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File free 1040ez 2. File free 1040ez   Estimated Tax for 2014 Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Who Does Not Have To Pay Estimated Tax Who Must Pay Estimated TaxGeneral Rule Married Taxpayers Special Rules Aliens Estates and Trusts How To Figure Estimated Tax2014 Estimated Tax Worksheet When To Pay Estimated TaxWhen To Start Farmers and Fishermen How To Figure Each PaymentRegular Installment Method Annualized Income Installment Method Estimated Tax Payments Not Required How To Pay Estimated TaxCredit an Overpayment Pay Online Pay by Phone Pay by Check or Money Order Using the Estimated Tax Payment Voucher Introduction Estimated tax is the method used to pay tax on income that is not subject to withholding. File free 1040ez This includes income from self-employment, interest, dividends, alimony, rent, gains from the sale of assets, prizes, and awards. File free 1040ez 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. File free 1040ez 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. File free 1040ez 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. File free 1040ez If you do not pay enough by the due date of each payment period (see When To Pay Estimated Tax , later), you may be charged a penalty even if you are due a refund when you file your tax return. File free 1040ez For information on when the penalty applies, see chapter 4. File free 1040ez It would be helpful for you to have a copy of your 2013 tax return and an estimate of your 2014 income nearby while reading this chapter. File free 1040ez Topics - This chapter discusses: Who must pay estimated tax, How to figure estimated tax (including illustrated examples), When to pay estimated tax, How to figure each payment, and How to pay estimated tax. File free 1040ez Useful Items - You may want to see: Form (and Instructions) 1040-ES Estimated Tax for Individuals See chapter 5 for information about how to get this publication and form. File free 1040ez Worksheets. File free 1040ez   You may need to use several of the blank worksheets included in this chapter. File free 1040ez See Worksheets for Chapter 2, later, to locate what you need. File free 1040ez 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. File free 1040ez To do this, file a new Form W-4 with your employer. File free 1040ez See chapter 1. File free 1040ez Estimated tax not required. File free 1040ez   You do not have to pay estimated tax for 2014 if you meet all three of the following conditions. File free 1040ez You had no tax liability for 2013. File free 1040ez You were a U. File free 1040ez S. File free 1040ez citizen or resident alien for the whole year. File free 1040ez Your 2013 tax year covered a 12-month period. File free 1040ez   You had no tax liability for 2013 if your total tax (defined later under Total tax for 2013—line 14b ) was zero or you did not have to file an income tax return. File free 1040ez Please click here for the text description of the image. File free 1040ez Figure 2-A: Do You Have To Pay Estimated Tax? Who Must Pay Estimated Tax If you owed additional tax for 2013, you may have to pay estimated tax for 2014. File free 1040ez 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. File free 1040ez General Rule In most cases, you must pay estimated tax for 2014 if both of the following apply. File free 1040ez You expect to owe at least $1,000 in tax for 2014, after subtracting your withholding and refundable credits. File free 1040ez You expect your withholding and refundable credits to be less than the smaller of: 90% of the tax to be shown on your 2014 tax return, or 100% of the tax shown on your 2013 tax return. File free 1040ez Your 2013 tax return must cover all 12 months. File free 1040ez Note. File free 1040ez The percentages in (2a) or (2b) above may be different if you are a farmer, fisherman, or higher income taxpayer. File free 1040ez See Special Rules , later. File free 1040ez If the result from using the general rule above suggests that you will not have enough withholding, complete the 2014 Estimated Tax Worksheet for a more accurate calculation. File free 1040ez Figure 2-A takes you through the general rule. File free 1040ez You may find this helpful in determining if you must pay estimated tax. File free 1040ez If all your income will be subject to income tax withholding, you probably do not need to pay estimated tax. File free 1040ez Example 1. File free 1040ez Jane Smart uses Figure 2-A and the following information to figure whether she should pay estimated tax for 2014. File free 1040ez She files as head of household claiming her dependent son, takes the standard deduction, and expects no refundable credits for 2014. File free 1040ez Expected adjusted gross income (AGI) for 2014 $82,800 AGI for 2013 $73,700 Total tax on 2013 return (Form 1040,  line 61) $  8,746 Total 2014 estimated tax (line 13c of the 2014 Estimated Tax Worksheet) $11,015 Tax expected to be withheld in 2014 $10,000 Jane's answer to Figure 2-A, box 1, is YES; she expects to owe at least $1,000 for 2014 after subtracting her withholding from her expected total tax ($11,015 − $10,000 = $1,015). File free 1040ez Her answer to box 2a is YES; she expects her income tax withholding ($10,000) to be at least 90% of the tax to be shown on her 2014 return ($11,015 × 90% = $9,913. File free 1040ez 50). File free 1040ez Jane does not need to pay estimated tax. File free 1040ez Example 2. File free 1040ez The facts are the same as in Example 1, except that Jane expects only $8,700 tax to be withheld in 2014. File free 1040ez Because that is less than $9,913. File free 1040ez 50, her answer to box 2a is NO. File free 1040ez Jane's answer to box 2b is also NO; she does not expect her income tax withholding ($8,700) to be at least 100% of the total tax shown on her 2013 return ($8,746). File free 1040ez Jane must increase her withholding or pay estimated tax for 2014. File free 1040ez Example 3. File free 1040ez The facts are the same as in Example 2, except that the total tax shown on Jane's 2013 return was $8,600. File free 1040ez Because she expects to have more than $8,600 withheld in 2014 ($8,700), her answer to box 2b is YES. File free 1040ez Jane does not need to pay estimated tax for 2014. File free 1040ez Married Taxpayers If you qualify to make joint estimated tax payments, apply the rules discussed here to your joint estimated income. File free 1040ez You and your spouse can make joint estimated tax payments even if you are not living together. File free 1040ez However, you and your spouse cannot make joint estimated tax payments if: You are legally separated under a decree of divorce or separate maintenance, You and your spouse have different tax years, Either spouse is a nonresident alien (unless that spouse elected to be treated as a resident alien for tax purposes). File free 1040ez See Choosing Resident Alien Status in Publication 519, or Individuals of the same sex and opposite sex who are in registered domestic partnerships, civil unions, or other similar formal