptions and enter the result on line 10 unless line 3 is more than $311,300 if married filing jointly or qualifying widow(er), $285,350 if head of household, $259,400 if single, or $155,650 if married filing separately.

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

Line 12. 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.

Tax on child's investment income. 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.

See

Publication 929

.

Tax on net capital gain. 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.

Tax on qualified dividends and capital gains. For 2016, your capital gain and dividends rate will depend on your income.

Tax on capital gain or qualified dividends. 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 if excluding foreign earned income or excluding or deducting foreign housing. 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.

Line 13. If you file Form 1040, add the tax from Forms 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 2015 return.

Use the 2015 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 2016 Annualized Estimated Tax Worksheet (Worksheet 2-9). Enter the result on line 13 of this worksheet.

Line 15. Include all the nonrefundable credits you expect to claim because of events that will occur during the period.

Note. When figuring your credits for each period, annualize any item of income or deduction to figure each credit. 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.

Line 18. Add your expected other taxes.

Other taxes include the following.

 

 -------------------------------------------

 

       

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 2016. 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.

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.

Note. When figuring your refundable credits for each period, annualize any item of income or deduction used to figure each credit.

Line 29. If line 28 is smaller than line 25 and you are not certain of the estimate of your 2016 tax, you can avoid a penalty by entering the amount from line 25 on line 29.

Line 31. 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 2016 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.

Nonresident aliens. 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.

 

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:

 

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.

How To Pay Estimated Tax

There are several ways to pay estimated tax.

 

Credit an Overpayment

If you show an overpayment of tax after completing your Form 1040A for 2015, you can apply part or all of it to your estimated tax for 2016. On Form 1040, or Form 1040A, enter the amount you want credited to your estimated tax rather than refunded. Take the amount you have credited into account when figuring your estimated tax payments. If you timely file your 2015 return, treat the credit as a payment made on April 15, 2016.

If you are a beneficiary of an estate or trust, and the trustee elects to credit 2016 trust payments of estimated tax to you, you can treat the amount credited as paid by you on January 15, 2017.

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. You also cannot use that overpayment in any other way.

Example. When Kathleen finished filling out her 2015 tax return, she saw that she had overpaid her taxes by $750. Kathleen knew she would owe additional tax in 2016. She credited $600 of the overpayment to her 2016 estimated tax and had the remaining $150 refunded to her.

In September, she amended her 2015 return by filing Form 1040X, Amended U.S. Individual Income Tax Return. It turned out that she owed $250 more in tax than she had thought. This reduced her 2015 overpayment from $750 to $500. Because the $750 had already been applied to her 2016 estimated tax or refunded to her, the IRS billed her for the additional $250 she owed, plus penalties and interest. Kathleen could not use any of the $600 she had credited to her 2016 estimated tax to pay this bill.

Pay Online

Paying online is convenient and secure and helps make sure we get your payments on time. You can make your estimated tax payments online when you e-file or at any time during the year. You can pay using either of the following electronic payment methods.

 

To pay your taxes online or for more information, go to

http://www.irs.gov/payments.

Pay by Phone

Paying by phone is another safe and secure method of paying electronically. Use one of the following methods.

 

Direct transfer.

To use EFTPS, you must be enrolled. You can enroll online or have an enrollment form mailed to you. To make a payment using EFTPS, call 1-800-555-4477 (English) or 1-800-244-4829 (Español). People who are deaf, hard of hearing or have a speech disability and who have access to TTY/TDD equipment can call 1-800-733-4829. For more information about EFTPS, go to

http://www.irs.gov/payments.

Debit or credit card. To pay using a debit or credit card, you can call one of the following service providers. There is a convenience fee charged by these providers that varies by provider, card type, and payment amount.

Link2GOV Corporation 1-888-PAY-1040™ (1-888-729-1040) http://www.PAY1040.com

WorldPay US, Inc. 1-844-PAY-TAX-8™ (1-844-729-8298) http://www.payUSAtax.com

Official Payments Corporation 1-888-UPAY-TAX™ (1-888-872-9829) http://www.officialpayments.com

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. 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.

CAUTION: Do not use the address shown in the Form 1040A instructions.

If you did not pay estimated tax last year, get a copy of Form 1040-ES from the IRS (see chapter 5). Follow the instructions to make sure you use the vouchers correctly.

Joint estimated tax payments. 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.

Change of address. You must notify the IRS if you are making estimated tax payments and you changed your address during the year. Complete Form 8822, Change of Address, and mail it to the address shown in the instructions for that form.

Worksheets for Chapter 2

 Use the following worksheets and tables to figure your correct

 

 estimated tax.

 

 ----------------------------------------------------------------------

 

 

IF you need . . .                              THEN use . . .

 

 ----------------------------------------------------------------------

 

 2016 Tax Rate Schedules                        2016 Tax Rate Schedules

 

 ----------------------------------------------------------------------

 

 the 2016 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 $155,650 --

 

 line 2 of ES Worksheet                         Worksheet 2-5

 

 ----------------------------------------------------------------------

 

 to reduce your exemption amount because your

 

 estimated AGI is more than $155,650 -- 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-EZ -- line 6 of ES

 

 Worksheet                                      Worksheet 2-8

 

 ----------------------------------------------------------------------

 

 the 2016 Annualized Estimated Tax Worksheet

 

 (Annualized ES Worksheet)                      Worksheet 2-9

 

 ----------------------------------------------------------------------

 

 to reduce your itemized deductions because

 

 your estimated annualized AGI is more than

 

 $155,650 -- line 6 of Annualized ES Worksheet  Worksheet 2-10

 

 ----------------------------------------------------------------------

 

 to reduce your exemption amount because your

 

 estimated annualized AGI is more than

 

 $155,650 -- 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-EZ -- line 12 of

 

 Annualized ES Worksheet                        Worksheet 2-13

 

 ----------------------------------------------------------------------

 

 to refigure (amend) your estimated tax during

 

 the year                                       Worksheet 2-14

 

 ----------------------------------------------------------------------

 

 

 

2016 Tax Rate Schedules

 

 

CAUTION: Do not use these Tax Rate Schedules to figure your 2015 taxes. Use them only to figure your 2016 estimated taxes.

Schedule X -- Use if your 2016 filing status is Single

 If line 5 is:                            The tax is:

 

                                                               

of the

 

                        But not                                 amount

 

 Over --                over --                                 over --

 

 ----------------------------------------------------------------------

 

      $0                 $9,275                  

10.0%              $0

 

   9,275                 37,650        

$927.50 + 15.0%           9,275

 

  37,650                 91,150        

5,183.75 + 25.0%          37,650

 

  91,150                190,150      

18,558.75 + 28.0%          91,150

 

 190,150                413,350      

46,278.75 + 33.0%         190,150

 

 413,350                415,050      

119,934.75 + 35.0%         413,350

 

 415,050                -------      

120,529.75 + 39.6%         415,050

 

 ----------------------------------------------------------------------

 

 

Schedule Y-1 -- Use if your 2016 filing status is Married filing jointly or Qualifying widow(er)

 If line 5 is:                            The tax is:

 

                                                               

of the

 

                        But not                                 amount

 

 Over --                over --                                 over --

 

 ----------------------------------------------------------------------

 

      $0                $18,550                  

10.0%              $0

 