relationships that are not marriages under state law cannot make joint estimated tax payments. File free 1040ez These individuals can take credit only for the estimated tax payments that he or she made. File free 1040ez If you and your spouse cannot make joint estimated tax payments, apply these rules to your separate estimated income. File free 1040ez Making joint or separate estimated tax payments will not affect your choice of filing a joint tax return or separate returns for 2014. File free 1040ez 2013 separate returns and 2014 joint return. File free 1040ez   If you plan to file a joint return with your spouse for 2014, but you filed separate returns for 2013, your 2013 tax is the total of the tax shown on your separate returns. File free 1040ez You filed a separate return if you filed as single, head of household, or married filing separately. File free 1040ez 2013 joint return and 2014 separate returns. File free 1040ez   If you plan to file a separate return for 2014, but you filed a joint return for 2013, your 2013 tax is your share of the tax on the joint return. File free 1040ez You file a separate return if you file as single, head of household, or married filing separately. File free 1040ez   To figure your share of the tax on a joint return, first figure the tax both you and your spouse would have paid had you filed separate returns for 2013 using the same filing status for 2014. File free 1040ez Then multiply the tax on the joint return by the following fraction. File free 1040ez      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. File free 1040ez Joe and Heather filed a joint return for 2013 showing taxable income of $48,500 and a tax of $6,386. File free 1040ez Of the $48,500 taxable income, $40,100 was Joe's and the rest was Heather's. File free 1040ez For 2014, they plan to file married filing separately. File free 1040ez Joe figures his share of the tax on the 2013 joint return as follows: Tax on $40,100 based on separate return $5,960 Tax on $8,400 based on separate return 843 Total $6,803 Joe's percentage of total ($5,960 ÷ $6,803) 87. File free 1040ez 6% Joe's share of tax on joint return  ($6,386 × 87. File free 1040ez 6%) $5,594 Special Rules There are special rules for farmers, fishermen, and certain higher income taxpayers. File free 1040ez Farmers and Fishermen If at least two-thirds of your gross income for 2013 or 2014 is from farming or fishing, substitute 662/3% for 90% in (2a) under General Rule , earlier. File free 1040ez Gross income. File free 1040ez   Your gross income is all income you receive in the form of money, goods, property, and services that is not exempt from tax. File free 1040ez To determine whether two-thirds of your gross income for 2013 was from farming or fishing, use as your gross income the total of the income (not loss) amounts. File free 1040ez Joint returns. File free 1040ez   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. File free 1040ez Gross income from farming. File free 1040ez   This is income from cultivating the soil or raising agricultural commodities. File free 1040ez It includes the following amounts. File free 1040ez Income from operating a stock, dairy, poultry, bee, fruit, or truck farm. File free 1040ez Income from a plantation, ranch, nursery, range, orchard, or oyster bed. File free 1040ez Crop shares for the use of your land. File free 1040ez Gains from sales of draft, breeding, dairy, or sporting livestock. File free 1040ez   For 2013, gross income from farming is the total of the following amounts. File free 1040ez Schedule F (Form 1040), Profit or Loss From Farming, line 9. File free 1040ez Form 4835, Farm Rental Income and Expenses, line 7. File free 1040ez Your share of the gross farming income from a partnership, S corporation, estate or trust, from: Schedule K-1 (Form 1065), Schedule K-1 (Form 1120S), or Schedule K-1 (Form 1041). File free 1040ez Your gains from sales of draft, breeding, dairy, or sporting livestock shown on Form 4797, Sales of Business Property. File free 1040ez   Wages you receive as a farm employee and wages you receive from a farm corporation are not gross income from farming. File free 1040ez Gross income from fishing. File free 1040ez   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. File free 1040ez   Gross income from fishing includes the following amounts. File free 1040ez Schedule C (Form 1040), Profit or Loss From Business. File free 1040ez Income for services as an officer or crew member of a vessel while the vessel is engaged in fishing. File free 1040ez Your share of the gross fishing income from a partnership, S corporation, estate or trust, from: Schedule K-1 (Form 1065), Schedule K-1 (Form 1120S), or Schedule K-1 (Form 1041). File free 1040ez Certain taxable interest and punitive damage awards received in connection with the Exxon Valdez litigation. File free 1040ez Income for services normally performed in connection with fishing. File free 1040ez Services normally performed in connection with fishing include: Shore service as an officer or crew member of a vessel engaged in fishing, and Services that are necessary for the immediate preservation of the catch, such as cleaning, icing, and packing the catch. File free 1040ez Higher Income Taxpayers If your AGI for 2013 was more than $150,000 ($75,000 if your filing status for 2014 is married filing a separate return), substitute 110% for 100% in (2b) under General Rule , earlier. File free 1040ez For 2013, AGI is the amount shown on Form 1040, line 37; Form 1040A, line 21; and Form 1040EZ, line 4. File free 1040ez Note. File free 1040ez This rule does not apply to farmers and fishermen. File free 1040ez Aliens Resident and nonresident aliens also may have to pay estimated tax. File free 1040ez Resident aliens should follow the rules in this publication, unless noted otherwise. File free 1040ez Nonresident aliens should get Form 1040-ES (NR), U. File free 1040ez S. File free 1040ez Estimated Tax for Nonresident Alien Individuals. File free 1040ez You are an alien if you are not a citizen or national of the United States. File free 1040ez You are a resident alien if you either have a green card or meet the substantial presence test. File free 1040ez For more information about withholding, the substantial presence test, and Form 1040-ES (NR), see Publication 519. File free 1040ez Estates and Trusts Estates and trusts also must pay estimated tax. File free 1040ez 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. File free 1040ez Estates and trusts must use Form 1041-ES, Estimated Income Tax for Estates and Trusts, to figure and pay estimated tax. File free 1040ez 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. File free 1040ez When figuring your 2014 estimated tax, it may be helpful to use your income, deductions, and credits for 2013 as a starting point. File free 1040ez Use your 2013 federal tax return as a guide. File free 1040ez You can use Form 1040-ES to figure your estimated tax. File free 1040ez Nonresident aliens use Form 1040-ES (NR) to figure estimated tax. File free 1040ez You must make adjustments both for changes in your own situation and for recent changes in the tax law. File free 1040ez Some of these changes are discussed under What's New for 2014 , earlier. File free 1040ez For information about these and other changes in the law, visit the IRS website at IRS. File free 1040ez gov. File free 1040ez The instructions for Form 1040-ES include a worksheet to help you figure your estimated tax. File free 1040ez Keep the worksheet for your records. File free 1040ez 2014 Estimated Tax Worksheet Use Worksheet 2-1 to help guide you through the information about completing the 2014 Estimated Tax Worksheet. File free 1040ez You can also find a copy of the worksheet in the Instructions for Form 1040-ES. File free 1040ez Expected AGI—Line 1 Your expected AGI for 2014 (line 1) is your expected total income minus your expected adjustments to income. File free 1040ez Total income. File free 1040ez   Include in your total income all the income you expect to receive during the year, even income that is subject to withholding. File free 1040ez However, do not include income that is tax exempt. File free 1040ez   Total income includes all income and loss for 2014 that, if you had received it in 2013, would have been included on your 2013 tax return in the total on line 22 of Form 1040, line 15 of Form 1040A, or line 4 of Form 1040EZ. File free 1040ez Social security and railroad retirement benefits. File free 1040ez If you expect to receive social security or tier 1 railroad retirement benefits during 2014, use Worksheet 2-2 to figure the amount of expected taxable benefits you should include on line 1. File free 1040ez Adjustments to income. File free 1040ez   Be sure to subtract from your expected total income all of the adjustments you expect to take on your 2014 tax return. File free 1040ez Self-employed. File free 1040ez 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. File free 1040ez Include the amount from Worksheet 2-3 in your expected adjustments to income. File free 1040ez 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. File free 1040ez Expected Taxable Income— Lines 2–5 Reduce your expected AGI for 2014 (line 1) by either your expected itemized deductions or your standard deduction and by your exemptions (lines 2 through 5). File free 1040ez Itemized deductions—line 2. File free 1040ez   If you expect to claim itemized deductions on your 2014 tax return, enter the estimated amount on line 2. File free 1040ez   Itemized deductions are the deductions that can be claimed on Schedule A (Form 1040). File free 1040ez    For 2014, your total itemized deductions may be reduced if your AGI is more than the amount shown next for your filing status. File free 1040ez Single $254,200 Married filing jointly or qualifying widow(er) $305,050 Married filing separately $152,525 Head of household $279,650   If you expect your AGI to be more than this amount, use Worksheet 2-5 to figure the amount to enter on line 2. File free 1040ez Standard deduction—line 2. File free 1040ez   If you expect to claim the standard deduction on your 2014 tax return, enter the amount on line 2. File free 1040ez Use Worksheet 2-4 to figure your standard deduction. File free 1040ez No standard deduction. File free 1040ez   The standard deduction for some individuals is zero. File free 1040ez Your standard deduction will be zero if you: File a separate return and your spouse itemizes deductions, Are a dual-status alien, or File a return for a period of less than 12 months because you change your accounting period. File free 1040ez Exemptions—line 4. File free 1040ez   After you have subtracted either your expected itemized deductions or your standard deduction from your expected AGI, reduce the amount remaining by $3,950 for each exemption you expect to take on your 2014 tax return. File free 1040ez 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. File free 1040ez 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. File free 1040ez    For 2014, your deduction for personal exemption is reduced if your AGI is more than the amount shown next for your filing status. File free 1040ez Single $254,200 Married filing jointly or qualifying widow(er) $305,050 Married filing separately $152,525 Head of household $279,650   If you expect your AGI to be more than this amount, use Worksheet 2-6 to figure the amount to enter on line 4. File free 1040ez Expected Taxes and Credits— Lines 6–13c After you have figured your expected taxable income (line 5), follow the steps next to figure your expected taxes, credits, and total tax for 2014. File free 1040ez Most people will have entries for only a few of these steps. File free 1040ez However, you should check every step to be sure you do not overlook anything. File free 1040ez Step 1. File free 1040ez   Figure your expected income tax (line 6). File free 1040ez Generally, you will use the 2014 Tax Rate Schedules, later, to figure your expected income tax. File free 1040ez   However, see below for situations where you must use a different method to compute your estimated tax. File free 1040ez Tax on child's investment income. File free 1040ez   You must use a special method to figure tax on the income of the following children who have more than $2,000 of investment income. File free 1040ez Children under age 18 at the end of 2014. File free 1040ez The following children if their earned income is not more than half their support. File free 1040ez Children age 18 at the end of 2014. File free 1040ez Children who are full-time students over age 18 and under age 24 at the end of 2014. File free 1040ez See Publication 929, Tax Rules for Children and Dependents. File free 1040ez Although the ages and dollar amounts in the publication may be different in the 2014 revision, this reference will give you basic information for figuring the tax. File free 1040ez Tax on net capital gain. File free 1040ez   The regular income tax rates for individuals do not apply to a net capital gain. File free 1040ez Instead, your net capital gain is taxed at a lower maximum rate. File free 1040ez   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. File free 1040ez Tax on capital gain and qualified dividends. File free 1040ez If the amount on line 1 includes a net capital gain or qualified dividends, use Worksheet 2-7 to figure your tax. File free 1040ez Note. File free 1040ez For 2014, your capital gains and dividends rate will depend on your income. File free 1040ez Tax if excluding foreign earned income or excluding or deducting foreign housing. File free 1040ez 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. File free 1040ez Step 2. File free 1040ez   Total your expected taxes (line 8). File free 1040ez Include on line 8 the sum of the following. File free 1040ez Your tax on line 6. File free 1040ez Your expected alternative minimum tax (AMT) from Form 6251, or included on Form 1040A. File free 1040ez Your expected additional taxes from Form 8814, Parents' Election To Report Child's Interest and Dividends, and Form 4972, Tax on Lump-Sum Distributions. File