  18,550                 75,300      

$1,855.00 + 15.0%          18,550

 

  75,300                151,900      

10,367.50 + 25.0%          75,300

 

 151,900                231,450      

29,517.50 + 28.0%         151,900

 

 231,450                413,350      

51,791.50 + 33.0%         231,450

 

 413,350                466,950      

111,818.50 + 35.0%         413,350

 

 466,950                -------      

130,578.50 + 39.6%         466,950

 

 ----------------------------------------------------------------------

 

 

Schedule Z -- Use if your 2016 filing status is Head of household

 If line 5 is:                            The tax is:

 

                                                               

of the

 

                        But not                                 amount

 

 Over --                over --                                 over --

 

 ----------------------------------------------------------------------

 

      $0                $13,250                  

10.0%              $0

 

  13,250                 50,400      

$1,325.00 + 15.0%          13,250

 

  50,400                130,150        

6,897.50 + 25.0%          50,400

 

 130,150                210,800      

26,835.00 + 28.0%         130,150

 

 210,800                413,350      

49,417.00 + 33.0%         210,800

 

 413,350                441,000      

116,258.50 + 35.0%         413,350

 

 441,000                -------      

125,936.00 + 39.6%         441,000

 

 ----------------------------------------------------------------------

 

 

Schedule Y-2 -- Use if your 2016 filing status is Married filing separately

 If line 5 is:                            The tax is:

 

                                                               

of the

 

                        But not                                 amount

 

 Over --                over --                                 over --

 

 ----------------------------------------------------------------------

 

      $0                 $9,275                  

10.0%              $0

 

   9,275                 37,650        

$927.50 + 15.0%           9,275

 

  37,650                 75,950        

5,183.75 + 25.0%          37,650

 

  75,950                115,725      

14,758.75 + 28.0%          75,950

 

 115,725                206,675      

25,895.75 + 33.0%         115,725

 

 206,675                233,475      

55,909.25 + 35.0%         206,675

 

 233,475                -------      

65,289.25 + 39.6%         233,475

 

 ----------------------------------------------------------------------

 

 

Worksheet 2-1. 2016 Estimated Tax Worksheet

 Keep for Your Records

 

 

CAUTION:

 

When this worksheet refers you to instructions, you can find

 

 those instructions in the instructions for 2016 Form 1040-ES.

 

 ----------------------------------------------------------------------

 

   

1.

 Adjusted gross income you expect in 2016 (see

 

      instructions)                                          

1.

 ______

 

   

2.

 • If you plan to itemize deductions, enter the

 

        estimated total of your itemized deductions.

 

       

Caution:

 

If line 1 is over $155,650, your

 

        deduction may be reduced. See Worksheet 2-5.

 

      • If you do not plan to itemize deductions, enter

 

        your standard deduction                              

2.

 ______

 

   

3.

 Subtract line 2 from line 1                            

3.

 ______

 

   

4.

 Exemptions. Multiply $4,050 by the number of

 

      personal exemptions.

 

     

Caution:

 

If line 1 is over $155,650, the amount of

 

      your personal exemptions may be limited. See

 

      Worksheet 2-6

                                           

4.

 ______

 

   

5.

 Subtract line 4 from line 3                            

5.

 ______

 

   

6. Tax.

 Figure your tax on the amount on line 5 by

 

      using the

2016 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. Add to this amount any other

 

      taxes you expect to include in the total on

 

      Form 1040, line 44                                      

8.

 ______

 

   

9.

 Credits (see instructions).

Do not

 include any

 

      income tax withholding on this line                    

9.

 ______

 

 

10.

 Subtract line 9 from line 8. 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, net premium tax credit, refundable

 

      American opportunity credit, and refundable credit

 

      from Form 8885                                        

13b.

 ______

 

   

c. Total 2016 estimated tax.

 Subtract line 13b from

 

      line 13a. If zero or less, enter -0-                  

13c.

 ______

 

 

14a.

 Multiply line 13c by 90% (0.90)

 

      (66 2/3% (0.6667) 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.

 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. To

 

      avoid a penalty, make sure your estimate on line 13c

 

      is as accurate as possible. Even if you pay the

 

      required annual payment, you may still owe tax when

 

      you file your return. If you prefer, you can pay the

 

      amount shown on line 13c.

 

 

15.

 Income tax withheld and estimated to be withheld

 

      during 2016 (including income tax withholding on

 

      pensions, annuities, certain deferred income, etc.)    

15.

 ______

 

 

16a.

 Subtract line 15 from line 14c          

16a.

 ______

 

      Is the result zero or less?

 

      [ ]

Yes.

 Stop here. You are not

 

      required to make estimated tax

 

      payments.

 

      [ ]

No.

 Go to line 16b.

 

   

b.

 Subtract line 15 from line 13c          

16b.

 ______

 

      Is the result less than $1,000?

 

      [ ]

Yes.

 Stop here. You are not

 

      required to make estimated tax

 

      payments.

 

      [ ]

No.

 Go to line 17 to figure your

 

      required payment.

 

 

17.

 If the first payment you are required to make is due

 

      April 18, 2016, enter 1/4 of line 16a (minus any 2015

 

      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. 2016 Estimated Tax Worksheet -- Line 1 Estimated Taxable Social Security and Railroad Retirement Benefits

 Keep for Your Records

 

 ----------------------------------------------------------------------

 

 

Note.

 If you are using this worksheet to estimate your taxable social

 

 security or railroad retirement benefits for Worksheet 2-9, 2016

 

 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.

 

 ----------------------------------------------------------------------

 

 

1.

 Enter your expected social security and railroad

 

     retirement benefits                                      

1.

 ______

 

 

2.

 Enter one-half of line 1                                

2.

 ______

 

 

3.

 Enter your expected total income.

Do not

 include

 

     any social security and railroad retirement benefits,

 

     nontaxable interest income, nontaxable IRA

 

     distributions, or nontaxable pension distributions      

3.

 ______

 

 

4.

 Enter your expected nontaxable interest income          

4.

 ______

 

 

5.

 Enter (as a positive amount) the total of any

 

     expected exclusions or deductions for:

 

      • U.S. savings bond interest used for higher education

 

        expenses (Form 8815)

 

      • Employer-provided adoption benefits (Form 8839)

 

      • Foreign earned income or housing

 

        (2555-EZ)

 

      • Income by bona fide residents of American Samoa

 

        (Form 4563) or Puerto Rico                            

5.

 ______

 

 

6.

 Add lines 2, 3, 4, and 5                                

6.

 ______

 

 

7.

 Enter your expected adjustments to income.

Do not

 

     include any student loan interest deduction              

7.

 ______

 

 

8.

 Subtract line 7 from line 6. If zero or less,

stop

 

     here.

 

     

Note. Do not

 include any social security or railroad

 

     retirement benefits in the amount on line 1 of your

 

     2016 Estimated Tax Worksheet (Worksheet 2-1) (or

 

     Annualized Estimated Tax Worksheet (Worksheet 2-9))      

8.

 ______

 

 

9.

 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.

 ______

 

 

10.

 Subtract line 9 from line 8. If zero or less,

stop

 

     here.

 

     

Note. 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.

 ______

 

 

11.

 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.

 ______

 

 

12.

 Subtract line 11 from line 10. If zero or less,

 

     enter -0-                                              

12.