free 1040ez Any recapture of education credits. File free 1040ez Step 3. File free 1040ez   Subtract your expected credits (line 9). File free 1040ez If you are using your 2013 return as a guide and filed Form 1040, your total credits for 2013 were shown on line 54. File free 1040ez If you filed Form 1040A, your total credits for 2013 were on line 34. File free 1040ez   If your credits on line 9 are more than your taxes on line 8, enter “-0-” on line 10 and go to Step 4. File free 1040ez Step 4. File free 1040ez   Add your expected self-employment tax (line 11). File free 1040ez You already should have figured your self-employment tax (see Self-employed under Expected AGI—Line 1, earlier). File free 1040ez Step 5. File free 1040ez   Add your expected other taxes (line 12). File free 1040ez   Other taxes include the following. File free 1040ez Additional tax on early distributions from: An IRA or other qualified retirement plan, A tax-sheltered annuity, or A modified endowment contract entered into after June 20, 1988. File free 1040ez Household employment taxes if: You will have federal income tax withheld from wages, pensions, annuities, gambling winnings, or other income, or You would be required to make estimated tax payments even if you did not include household employment taxes when figuring your estimated tax. File free 1040ez Amounts written on Form 1040 on the line for “other taxes” (line 60 on the 2013 Form 1040). File free 1040ez But, do not include recapture of a federal mortgage subsidy; tax on excess golden parachute payments; look-back interest due under section 167(g) or 460(b) of the Internal Revenue Code; excise tax on insider stock compensation from an expatriated corporation; uncollected social security and Medicare tax or RRTA tax on tips or group-term life insurance; or additional tax on advance payments of health coverage tax credit when not eligible. File free 1040ez Repayment of the first-time homebuyer credit. File free 1040ez See Form 5405. File free 1040ez Additional Medicare Tax. File free 1040ez A 0. File free 1040ez 9% Additional Medicare Tax applies to your combined Medicare wages and self-employment income and/or your RRTA compensation that exceeds the amount listed in the following chart, based on your filing status. File free 1040ez Filing Status Threshold Amount Married filing jointly $250,000 Married filing separately $125,000 Single $200,000 Head of household $200,000 Qualifying Widow(er) $200,000 Medicare wages and self-employment income are combined to determine if your income exceeds the threshold. File free 1040ez A self-employment loss should not be considered for purposes of this tax. File free 1040ez RRTA compensation should be separately compared to the threshold. File free 1040ez Your employer is responsible for withholding the 0. File free 1040ez 9% Additional Medicare Tax on Medicare wages or RRTA compensation it pays to you in excess of $200,000 in 2014. File free 1040ez You should consider this withholding, if applicable, in determining whether you need to make an estimated payment. File free 1040ez For more information on Additional Medicare Tax, go to IRS. File free 1040ez gov and enter “Additional Medicare Tax” in the search box. File free 1040ez Net Investment Income Tax (NIIT). File free 1040ez The NIIT is 3. File free 1040ez 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. File free 1040ez Filing Status Threshold Amount Married filing jointly $250,000 Married filing separately $125,000 Single $200,000 Head of household $200,000 Qualifying Widow(er) $250,000 For more information on Net Investment Income Tax, go to IRS. File free 1040ez gov and enter “Net Investment Income Tax” in the search box. File free 1040ez Step 6. File free 1040ez   Subtract your refundable credit (line 13b). File free 1040ez   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. File free 1040ez   The result of steps 1 through 6 is your total estimated tax for 2014 (line 13c). File free 1040ez Required Annual Payment— Line 14c On lines 14a through 14c, figure the total amount you must pay for 2014, through withholding and estimated tax payments, to avoid paying a penalty. File free 1040ez General rule. File free 1040ez   The total amount you must pay is the smaller of: 90% of your total expected tax for 2014, or 100% of the total tax shown on your 2013 return. File free 1040ez Your 2013 tax return must cover all 12 months. File free 1040ez Special rules. File free 1040ez   There are special rules for higher income taxpayers and for farmers and fishermen. File free 1040ez Higher income taxpayers. File free 1040ez   If your AGI for 2013 was more than $150,000 ($75,000 if your filing status for 2014 is married filing separately), substitute 110% for 100% in (2) above. File free 1040ez This rule does not apply to farmers and fishermen. File free 1040ez For 2013, AGI is the amount shown on Form 1040, line 37; Form 1040A, line 21; and Form 1040EZ, line 4. File free 1040ez Example. File free 1040ez   Jeremy Martin's total tax on his 2013 return was $42,581, and his expected tax for 2014 is $71,253. File free 1040ez His 2013 AGI was $180,000. File free 1040ez Because Jeremy had more than $150,000 of AGI in 2013, he figures his required annual payment as follows. File free 1040ez He determines that 90% of his expected tax for 2014 is $64,128 (. File free 1040ez 90 × $71,253). File free 1040ez Next, he determines that 110% of the tax shown on his 2013 return is $46,839 (1. File free 1040ez 10 x $42,581). File free 1040ez Finally, he determines that his required annual payment is $46,839, the smaller of the two. File free 1040ez Farmers and fishermen. File free 1040ez   If at least two-thirds of your gross income for 2013 or 2014 is from farming or fishing, your required annual payment is the smaller of: 662/3% (. File free 1040ez 6667) of your total tax for 2014, or 100% of the total tax shown on your 2013 return. File free 1040ez (Your 2013 tax return must cover all 12 months. File free 1040ez )   For definitions of “gross income from farming” and “gross income from fishing,” see Farmers and Fishermen , under Special Rules discussed earlier. File free 1040ez Total tax for 2013—line 14b. File free 1040ez   Your 2013 total tax, if you filed Form 1040, is the amount on line 61 reduced by the following. File free 1040ez Unreported social security and Medicare tax or RRTA tax from Forms 4137 or 8919 (line 57). File free 1040ez The following amounts from Form 5329 included on line 58. File free 1040ez Any tax on excess contributions to IRAs, Archer MSAs, Coverdell education savings accounts, and health savings accounts. File free 1040ez Any tax on excess accumulations in qualified retirement plans. File free 1040ez The following write-ins on line 60. File free 1040ez Excise tax on excess golden parachute payments (identified as “EPP”). File free 1040ez Excise tax on insider stock compensation from an expatriated corporation (identified as “ISC”). File free 1040ez Look-back interest due under section 167(g) (identified as “From Form 8866”). File free 1040ez Look-back interest due under section 460(b) (identified as “From Form 8697”). File free 1040ez Recapture of federal mortgage subsidy (identified as “FMSR”). File free 1040ez Additional tax on advance payments of health coverage tax credit when not eligible (identified as “HCTC”). File free 1040ez Uncollected social security and Medicare tax or RRTA tax on tips or group-term life insurance (identified as “UT”). File free 1040ez Any refundable credit amounts. File free 1040ez   If you filed Form 1040A, your 2013 total tax is the amount on line 35 reduced by any refundable credits. File free 1040ez   If you filed Form 1040EZ, your 2013 total tax is the amount on line 10 reduced by the amount on line 8a. File free 1040ez Total Estimated Tax Payments Needed—Line 16a Use lines 15 and 16a to figure the total estimated tax you may be required to pay for 2014. File free 1040ez Subtract your expected withholding from your required annual payment (line 14c). File free 1040ez You usually must pay this difference in four equal installments. File free 1040ez See When To Pay Estimated Tax and How To Figure Each Payment . File free 1040ez You do not have to pay estimated tax if: Line 14c minus line 15 is zero or less, or Line 13c minus line 15 is less than $1,000. File free 1040ez Withholding—line 15. File free 1040ez   Your expected withholding for 2014 (line 15) includes the income tax you expect to be withheld from all sources (wages, pensions and annuities, etc. File free 1040ez ). File free 1040ez It includes excess social security, and tier 1 railroad retirement tax you expect to be withheld from your wages and compensation. File free 1040ez For this purpose, you will have excess social security or tier 1 railroad retirement tax withholding for 2014 only if your wages and compensation from two or more employers are more than $117,000. File free 1040ez See Excess Social Security or Railroad Retirement Tax Withholding in chapter 3. File free 1040ez   It also includes Additional Medicare Tax you expect to be withheld from your wages or compensation. File free 1040ez Your employer is responsible for withholding the 0. File free 1040ez 9% Additional Medicare Tax on Medicare wages or RRTA compensation it pays to you in excess of $200,000. File free 1040ez When To Pay Estimated Tax For estimated tax purposes, the year is divided into four payment periods. File free 1040ez Each period has a specific payment due date. File free 1040ez 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. File free 1040ez If a payment is mailed, the date of the U. File free 1040ez S. File free 1040ez postmark is considered the date of payment. File free 1040ez The payment periods and due dates for estimated tax payments are shown next. File free 1040ez For exceptions to the dates listed, see Saturday, Sunday, holiday rule below. File free 1040ez For the period: Due date: Jan. File free 1040ez 11 – March 31 April 15 April 1 – May 31 June 16 June 1 – August 31 September 15 Sept. File free 1040ez 1 – Dec. File free 1040ez 31 January 15  next year2 1If your tax year does not begin on January 1,  see Fiscal year taxpayers . File free 1040ez 2See January payment . File free 1040ez Saturday, Sunday, holiday rule. File free 1040ez   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. File free 1040ez January payment. File free 1040ez   If you file your 2014 Form 1040 or Form 1040A by February 2, 2015, and pay the rest of the tax you owe, you do not need to make the payment due on January 15, 2015. File free 1040ez Example. File free 1040ez Janet Adams does not pay any estimated tax for 2014. File free 1040ez She files her 2014 income tax return and pays the balance due shown on her return on January 26, 2015. File free 1040ez Janet's estimated tax for the fourth payment period is considered to have been paid on time. File free 1040ez However, she may owe a penalty for not making the first three estimated tax payments, if required. File free 1040ez Any penalty for not making those payments will be figured up to January 26, 2015. File free 1040ez Fiscal year taxpayers. File free 1040ez   If your tax year does not start on January 1, your payment due dates are: The 15th day of the 4th month of your fiscal year, The 15th day of the 6th month of your fiscal year, The 15th day of the 9th month of your fiscal year, and The 15th day of the 1st month after the end of your fiscal year. File free 1040ez   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. File free 1040ez When To Start You do not have to make estimated tax payments until you have income on which you will owe income tax. File free 1040ez 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. File free 1040ez You have several options when paying estimated taxes. File free 1040ez You can: apply an overpayment from the previous tax year, pay all your estimated tax by the due date of your first payment, or pay it in installments. File free 1040ez If you choose to pay in installments, make your first payment by the due date for the first payment period. File free 1040ez Make your remaining installment payments by the due dates for the later periods. File free 1040ez To avoid any estimated tax penalties, all installments must be paid by their due date and for the required amount. File free 1040ez No income subject to estimated tax during first period. File free 1040ez   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. File free 1040ez 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. File free 1040ez Table 2-1 shows the dates for making installment payments. File free 1040ez    Table 2-1. File free 1040ez Due Dates for Estimated Tax Installment Payments If you first have income on which you must pay estimated tax: Make a payment  by:* Make later  installments  by:* Before April 1 April 15 June 16     Sept. File free 1040ez 15     Jan. File free 1040ez 15 next year April 1–May 31 June 16 Sept. File free 1040ez 15     Jan. File free 1040ez 15 next year June 1–Aug. File free 1040ez 31 Sept. File free 1040ez 15 Jan. File free 1040ez 15 next year After Aug. File free 1040ez 31 Jan. File free 1040ez 15 next year (None) *See January payment and Saturday, Sunday, holiday rule . File free 1040ez How much to pay to avoid penalty. File free 1040ez   To determine how much you should pay by each payment due date, see How To Figure Each Payment , later. File free 1040ez Farmers and Fishermen If at least two-thirds of your gross income for 2013 or 2014 is from farming or fishing, you have only one payment due date for your 2014 estimated tax, January 15, 2015. File free 1040ez The due dates for the first three payment periods, discussed under When To Pay Estimated Tax , earlier, do not apply to you. File free 1040ez If you file your 2014 Form 1040 by March 2, 2015, and pay all the tax you owe at that time, you do not need to make an estimated tax payment. File free 1040ez Fiscal year farmers and fishermen. File free 1040ez   If you are a farmer or fisherman, but your tax year does not start on January 1, you can either: Pay all your estimated tax by the 15th day after the end of your