 ______

 

 

13.

 Enter the

smaller

 of line 10 or line 11                

13.

 ______

 

 

14.

 Enter one-half of line 13                              

14.

 ______

 

 

15.

 Enter the

smaller

 of line 2 or line 14                  

15.

 ______

 

 

16.

 Multiply line 12 by 85% (0.85). If line 12 is zero,

 

     enter -0-                                              

16.

 ______

 

 

17.

 Add lines 15 and 16                                    

17.

 ______

 

 

18.

 Multiply line 1 by 85% (0.85)                          

18.

 ______

 

 

19.

 Enter the

smaller

 of line 17 or line 18                

19.

 ______

 

 

20. Expected taxable social security and railroad

 

     retirement benefits for the period.

 Divide line 19 by

 

     the annualization amount shown on Worksheet 2-9, line

 

     2, for the same period and enter here. Include this

 

     amount in the total on line 1 of your 2016 Estimated

 

     Tax Worksheet (Worksheet 2-1) (or Annualized Estimated

 

     Tax Worksheet (Worksheet 2-9))                          

20.

 

                                                                 ======

 

 ----------------------------------------------------------------------

 

 

Worksheet 2-3. 2016 Estimated Tax Worksheet -- Lines 1 and 11 Estimated Self-Employment Tax and Deduction Worksheet

 Keep for Your Records

 

 ----------------------------------------------------------------------

 

 

1 a.

 Enter your expected income and

 

       profits subject to self-employment

 

       tax*                                  

1a.

 ________

 

   

b.

 If you will have farm income and

 

       also receive social security

 

       retirement or disability benefits,

 

       enter your expected Conservation

 

       Reserve Program payments that will

 

       be included on

 

       Schedule F (Form 1040) or listed on

 

       Schedule K-1 (Form 1065)              

1b.

 ________

 

 

2.

   Subtract line 1b from line 1a        

2.

  ________

 

 

3.

   Multiply line 2 by 92.35% (0.9235).

 

       If less than $400,

do not

 complete

 

       this worksheet; you will not owe

 

       self-employment tax on your

 

       expected net earnings from

 

       self-employment                      

3.

  ________

 

 

4.

   Multiply line 3 by 2.9% (0.029)                      

4.

 ________

 

 

5.

   Maximum income subject to social

 

       security tax                          

5.  

$118,500

 

 

6.

   Enter your expected wages (if

 

       subject to social security tax or

 

       the 6.2% portion of tier 1 railroad

 

       retirement tax)                      

6.

  ________

 

 

7.

   Subtract line 6 from line 5          

7.

  ________

 

       

Note.

 

If line 7 is zero or less,

 

       enter -0- on line 9 and skip to

 

       line 10.

 

 

8.

   Enter the

smaller

 of line 3 or

 

       line 7                                

8.

  ________

 

 

9.

   Multiply line 8 by 12.4% (0.124)                    

9.

 ________

 

 

10.

   Add line 4 and line 9. Enter the result here and

 

       on line 11 of your 2016 Estimated Tax Worksheet

 

       (Worksheet 2-1) (or line 17 of the Annualized

 

       Estimated Tax Worksheet (Worksheet 2-9))            

10.

 ________

 

 

11.

   Multiply line 10 by 50% (0.50).

 

       This is your expected deduction for

 

       self-employment tax on Form 1040,

 

       line 27. Subtract this amount when

 

       figuring your expected AGI on line

 

       1 of your 2016 Estimated Tax

 

       Worksheet (Worksheet 2-1) (or

 

       Annualized Estimated Tax Worksheet

 

       (Worksheet 2-9))                      

11.

 

                                                 ========

 

 ----------------------------------------------------------------------

 

 * Net profit from self-employment is found on Schedule C; Schedule F;

 

 Schedule K-1 (Form 1065); and Schedule K-1 (Form 1065-B).

 

 ======================================================================

 

 

Worksheet 2-4. 2016 Estimated Tax Worksheet--Line 2 Standard Deduction Worksheet

 Keep for Your Records

 

 ----------------------------------------------------------------------

 

 

Caution.

 Do not complete this worksheet if you expect your spouse to

 

 itemize on a separate return or you expect to be a dual-status alien.

 

 In either case, your standard deduction will be zero.

 

 

1.

 Enter the amount shown below for your filing status.

 

    • Single or married filing separately -- $6,300

 

    • Married filing jointly or Qualifying widow(er)

 

      -- $12,600

 

    • Head of household -- $9,300                  

1.

 ______

 

 

2.

 Can you (or your spouse if filing jointly) be

 

    claimed as a dependent on someone else's

 

    return?

 

    [ ]

No.

 Skip line 3; enter the amount from

 

            line 1 on line 4.

 

    [ ]

Yes.

 Go to line 3.

 

 

3.

 Is your

earned income

* more than $700?

 

    [ ]

Yes.

 Add $350 to your earned income.

 

             Enter the total.

 

    [ ]

No.

 Enter $1,050                          

3.

 ______

 

 

4.

 Enter the

smaller

 of line 1 or line 3                    

4.

 ______

 

 

5.

 Were you (or your spouse if filing jointly) born before

 

    January 2, 1952, or blind?

 

    [ ]

No.

  Go to line 6.

 

    [ ]

Yes.

 Check if:

 

             a.

You

 were [ ] Born before January 2, 1952 [ ]

 

                [ ] Blind

 

             b.

Your spouse

 was [ ] Born before January 2,

 

                1952 [ ] Blind

 

             c.

Total boxes checked in 5a and 5b

 [ ]

 

             Multiply $1,250 ($1,550 if single or head of

 

             household) by the number in the box on line 5c  

5.

 ______

 

 

6. Standard deduction.

 Add lines 4 and 5. Enter the result

 

    here and on line 2 of your 2016 Estimated Tax Worksheet

 

    (Worksheet 2-1) (or line 7 of your 2016 Annualized

 

    Estimated Tax Worksheet (Worksheet 2-9))                  

6.

 

                                                                 ======

 

 ----------------------------------------------------------------------

 

 *

Earned income

 includes wages, salaries, tips, professional fees, and

 

 other compensation received for personal services you performed. It

 

 also includes taxable scholarships and fellowship grants. Reduce your

 

 earned income by your allowed deduction for self-employment tax

 

 (Worksheet 2-3, line 11).

 

 ======================================================================

 

 

Worksheet 2-5. 2016 Estimated Tax Worksheet--Line 2 Phaseout of Itemized Deductions

 Keep for Your Records

 

 ----------------------------------------------------------------------

 

 

1.

 Enter the estimated total of your itemized deductions    

1.

 ______

 

 

2.

 Enter the total amount included on line 1 above for

 

     medical and dental expenses, investment interest

 

     expense, casualty or theft losses of personal use

 

     property, casualty and theft losses from

 

     income-producing property, and gambling losses          

2.

 ______

 

 

3.

 Is the amount on line 2 less than the amount on line 1?

 

     [ ]

No. Stop here.

 Your deduction is not limited. Enter

 

     the amount from line 1 above on line 2 of the 2016

 

     Estimated Tax Worksheet (Worksheet 2-1).

 

     [ ]

Yes.

 Subtract line 2 from line 1                    

3.

 ______

 

 

4.

 Multiply line 3 by 80% (0.80)                            

4.