tax year, or File your return and pay all the tax you owe by the 1st day of the 3rd month after the end of your tax year. File free 1040ez 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. File free 1040ez You should pay enough by each due date to avoid a penalty for that period. File free 1040ez 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. File free 1040ez The penalty is discussed in chapter 4. File free 1040ez Regular Installment Method If your first estimated tax payment is due April 15, 2014, you can figure your required payment for each period by dividing your annual estimated tax due (line 16a of the 2014 Estimated Tax Worksheet (Worksheet 2-1)) by 4. File free 1040ez Enter this amount on line 17. File free 1040ez However, use this method only if your income is basically the same throughout the year. File free 1040ez Change in estimated tax. File free 1040ez   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. File free 1040ez 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. File free 1040ez If you do not receive your income evenly throughout the year, your required estimated tax payments may not be the same for each period. File free 1040ez See Annualized Income Installment Method . File free 1040ez Amended estimated tax. File free 1040ez If you refigure your estimated tax during the year, or if your first estimated tax payment is due after April 15, 2014, figure your required payment for each remaining payment period using Worksheet 2-14. File free 1040ez Example. File free 1040ez Early in 2014, Mira Roberts figures that her estimated tax due is $1,800. File free 1040ez She makes estimated tax payments on April 15 and June 16 of $450 each ($1,800 ÷ 4). File free 1040ez On July 10, she sells investment property at a gain. File free 1040ez Her refigured estimated tax is $4,100. File free 1040ez Her required estimated tax payment for the third payment period is $2,175, as shown in her filled-in Worksheet 2-14. File free 1040ez If Mira's estimated tax does not change again, her required estimated tax payment for the fourth payment period will be $1,025. File free 1040ez Worksheet 2-14. File free 1040ez Amended Estimated Tax Worksheet—Illustrated               1. File free 1040ez Amended total estimated tax due 1. File free 1040ez $4,100 2. File free 1040ez Multiply line 1 by:           50% (. File free 1040ez 50) if next payment is due June 16, 2014           75% (. File free 1040ez 75) if next payment is due September 15,  2014           100% (1. File free 1040ez 00) if next payment is due January 15,  2015 2. File free 1040ez 3,075     3. File free 1040ez Estimated tax payments for all previous periods 3. File free 1040ez 900     4. File free 1040ez 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. File free 1040ez $2,175       Note. File free 1040ez If the payment on line 4 is due January 15, 2015, stop here. File free 1040ez Otherwise, go to line 5. File free 1040ez         5. File free 1040ez Add lines 3 and 4 5. File free 1040ez 3,075 6. File free 1040ez Subtract line 5 from line 1 and enter the result (but not less than zero) 6. File free 1040ez 1,025 7. File free 1040ez Each following required payment: If the payment on line 4 is due June 16, 2014, enter one-half of the amount on line 6 here and on the payment vouchers for your payments due September 15, 2014, and January 15, 2015. File free 1040ez If the amount on line 4 is due September 15, 2014, enter the amount from line 6 here and on the payment voucher for your payment due January 15, 2015 7. File free 1040ez $1,025 Worksheet 2-14. File free 1040ez Amended Estimated Tax Worksheet—Blank               1. File free 1040ez Amended total estimated tax due 1. File free 1040ez   2. File free 1040ez Multiply line 1 by:           50% (. File free 1040ez 50) if next payment is due June 16, 2014           75% (. File free 1040ez 75) if next payment is due September 15,  2014           100% (1. File free 1040ez 00) if next payment is due January 15,  2015 2. File free 1040ez       3. File free 1040ez Estimated tax payments for all previous periods 3. File free 1040ez       4. File free 1040ez 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. File free 1040ez         Note. File free 1040ez If the payment on line 4 is due January 15, 2015, stop here. File free 1040ez Otherwise, go to line 5. File free 1040ez         5. File free 1040ez Add lines 3 and 4 5. File free 1040ez   6. File free 1040ez Subtract line 5 from line 1 and enter the result (but not less than zero) 6. File free 1040ez   7. File free 1040ez Each following required payment: If the payment on line 4 is due June 16, 2014, enter one-half of the amount on line 6 here and on the payment vouchers for your payments due September 15, 2014, and January 15, 2015. File free 1040ez If the amount on line 4 is due September 15, 2014, enter the amount from line 6 here and on the payment voucher for your payment due January 15, 2015 7. File free 1040ez   Underpayment penalty. File free 1040ez   The penalty is figured separately for each payment period. File free 1040ez 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. File free 1040ez To see how you may be able to avoid or reduce this penalty, see Annualized Income Installment Method (Schedule AI) in chapter 4. File free 1040ez 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. File free 1040ez 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. File free 1040ez To see whether you can pay less for any period, complete the 2014 Annualized Estimated Tax Worksheet (Worksheet 2-9). File free 1040ez You first must complete the 2014 Estimated Tax Worksheet (Worksheet 2-1) through line 16b. File free 1040ez Use the result you figure on line 32 of Worksheet 2-9 to make your estimated tax payments and complete your payment vouchers. File free 1040ez Note. File free 1040ez If you use the annualized income installment method to figure your estimated tax payments, you must file Form 2210 with your 2014 tax return. File free 1040ez See Annualized Income Installment Method (Schedule AI) in chapter 4 for more information. File free 1040ez Instructions for the 2014 Annualized Estimated Tax Worksheet (Worksheet 2-9) Use Worksheet 2-9 to help you follow these instructions. File free 1040ez 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. File free 1040ez The top of the worksheet shows the dates for each payment period. File free 1040ez The periods build; that is, each period includes all previous periods. File free 1040ez After the end of each payment period, complete the corresponding worksheet column to figure the payment due for that period. File free 1040ez Line 1. File free 1040ez   Enter your AGI for the period. File free 1040ez 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. File free 1040ez See Expected AGI—Line 1 , earlier. File free 1040ez Self-employment income. File free 1040ez   If you had self-employment income, first complete Section B of this worksheet. File free 1040ez Use the amounts on line 43 when figuring your expected AGI to enter in each column of Section A, line 1. File free 1040ez Line 4. File free 1040ez   Be sure to consider all deduction limits figured on Schedule A (Form 1040), such as reducing your medical expenses by 10% (7. File free 1040ez 5% if either you or your spouse was born before January 2, 1950) or reducing certain miscellaneous deductions by 2% of your AGI. File free 1040ez Figure your deduction limits using your expected AGI in the corresponding column of line 1 (2014 Annualized Estimated Tax Worksheet (Worksheet 2-9)). File free 1040ez Line 6. File free 1040ez   Multiply line 4 by line 5 and enter the result on line 6 unless line 3 is more than $305,050 if married filing jointly or qualifying widow(er), $279,650 if head of household, $254,200 if single, or $152,525 if married filing separately. File free 1040ez In that case, use Worksheet 2-10 to figure the amount to enter on line 6. File free 1040ez Complete Worksheet 2–10 for each period, as necessary. File free 1040ez Line 7. File free 1040ez   If you will not itemize your deductions, use Worksheet 2-4 to figure your standard deduction. File free 1040ez Line 10. File free 1040ez   Multiply $3,950 by your total expected exemptions and enter the result on line 10 unless line 3 is more than $305,050 if married filing jointly or qualifying widow(er), $279,650 if head of household, $254,200 if single, or $152,525 if married filing separately. File free 1040ez   In that case, use Worksheet 2-11 to figure the amount to enter on line 10. File free 1040ez Line 12. File free 1040ez   Generally, you will use the Tax Rate Schedules to figure the tax on your annualized income. File free 1040ez However, see below for situations where you must use a different method to compute your estimated tax. File free 1040ez Tax on child's investment income. File free 1040ez   You must use a special method to figure tax on the income of the following children who have more than $2,000 of investment income. File free 1040ez Children under age 18 at the end of 2014. File free 1040ez The following children if their earned income is not more than half their support. File free 1040ez Children age 18 at the end of 2014. File free 1040ez Children who are full-time students over age 18 and under age 24 at the end of 2014. File free 1040ez See Publication 929. File free 1040ez Tax on net capital gain. File free 1040ez   The regular income tax rates for individuals do not apply to a net capital gain. File free 1040ez Instead, your net capital gain is taxed at a lower maximum rate. File free 1040ez   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. File free 1040ez Tax on qualified dividends and capital gains. File free 1040ez   For 2014, your capital gain and dividends rate will depend on your income. File free 1040ez Tax on capital gain or qualified dividends. File free 1040ez 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. File free 1040ez Tax if excluding foreign earned income or excluding or deducting foreign housing. File free 1040ez 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. File free 1040ez Line 13. File free 1040ez   If you file Form 1040, add the tax from Forms 8814, 4972, and 6251 for the period. File free 1040ez If you file Form 1040A, add the amount from the Alternative Minimum Tax Worksheet found in the instructions. File free 1040ez Also include any recapture of an education credit for each period. File free 1040ez You may owe this tax if you claimed an education credit in an earlier year and you received either tax-free educational assistance or a refund of qualifying expenses for the same student after filing your 2013 return. File free 1040ez   Use the 2013 forms or worksheets to see if you will owe any of the taxes discussed above. File free 1040ez Figure the tax based on your income and deductions during the period shown in the column headings. File free 1040ez Multiply this amount by the annualization amounts shown for each column on line 2 of the 2014 Annualized Estimated Tax Worksheet (Worksheet 2-9). File free 1040ez Enter the result on line 13 of this worksheet. File free 1040ez Line 15. File free 1040ez   Include all the nonrefundable credits you expect to claim because of events that will occur during the period. File free 1040ez Note. File free 1040ez When figuring your credits for each period, annualize any item of income or deduction to figure each credit. File free 1040ez 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. File free 1040ez Line 18. File free 1040ez   Add your expected other taxes. File free 1040ez   Other taxes include the following. File free 1040ez Additional tax on early distributions from: An IRA or other qualified retirement plan, A tax-sheltered annuity, or A modified endowment contract entered into after June 20, 1988. File free 1040ez Household employment taxes if: You will have federal income tax withheld from wages, pensions, annuities, gambling winnings, or other income, or You would be required to make estimated tax payments even if you did not include household employment taxes when figuring your estimated tax. File free 1040ez Amounts on Form 1040 written on the line for “other taxes” (line 60 on the 2013 Form 1040). File free 1040ez But do not include recapture of a federal mortgage subsidy; tax on excess golden parachute payments; look-back interest due under section 167(g) or 460(b) of the Internal Revenue Code; excise tax on insider stock compensation from an expatriated corporation; uncollected social security, Medicare, or RRTA tax on tips or group-term life insurance; or additional tax on advance payments of health coverage tax credit when not eligible. File free 1040ez Repayment of the first-time homebuyer credit if the home will cease to be your main home in 2014. File free 1040ez See Form 5405 for exceptions. File free 1040ez Additional Medicare Tax. File free 1040ez A 0. File free 1040ez 9% Additional Medicare Tax applies to your combined Medicare wages and self-employment income and/or your RRTA compensation that exceeds the amount listed in the following chart, based on your filing status. File free 1040ez Filing Status Threshold Amount Married filing jointly $250,000 Married filing separately $125,000 Single $200,000 Head of household $200,000 Qualifying Widow(er) $200,000 Medicare wages and self-employment income are combined to determine if your income exceeds the threshold. File free 1040ez A self-employment loss should not be considered for purposes of this tax. File free 1040ez RRTA compensation should be separately compared to the threshold. File free 1040ez Your employer is responsible for withholding the 0. File free 1040ez 9% Additional Medicare Tax on Medicare wages or RRTA compensation it pays you in excess of $200,000 in 2014. File free 1040ez You should consider this withholding, if applicable, in determining whether you need to make an estimated payment. File free 1040ez For more information on Additional Medicare Tax, go to IRS. File free 1040ez gov and enter “Additional Medicare Tax” in the search box. File free 1040ez Net Investment Income Tax (NIIT). File free 1040ez The NIIT is 3. File