 ______

 

 

5.

 Enter the amount from line 1 of the 2016 Estimated Tax

 

     Worksheet (Worksheet 2-1)                                

5.

 ______

 

 

6.

 Enter $311,300 if married filing jointly or qualifying

 

     widow(er), $285,350 if head of household, $259,400 if

 

     single, $155,650 if married filing separately            

6.

 ______

 

 

7.

 Is the amount on line 6 less than the amount on line 5?

 

     [ ]

No. Stop here.

 Your deduction is not limited. Enter

 

     the amount from line 1 above on line 2 of the Estimated

 

     Tax Worksheet (Worksheet 2-1).

 

     [ ]

Yes.

 Subtract line 6 from line 5                    

7.

 ______

 

 

8.

 Multiply line 7 by 3% (0.03)                            

8.

 ______

 

 

9.

 Enter the

smaller

 of line 4 or line 8                    

9.

 ______

 

 

10. Total Itemized Deductions.

 Subtract line 9 from line

 

     1. Enter the result here and on line 2 of your 2016

 

     Estimated Tax Worksheet (Worksheet 2-1)                

10.

 ______

 

 ----------------------------------------------------------------------

 

 

Worksheet 2-6. 2016 Estimated Tax Worksheet--Line 4 Reduction of Exemption Amount

 Keep for Your Records

 

 ----------------------------------------------------------------------

 

 

1.

 Multiply $4,050 by the number of exemptions you plan to

 

    claim                                                    

1.

 ______

 

 

2.

 Enter the amount from line 1 of your 2016 Estimated Tax

 

    Worksheet (Worksheet 2-1)                                

2.

 ______

 

 

3.

 Enter

 

     $259,400 if single,

 

     $311,300 if married filing jointly or qualifying

 

     widow(er),

 

     $155,650 if married filing separately, or

 

     $285,350 if head of household                            

3.

 ______

 

 

4.

 Subtract line 3 from line 2                              

4.

 ______

 

 

5.

 Is line 4 more than $122,500 (more than $61,250 if

 

    married filing separately)?

 

    [ ]

Yes.

 You can not take a deduction for exemptions.

 

    [ ]

No.

 Divide line 4 by $2,500 ($1,250 if married

 

    filing separately). If the result is not a whole number,

 

    increase it to the next highest whole number (for

 

    example, increase 0.0004 to 1)                            

5.

 ______

 

 

6.

 Multiply line 5 by 2% (0.02). Enter the result as a

 

    decimal                                                  

6.

 ______

 

 

7.

 Multiply line 1 by line 6                                

7.

 ______

 

 

8.

 Subtract line 7 from line 1. Enter the result here and

 

    on line 4 of your 2016 Estimated Tax Worksheet

 

    (Worksheet 2-1)                                          

8.

 ______

 

 ----------------------------------------------------------------------

 

 

Worksheet 2-7. 2016 Estimated Tax Worksheet--Line 6 Qualified Dividends and Capital Gain Tax Worksheet

 Keep for Your Records

 

 ----------------------------------------------------------------------

 

 

1.

 Enter the amount from the

 

     appropriate worksheet.

 

     • Line 5 of your 2016

 

       Estimated Tax Worksheet.

 

     • Line 3 of Worksheet 2-8

 

       (use if you will exclude

 

       or deduct foreign earned

 

       income or housing)            

1.

 ______

 

 

2.

 Enter your

 

     qualified

 

     dividends

 

     expected for

 

     2016

¹

               

2.

 ______

 

 

3.

 Enter your net

 

     capital gain

 

     expected for

 

     2016

¹

               

3.

 ______

 

 

4.

 Add lines 2 and 3                

4.

 ______

 

 

5.

 Enter your 28%

 

      rate gain or loss

 

     expected for

 

     2016

²

               

5.

 ______

 

 

6.

 Enter your

 

     unrecaptured

 

     section 1250 gain

 

     expected for

 

     2016                

6.

 ______

 

 

7.

 Add lines 5 and 6    

7.

 ______

 

 

8.

 Enter the

smaller

 of line 3

 

     or line 7                        

8.

 ______

 

 

9.

 Subtract line 8 from line 4      

9.

 ______

 

 

10.

 Subtract line 9 from line 1.

 

     If zero or less, enter -0-      

10.

 ______

 

 

11.

 Enter the

smaller

 

     of line 1 or

 

     $75,300 ($37,650

 

     if single or

 

     married filing

 

     separately, or

 

     $50,400 if head of

 

     household)          

11.

 ______

 

 

12.

 Enter the

smaller

 

     of line 10 or line

 

     11                  

12.

 ______

 

 

13.

 Subtract line 4

 

     from line 1. If

 

     zero or less,

 

     enter -0-          

13.

 ______

 

 

14.

 Enter the

larger

 of line 12 or line 13      

14.

 ______

 

     

Note.

 

If line 11 and line 12 are the same,

 

     skip line 15 and go to line 16.

 

 

15.

 Subtract line 12 from line 11. This is the

 

     amount taxed at 0%                          

15.

 ______

 

     

Note.

 

If lines 1 and 11 are the same, skip

 

     lines 16 through 36 and go to line 37.

 

 

16.

 Enter the

smaller

 of line 1 or

 

     line 9                          

16.

 ______

 

 

17.

 Enter the amount from line 15.

 

     If line 15 is blank, enter -0-  

17.

 ______

 

 

18.

 Subtract line 17 from line 16.

 

     If zero or less, enter -0-      

18.

 ______

 

 

19.

 Enter:

 

      • $415,050 if single,

 

      • $233,475 if married filing

 

        separately,

 

      • $466,950 if married filing

 

        jointly or qualifying

 

        widow(er), or

 

      • $441,000 if head of

 

        household                    

19.

 ______

 

 

20.

 Enter the

smaller

 of line 1 or

 

     line 19                        

20.

 ______

 

 

21.

 Add lines 14 and

 

     15                  

21.

 ______

 

 

22.

 Subtract line 21

 

     from line 20. If

 

     zero or less,

 

     enter -0-          

22.

 ______

 

 

23.

 Enter the smaller of line 18 or line 22    

23.

 ______

 

 

24.

 Multiply line 23 by 15% (0.15)                          

24.

 ______

 

 

25.

 Add line 17 and line 23. If

 

     line 1 equals the sum of lines

 

     21 and 23, then skip lines 26

 

     through 36 and go to line 37    

25.

 ______

 

 

26.

 Subtract line 25 from line 16              

26.

 ______

 

 

27.

 Multiply line 26 by 20% (0.20)                          

27.

 ______

 

 

28.

 Enter the

smaller

 of line 3 or

 

     line 6                          

28.

 ______

 

 

29.

 Add lines 4 and 14  

29.

 ______

 

 

30.

 Enter the amount

 

     from line 1 above  

30.

 ______

 

 

31.

 Subtract line 30 from line 29.

 

     If zero or less, enter -0-      

31.

 ______

 

 

32.

 Subtract line 31 from line 28. If zero or

 

     less, enter -0-                            

32.

 ______

 

 

33.

 Multiply line 32 by 25% (0.25)                          

33.

 ______

 

     

Note.

 

If line 5 is zero or blank, skip lines 34

 

     through 36 and go to line 37.

 

 

34.