free 1040ez 8% of the lesser of your net investment income or the excess of your modified adjusted gross income over a specified threshold amount. File free 1040ez Threshold amounts: Filing Status Threshold Amount Married filing jointly $250,000 Married filing separately $125,000 Single $200,000 Head of household $200,000 Qualifying Widow(er) $250,000 For more information on Net Investment Income Tax, go to IRS. File free 1040ez gov and enter “Net Investment Income Tax” in the search box. File free 1040ez Line 20. File free 1040ez   Include all the refundable credits (other than withholding credits) you can claim because of events that occurred during the period. File free 1040ez Note. File free 1040ez When figuring your refundable credits for each period, annualize any item of income or deduction used to figure each credit. File free 1040ez Line 29. File free 1040ez   If line 28 is smaller than line 25 and you are not certain of the estimate of your 2014 tax, you can avoid a penalty by entering the amount from line 25 on line 29. File free 1040ez Line 31. File free 1040ez   For each period, include estimated tax payments made and any excess social security and railroad retirement tax. File free 1040ez   Also include estimated federal income tax withholding. File free 1040ez One-fourth of your estimated withholding is considered withheld on the due date of each payment period. File free 1040ez To figure the amount to include on line 31 for each period, multiply your total expected withholding for 2014 by: 25% (. File free 1040ez 25) for the first period, 50% (. File free 1040ez 50) for the second period, 75% (. File free 1040ez 75) for the third period, and 100% (1. File free 1040ez 00) for the fourth period. File free 1040ez   However, you may choose to include your withholding according to the actual dates on which the amounts will be withheld. File free 1040ez For each period, include withholding made from the beginning of the period up to and including the payment due date. File free 1040ez You can make this choice separately for the taxes withheld from your wages and all other withholding. File free 1040ez For an explanation of what to include in withholding, see Total Estimated Tax Payments Needed—Line 16a , earlier. File free 1040ez Nonresident aliens. File free 1040ez   If you will file Form 1040NR and you do not receive wages as an employee subject to U. File free 1040ez S. File free 1040ez income tax withholding, the instructions for the worksheet are modified as follows. File free 1040ez Skip column (a). File free 1040ez On line 1, enter your income for the period that is effectively connected with a U. File free 1040ez S. File free 1040ez trade or business. File free 1040ez On line 21, increase your entry by the amount determined by multiplying your income for the period that is not effectively connected with a U. File free 1040ez S. File free 1040ez trade or business by the following. File free 1040ez 72% for column (b). File free 1040ez 45% for column (c). File free 1040ez 30% for column (d). File free 1040ez However, if you can use a treaty rate lower than 30%, use the percentages determined by multiplying your treaty rate by 2. File free 1040ez 4, 1. File free 1040ez 5, and 1, respectively. File free 1040ez On line 26, enter one-half of the amount from line 16c of the Form 1040-ES (NR) 2014 Estimated Tax Worksheet in column (b), and one-fourth in columns (c) and (d) of Worksheet 2-9. File free 1040ez On lines 24 and 27, skip column (b). File free 1040ez On line 31, if you do not use the actual withholding method, include one-half of your total expected withholding in column (b) and one-fourth in columns (c) and (d). File free 1040ez See Publication 519 for more information. File free 1040ez Estimated Tax Payments Not Required You do not have to pay estimated tax if your withholding in each payment period is at least as much as: One-fourth of your required annual payment, or Your required annualized income installment for that period. File free 1040ez 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. File free 1040ez How To Pay Estimated Tax There are several ways to pay estimated tax. File free 1040ez Credit an overpayment on your 2013 return to your 2014 estimated tax. File free 1040ez Pay by direct transfer from your bank account, or pay by credit or debit card using a pay-by-phone system or the Internet. File free 1040ez Send in your payment (check or money order) with a payment voucher from Form 1040-ES. File free 1040ez Credit an Overpayment If you show an overpayment of tax after completing your Form 1040 or Form 1040A for 2013, you can apply part or all of it to your estimated tax for 2014. File free 1040ez On Form 1040, or Form 1040A, enter the amount you want credited to your estimated tax rather than refunded. File free 1040ez Take the amount you have credited into account when figuring your estimated tax payments. File free 1040ez If you timely file your 2013 return, treat the credit as a payment made on April 15, 2014. File free 1040ez If you are a beneficiary of an estate or trust, and the trustee elects to credit 2014 trust payments of estimated tax to you, you can treat the amount credited as paid by you on January 15, 2015. File free 1040ez 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. File free 1040ez You also cannot use that overpayment in any other way. File free 1040ez Example. File free 1040ez When Kathleen finished filling out her 2013 tax return, she saw that she had overpaid her taxes by $750. File free 1040ez Kathleen knew she would owe additional tax in 2014. File free 1040ez She credited $600 of the overpayment to her 2014 estimated tax and had the remaining $150 refunded to her. File free 1040ez In September, she amended her 2013 return by filing Form 1040X, Amended U. File free 1040ez S. File free 1040ez Individual Income Tax Return. File free 1040ez It turned out that she owed $250 more in tax than she had thought. File free 1040ez This reduced her 2013 overpayment from $750 to $500. File free 1040ez Because the $750 had already been applied to her 2014 estimated tax or refunded to her, the IRS billed her for the additional $250 she owed, plus penalties and interest. File free 1040ez Kathleen could not use any of the $600 she had credited to her 2014 estimated tax to pay this bill. File free 1040ez Pay Online Paying online is convenient and secure and helps make sure we get your payments on time. File free 1040ez You can make your estimated tax payments online when you e-file or at any time during the year. File free 1040ez You can pay using either of the following electronic payment methods. File free 1040ez Direct transfer from your bank account. File free 1040ez Credit or debit card. File free 1040ez To pay your taxes online or for more information, go to www. File free 1040ez irs. File free 1040ez gov/e-pay. File free 1040ez Pay by Phone Paying by phone is another safe and secure method of paying electronically. File free 1040ez Use one of the following methods. File free 1040ez Direct transfer from your bank account. File