 Add lines 14, 15, 23, 26, and 32            

34.

 ______

 

 

35.

 Subtract line 34 from line 1                

35.

 ______

 

 

36.

 Multiply line 35 by 28% (0.28)                          

36.

 ______

 

 

37.

 Figure the tax on the amount on line 14 from the 2016

 

     Tax Rate Schedules                                      

37.

 ______

 

 

38.

 Add lines 24, 27, 33, 36, and 37                        

38.

 

                                                                 ======

 

 

39.

 Figure the tax on the amount on line 1 from the 2016

 

     Tax Rate Schedules                                      

39.

 ______

 

 

40. Tax on all taxable income (including capital gains and

 

     qualified dividends).

 Enter the

smaller

 of line 38 or

 

     line 39 here and on line 6 of the 2016 Estimated Tax

 

     Worksheet (Worksheet 2-1) (or line 4 of Worksheet 2-8)  

40.

 

                                                                 ======

 

 ----------------------------------------------------------------------

 

 

¹

 If you expect to deduct investment interest expense, do not include

 

 on this line any qualified dividends or net capital gain that you will

 

 elect to treat as investment income.

 

 

²

 This includes a section

1202

 exclusion from eligible gain on

 

 qualified small business stock and gain or loss from the sale or

 

 exchange of collectibles. See the Instructions for

 

 Schedule D (Form 1040) for more information.

 

 ======================================================================

 

 

Worksheet 2-8. 2016 Estimated Tax Worksheet--Line 6 Foreign Earned Income Tax Worksheet

 Keep for Your Records

 

 ----------------------------------------------------------------------

 

 

Before you begin:

 If line 5 of your 2016 Estimated Tax Worksheet

 

 (Worksheet 2-1) is zero, do not complete this worksheet.

 

 ----------------------------------------------------------------------

 

 

1.

 Enter the amount from line 5 of your 2016 Estimated Tax

 

    Worksheet (Worksheet 2-1)                                

1.

 ______

 

 

2.

 Enter the total foreign earned income and housing amount

 

    you (and your spouse if filing jointly) expect to

 

    exclude or deduct in 2016 on Form 2555-EZ    

2.

 ______

 

 

3.

 Add lines 1 and 2                                        

3.

 ______

 

 

4. Tax on the amount on line 3.

 Use the 2016 Tax Rate

 

    Schedules or Worksheet 2-7*, as appropriate              

4.

 ______

 

 

5. Tax on the amount on line 2.

 Use the 2016 Tax Rate

 

    Schedules                                                

5.

 ______

 

 

6.

 Subtract line 5 from line 4. Enter the result here and

 

    on line 6 of your 2016 Estimated Tax Worksheet

 

    (Worksheet 2-1). If zero or less, enter -0-              

6.

 

                                                                 ======

 

 * If using Worksheet 2-7 (Qualified Dividends and Capital Gain Tax

 

 Worksheet), enter the amount from line 3 above on line 1 of Worksheet

 

 2-7. Complete Worksheet 2-7 through line 9. Next, determine if you

 

 have a capital gain excess.

 

 

Figuring capital gain excess.

 To find out if you have a capital gain

 

 excess, subtract line 5 of your 2016 Estimated Tax Worksheet

 

 (Worksheet 2-1) from line 9 of Worksheet 2-7. If the result is more

 

 than zero, that amount is your capital gain excess.

 

 Make these modifications only for purposes of filling out Worksheet

 

 2-8.

 

 a. Reduce (but not below zero) the amount you otherwise would enter on

 

 line 3 of Worksheet 2-7 by your capital gain excess.

 

 b. Reduce (but not below zero) the amount you otherwise would enter on

 

 line 2 of Worksheet 2-7 by any of your capital gain excess not used in

 

 (a) above.

 

 c. Reduce (but not below zero) the amount you otherwise would enter on

 

 line 5 of Worksheet 2-7 by your capital gain excess.

 

 d. Reduce (but not below zero) the amount you otherwise would enter on

 

 line 6 of Worksheet 2-7 by your capital gain excess.

 

 ======================================================================

 

 

Worksheet 2-9. 2016 Annualized Estimated Tax Worksheet

 Keep for Your Records

 

 

Note.

 For instructions, see Annualized Income Installment Method.

 

 ----------------------------------------------------------------------

 

 

Before you begin: Complete the 2016 Estimated Tax Worksheet --

 

 Worksheet 2-1.

 

 

Section A (For Figuring Your Annualized Estimated Tax Payments)

 --

 

 Complete each column after end of period shown.

 

 ----------------------------------------------------------------------

 

 

Estates and trusts:

 Use the

 

 following ending dates in

 

 columns (a) through (d):          

(a)      (b)       (c)       (d)

 

 2/29/2016, 4/30/2016,            1/1/16-  1/1/16-   1/1/16-   1/1/16-

 

 7/31/2016, 11/30/2016.           3/31/16  5/31/16   8/31/16   12/31/16

 

 ----------------------------------------------------------------------

 

 

1.

 Adjusted gross income

 

     (AGI) for each period

 

     (see instructions).

 

     Estates and trusts,

 

     enter your taxable

 

     income without your

 

     exemption for each

 

     period. Self-employed:

 

     Complete Section B

 

     first                    

1.

 

                             ------------------------------------------

 

 

2.

 Annualization amounts.

 

     (Estates and trusts,

 

     see instructions)        

2.     4       2.4       1.5        1

 

                             ------------------------------------------

 

 

3.

 Annualized income.

 

     Multiply line 1 by

 

     line 2                  

3.

 

                             ------------------------------------------

 

 

4.

 If you itemize, enter

 

     itemized deductions

 

     for period shown in

 

     the column headings

 

     (see instructions).

 

     All others, enter -0-

 

     and skip to line 7.

 

     

Exception:

 Estates and

 

     trusts, skip to line 9

 

     and enter amount from

 

     line 3                  

4.

 

                             ------------------------------------------

 

 

5.

 Annualization amounts    

5.     4       2.4       1.5        1

 

                             ------------------------------------------

 

 

6.

 Multiply line 4 by

 

     line 5 (if line 3 is

 

     more than $155,650,

 

     see instructions and

 

     Worksheet 2-10)          

6.

 

                             ------------------------------------------

 

 

7.

 Standard deduction

 

     from Worksheet 2-4      

7.

 

                             ------------------------------------------

 

 

8.

 Enter the

larger

 of

 

     line 6 or line 7        

8.

 

                             ------------------------------------------

 

 

9.

 Subtract line 8 from

 

     line 3                  

9.

 

                             ------------------------------------------

 

 

10.

 In each column,

 

     multiply $4,050 by

 

     your total expected

 

     number of exemptions

 

     (if line 3 is more

 

     than $155,650, see

 

     instructions and

 

     Worksheet 2-11)

 

     (Estates and trusts,

 

     see instructions)      

10.

 

                             ------------------------------------------

 

 

11.

 Subtract line 10 from

 

     line 9. If zero or

 

     less, enter -0-        

11.

 

                             ------------------------------------------

 

 

12.

 Figure your tax on the

 

     amount on line 11 (see

 

     instructions)          

12.

 

                             ------------------------------------------

 

 

13.

 For each period, enter

 

     any tax from Forms

 

     6251.

 

     Also include any

 

     recapture of education

 

     credits (see

 

     instructions)          

13.

 

                             ------------------------------------------

 

 

14.

 Add lines 12 and 13    

14.

 

                             ------------------------------------------

 

 

15.

 Enter nonrefundable

 

     credits for each

 

     period (see

 

     instructions)          

15.

 

                             ------------------------------------------

 

 

16.

 Subtract line 15 from

 

     line 14                

16.

 

                             ------------------------------------------

 

 

17.

 Self-employment tax

 

     from line 41 of

 

     Section B              

17.

 

                             ------------------------------------------

 

 

18.

 Enter other taxes for

 

     each period,

 

     including, if

 

     applicable, Additional

 

     Medicare Tax and/or

 

     NIIT (see

 

     instructions)          

18.

 

                             ------------------------------------------

 

 

19.

 Total tax. Add lines

 

     16, 17, and 18          

18.

 

                             ------------------------------------------

 

 

20.

 Enter refundable

 

     credits for each

 

     period (see

 

     instructions for type

 

     of credits allowed).

 

     

Do not

 include any

 

     income tax withholding

 

     on this line            

20.

 

                             ------------------------------------------

 

 

21.

 Subtract line 20 from

 

     line 19. If zero or

 

     less, enter -0-        

21.

 

                             ------------------------------------------

 

 

22.

 Applicable percentage  

22.   22.5%     45%      67.5%      90%

 

                             ------------------------------------------

 

 

23.

 Multiply line 21 by

 

     line 22                

23.

 

                             ------------------------------------------

 

     

Complete lines 24

 

     through 29 of one

 

     column before going to

 

     line 24 of the next

 

     column.

 

 

24.

 Enter the total of the

 

     amounts in all

 

     previous columns of

 

     line 29                

24.

 

                             ------------------------------------------

 

 

25.

 Annualized income

 

     installment. Subtract

 

     line 24 from line 23.

 

     If zero or less, enter

 

     -0-                    

25.

 

                             ------------------------------------------

 

 

26.

 Enter 25% (0.25) of

 

     line 14c of your 2016

 

     Estimated Tax

 

     Worksheet (Worksheet

 

     2-1) in each column    

26.

 

                             ------------------------------------------

 

 

27.

 Subtract line 29 of

 

     the previous column

 

     from line 28 of that

 

     column                  

27.

 

                             ------------------------------------------

 

 

28.

 Add lines 26 and 27    

28.

 

                             ------------------------------------------

 

 

29.

 Enter the

smaller

 of

 

     line 25 or line 28

 

     (see instructions)      

29.

 

                             ------------------------------------------

 

 

30.

 Total required

 

     payments for the

 

     period. Add lines 24

 

     and 29                  

30.

 

                             ------------------------------------------

 

 

31.

 Estimated tax payments

 

     made (line 32 of all

 

     previous columns) plus

 

     tax withholding

 

     through the due date

 

     for the period (see

 

     instructions)          

31.

 

                             ------------------------------------------

 

 

32.

 Estimated tax payment

 

     required by the next

 

     due date. Subtract

 

     line 31 from line 30

 

     and enter the result

 

     (but not less than

 

     zero) here and on

 

     your payment voucher    

32.

 

 ----------------------------------------------------------------------

 

 

Section B (For Figuring Your Annualized Estimated Self-Employment

 

 Tax)

 -- Complete each column after end of period shown.

 

 ----------------------------------------------------------------------

 

                                   

(a)      (b)       (c)       (d)

 

                                  1/1/16-  1/1/16-   1/1/16-   1/1/16-

 

 (Form 1040 filers only)          3/31/16  5/31/16   8/31/16   12/31/16

 

 ----------------------------------------------------------------------

 

 

33.

 Net earnings from

 

     self-employment for

 

     the period (see

 

     instructions)          

33.

 

                             ------------------------------------------

 

 

34.

 Prorated social

 

     security tax limit      

34.  $29,625  $49,375   $79,000   $118,500

 

                             ------------------------------------------

 

 

35.

 Enter actual wages for

 

     the period subject to

 

     social security tax or

 

     the 6.2% portion of

 

     the tier 1 railroad

 

     retirement tax.

 

     

Exception:

 If you file

 

     Form 4137 or

 

     Form 8919, see

 

     instructions            

35.

 

                             ------------------------------------------

 

 

36.

 Subtract line 35 from

 

     line 34. If zero or

 

     less, enter -0-        

36.

 

                             ------------------------------------------

 

 

37.

 Annualization amounts  

37.   0.496    0.2976     0.186     0.124

 

                             ------------------------------------------

 

 

38.

 Multiply line 37 by

 

     the

smaller

 of line 33

 

     or line 36              

38.

 

                             ------------------------------------------

 

 

39.

 Annualization amounts  

39.   0.116    0.0696    0.0435     0.029

 

                             ------------------------------------------

 

 

40.

 Multiply line 33 by

 

     line 39                

40.

 

                             ------------------------------------------

 

 

41.

 Add lines 38 and 40.

 

     Enter the result here

 

     and on line 17 of

 

     Section A              

41.

 

                             ------------------------------------------

 

 

42.

 Annualization amounts  

42.     8       4.8         3         2

 

                             ------------------------------------------

 

 

43.

 Deduction for

 

     self-employment tax.

 

     Divide line 41 by line

 

     42. Enter the result

 

     here. Use this result

 

     to figure your AGI on

 

     line 1                  

43.

 

 ----------------------------------------------------------------------

 

 

Worksheet 2-10. 2016 Annualized Estimated Tax Worksheet--Line 6 Phaseout of Itemized Deductions

 Keep for Your Records

 

 ----------------------------------------------------------------------

 

 

1.

 Enter line 4 of the 2016 Annualized ES Worksheet,

 

     Section A (Worksheet 2-9)                                

1.

 ______

 

 

2.

 Enter the total amount included on line 1 above for

 

     medical and dental expenses, investment interest,

 

     casualty or theft losses, and gambling losses (after

 

     applying the same limits used in line 1)                

2.

 ______

 

 

3.

 Subtract line 2 from line 1                              

3.

 ______

 

 

4.

 Enter line 5 of the 2016 Annualized ES Worksheet,

 

     Section A (Worksheet 2-9)                                

4.

 ______

 

 

5.

 Multiply line 1 by line 4                                

5.

 ______

 

     

Note.

 

If line 3 is zero or less, your deduction is not

 

     limited.

Stop

 here and enter the amount from line 5

 

     above on line 6 of the 2016 Annualized ES Worksheet,

 

     Section A (Worksheet 2-9).

 

 

6.

 Multiply line 3 by line 4                                

6.

 ______

 

 

7.

 Multiply line 6 by 80% (0.80)                

7.

 ______

 

 

8.

 Enter line 3 of the 2016 Annualized ES

 

     Worksheet, Section A (Worksheet 2-9)        

8.

 ______

 

 

9.

 Enter $311,300 if married filing jointly

 

     or qualifying widow(er); $285,350 if head

 

     of household; $259,400 if single; or

 

     $155,650 if married filing separately        

9.

 ______

 

 

10.

 Subtract line 9 from line 8                

10.

 ______

 

     

Note.

 

If line 10 is zero or less, your

 

     deduction is not limited.

Stop

 here and

 

     enter the amount from line 5 above on line

 

     6 of the 2016 Annualized ES Worksheet,

 

     Section A (Worksheet 2-9).

 

 

11.

 Multiply line 10 by 3% (0.03)              

11.

 ______

 

 

12.

 Enter the

smaller

 of line 7 or line 11                  

12.

 ______

 

 

13. Total Itemized Deductions.

 Subtract line 12 from line

 

     5. Enter the result here and in the appropriate column

 

     of the 2016 Annualized ES Worksheet, Section A, line 6

 

     (Worksheet 2-9)                                        

13.

 ______

 

 ----------------------------------------------------------------------

 

 

Worksheet 2-11. 2016 Annualized Estimated Tax Worksheet--Line 10 Reduction of Exemption Amount

 Keep for Your Records

 

 ----------------------------------------------------------------------

 

 

1.

 Multiply $4,050 by the number of exemptions you plan to

 

    claim                                                    

1.

 ______

 

 

2.

 Enter line 3 of the 2016 Annualized ES Worksheet,

 

    Section A (Worksheet 2-9)                                

2.

 ______

 

 

3.

 Enter the amount shown below for your filing status:

 

    $259,400 if single,

 

    $311,300 if married filing jointly or qualifying

 

    widow(er),

 

    $155,650 if married filing separately, or

 

    $285,350 if head of household                  

3.

 ______

 

 

4.

 Subtract line 3 from line 2                    

4.

 ______

 

 

5.

 Is line 4 more than $122,500 (more than

 

    $61,250 if married filing separately)?

 

    [ ]

Yes.

 You can not take a deduction for

 

    exemptions.

 

    [ ]

No.

 Divide line 4 by $2,500 ($1,250 if

 

    married filing separately). If the result is

 

    not a whole number, increase it to the next

 

    highest whole number (for example, increase

 

    0.0004 to 1)                                  

5.

 ______

 

 

6.

 Multiply line 5 by 2% (0.02). Enter the result as a

 

    decimal                                                  

6.

 ______

 

 

7.

 Multiply line 1 by line 6                                

7.

 ______

 

 

8. Deduction for exemptions.

 Subtract line 7 from line 1.

 

    Enter the result here and in the appropriate column of

 

    the 2016 Annualized ES Worksheet, Section A, line 10

 

    (Worksheet 2-9)                                          

8.

 ______

 

 ----------------------------------------------------------------------

 

 

Worksheet 2-12. 2016 Annualized Estimated Tax Worksheet--Line 12 Qualified Dividends and Capital Gain Tax Worksheet

 Keep for Your Records

 

 ----------------------------------------------------------------------

 

 

Note.

 To figure the annualized entries for lines 2, 3, 5, and 6 below,

 

 multiply the expected amount for the period by the annualization

 

 amount on line 2 of Worksheet 2-9 for the same period.

 

 ----------------------------------------------------------------------

 

 

1.

 Enter the amount from the appropriate worksheet.

 

     • Line 11 of your 2016

 

       Annualized Estimated Tax

 

       Worksheet (Worksheet 2-9).

 

     • Line 3 of Worksheet 2-13

 

       (use if you will exclude

 

       or deduct foreign earned

 

       income or housing)            

1.

 ______

 

 

2.

 Enter your

 

     annualized

 

     qualified

 

     dividends

 

     expected for 2016

¹

   

2.

 ______

 

 

3.

 Enter your

 

     annualized net

 

     capital gain

 

     expected for 2016

¹

   

3.

 ______

 

 

4.

 Add lines 2 and 3                

4.

 ______

 

 

5.

 Enter your

 

     annualized 28%

 

     rate gain or loss

 

     expected for 2016

²

   

5.

 ______

 

 

6.

 Enter your

 

     annualized

 

     unrecaptured

 

     section 1250 gain

 

     expected for 2016    

6.

 ______

 

 

7.

 Add lines 5 and 6    

7.

 ______

 

 

8.

 Enter the

smaller

 of line 3 or

 

     line 7                          

8.

 ______

 

 

9.

 Subtract line 8 from line 4      

9.

 ______

 

 

10.

 Subtract line 9 from line 1.

 

     If zero or less, enter -0-      

10.

 ______

 

 

11.

 Enter the

smaller

 

     of line 1 or

 

     $75,300 ($37,650

 

     if single or

 

     married filing

 

     separately, or

 

     $50,400 if head

 

     of household)      

11.

 ______

 

 

12.

 Enter the

smaller

 

     of line 10 or line

 

     11                  

12.

 ______

 

 

13.

 Subtract line 4

 

     from line 1. If

 

     zero or less,

 

     enter -0-          

13.

 ______

 

 

14.

 Enter the

larger

 of line 12 or line 13      

14.

 ______

 

     

Note.

 

If line 11 and line 12 are the same,

 

     skip line 15 and go to line 16.

 

 

15.

 Subtract line 12 from line 11. This is the

 

     amount taxed at 0%                          

15.

 ______

 

     

Note.

 

If lines 1 and 11 are the same, skip

 

     lines 16 through 36 and go to line 37.

 

 

16.

 Enter the

smaller

 of line 1 or

 

     line 9                          

16.

 ______

 

 

17.

 Enter the amount from line 15.

 

     If line 15 is blank, enter -0-  

17.

 ______

 

 

18.

 Subtract line 17 from line 16.

 

     If zero or less, enter -0-      

18.

 ______

 

 

19.

 Enter:

 

     • $415,050 if single,

 

     • $233,475 if married filing

 

       separately,

 

     • $466,950 if married filing

 

       jointly or qualifying

 

       widow(er), or

 

     • $441,000 if head of

 

       household                    

19.

 ______

 

 

20.

 Enter the

smaller

 of line 1 or

 

     line 19                        

20.

 ______

 

 

21.

 Add lines 14 and 1  

21.

 ______

 

 

22.

 Subtract line 21

 

     from line 20. If

 

     zero or less,

 

     enter -0-          

22.

 ______

 

 

23.

 Enter the smaller of line 18 or line 22    

23.

 ______

 

 

24.

 Multiply line 23 by 15% (0.15)                          

24.

 ______

 

 

25.

 Add line 17 and line 23. If

 

     line 1 equals the sum of

 

     lines 21 and 23, then skip

 

     lines 26 through 36 and go

 

     to line 37                      

25.

 ______

 

 

26.

 Subtract line 25 from line 16              

26.

 ______

 

 

27.

 Multiply line 26 by 20% (0.20)                          

27.

 ______

 

 

28.

 Enter the

smaller

 of line 3 or

 

     line 6                          

28.

 ______

 

 

29.

 Add lines 4 and 14  

29.

 ______

 

 

30.

 Enter the amount

 

     from line 1 above  

30.

 ______

 

 

31.

 Subtract line 30 from line 29.

 

     If zero or less, enter -0-      

31.

 ______

 

 

32.

 Subtract line 31 from line 28. If zero or

 

     less, enter -0-                            

32.

 ______

 

 

33.

 Multiply line 32 by 25% (0.25)                          

33.

 ______

 

     

Note.

 

If line 5 is zero or blank, skip lines 34

 

     through 36 and go to line 37.

 

 

34.

 Add lines 14, 15, 23, 26, and 32            

34.

 ______

 

 

35.

 Subtract line 34 from line 1                

35.

 ______

 

 

36.

 Multiply line 35 by 28% (0.28)                          

36.

 ______

 

 

37.

 Figure the tax on the amount on line 14 from the 2016

 

     Tax Rate Schedules                                      

37.

 ______

 

 

38.

 Add lines 24, 27, 33, 36, and 37                        

38.

 

                                                                 ======

 

 

39.

 Figure the tax on the amount on line 1 from the 2016

 

     Tax Rate Schedules                                      

39.

 ______

 

 

40. Tax on all taxable income (including capital gains

 

     and qualified dividends).

 Enter the

smaller

 of line

 

     38 or line 39 here and on line 12 of the appropriate

 

     column of the 2016 Annualized Estimated Tax Worksheet

 

     (or line 4 of Worksheet 2-13)                          

40.

 

                                                                 ======

 

 ----------------------------------------------------------------------

 

 

¹

 If you expect to deduct investment interest expense, do not include

 

 on this line any qualified dividends or net capital gain that you will

 

 elect to treat as investment income.

 

 

²

 This includes a section

1202

 exclusion from eligible gain on

 

 qualified small business stock and gain or loss from the sale or

 

 exchange of collectibles. See the Instructions for

 

 Schedule D (Form 1040) for more information.

 

 ----------------------------------------------------------------------

 

 

Worksheet 2-13. 2016 Annualized Estimated Tax Worksheet -- Line 12 Foreign Earned Income Tax Worksheet

 Keep for Your Records

 

 ----------------------------------------------------------------------

 

 

Before you begin:

 If line 11 of Worksheet 2-9 (2016 Annualized

 

 Estimated Tax Worksheet) is zero for the period, do not complete this

 

 worksheet.

 

 ----------------------------------------------------------------------

 

 

1.

 Enter the amount from line 11 of your 2016 Annualized

 

    Estimated Tax Worksheet for the period                    

1.

 ______

 

 

2.

 Enter the annualized amount* of foreign earned income

 

    and housing amount you (and your spouse if filing

 

    jointly) expect to exclude or deduct for the period on

 

    Form 2555-EZ                                

2.

 ______

 

 

3.

 Add lines 1 and 2                                        

3.

 ______

 

 

4. Tax on the amount on line 3.

 Use the 2016 Tax Rate

 

    Schedules or Worksheet 2-12**, as appropriate            

4.

 ______

 

 

5. Tax on the amount on line 2.

 Use the 2016 Tax Rate

 

    Schedules                                                

5.

 ______

 

 

6.

 Subtract line 5 from line 4. Enter the result here and

 

    on line 12 of your 2016 Annualized Estimated Tax

 

    Worksheet (Worksheet 2-9). If zero or less, enter -0-    

6.

 

                                                                 ======

 

 *

To figure the annualized amount for line 2, multiply the expected

 

 exclusion for the period by the annualization amount on line 2 of

 

 Worksheet 2-9 for the same period.

 

 **

If using Worksheet 2-12 (Qualified Dividends and Capital Gain Tax

 

 Worksheet), enter the amount from line 3 above on line 1 of Worksheet

 

 2-12. Complete Worksheet 2-12 through line 9. Next, determine if you

 

 have a capital gain excess.

 

 

Figuring capital gain excess.

 To find out if you have a capital gain

 

 excess for the appropriate period, subtract line 11 of Worksheet 2-9

 

 from line 9 of Worksheet 2-12. If the result is more than zero, that

 

 amount is your capital gain excess.

 

 

No capital gain excess.

 If you do not have a capital gain excess,

 

 complete the rest of Worksheet 2-12 according to its instructions.

 

 Then complete lines 5 and 6 above.

 

 

Capital gain excess.

 If you have a capital gain excess, complete a

 

 second Worksheet 2-12 as instructed above but in its entirety and with

 

 the following additional modifications. Then complete lines 5 and 6

 

 above.

 

 Make these modifications only for purposes of filling out Worksheet

 

 2-13.

 

 a. Reduce (but not below zero) the amount you otherwise would enter on

 

 line 3 of Worksheet 2-12 by your capital gain excess.

 

 b. Reduce (but not below zero) the amount you otherwise would enter on

 

 line 2 of Worksheet 2-12 by any of your capital gain excess not used

 

 in (a) above.

 

 c. Reduce (but not below zero) the amount you otherwise would enter on

 

 line 5 of Worksheet 2-12 by your capital gain excess.

 

 d. Reduce (but not below zero) the amount you otherwise would enter on

 

 line 6 of Worksheet 2-12 by your capital gain excess.

 

 ----------------------------------------------------------------------

 

 

3. Credit for Withholding and Estimated Tax for 2015

Introduction

When you file your 2015 income tax return, take credit for all the income tax and excess social security or railroad retirement tax withheld from your salary, wages, pensions, etc. Also take credit for the estimated tax you paid for 2015. These credits are subtracted from your total tax. Because these credits are refundable, you should file a return and claim these credits, even if you do not owe tax.

If the total of your withholding and your estimated tax payments for any payment period is less than the amount you needed to pay by the due date for that period, you may be charged a penalty, even if the total of these credits is more than your tax for the year.

Topics

This chapter discusses:

 

Withholding

If you had income tax withheld during 2015, you generally should be sent a statement by February 1, 2016, showing your income and the tax withheld. Depending on the source of your income, you will receive:

 

Form W-2

Your employer is required to provide or send Form W-2 to you no later than February 1, 2016. You should receive a separate Form W-2 from each employer you worked for.

If you stopped working before the end of 2015, your employer could have given you your Form W-2 at any time after you stopped working. However, your employer must provide or send it to you by February 1, 2016.

If you ask for the form, your employer must send it to you within 30 days after receiving your written request or within 30 days after your final wage payment, whichever is later.

If you have not received your Form W-2 by February 1, contact your employer or payer to request a copy. If you still do not get the form by February 15, the IRS can help you by requesting the form from your employer. The phone number for the IRS is listed in chapter 5. You will be asked for the following information.

 

Form W-2 shows your total pay and other compensation and the income tax, social security tax, and Medicare tax that was withheld during the year. Total the federal income tax withheld (shown in box 2 of all Forms W-2 received) and enter that amount on the appropriate line of your tax return.

In addition, Form W-2 is used to report any taxable sick pay you received and any income tax withheld from your sick pay. Your sick pay may be combined with other wages in one Form W-2 or you may receive a separate Form W-2 for sick pay.

If you file a paper tax return, attach Copy B of Form W-2 to your return.

Form W-2G

If you had gambling winnings in 2015, the payer may have withheld income tax. If tax was withheld, the payer will give you a Form W-2G showing the amount you won and the amount of tax withheld.

Report the amounts you won on line 21 of Form 1040. Take credit for the tax withheld on line 64 of Form 1040. If you had gambling winnings, you must use Form 1040; you cannot use Form 1040EZ.

Gambling losses can be deducted on Schedule A (Form 1040) as a miscellaneous itemized deduction. However, you cannot deduct more than the gambling winnings you report on Form 1040.

File Form W-2G with your income tax return only if it shows any federal income tax withheld in box 4.

The 1099 Series

Most forms in the 1099 series are not filed with your return. In general, these forms should be furnished to you by February 1, 2016. Unless instructed to file any of these forms with your return, keep them for your records.

There are several different forms in this series, including: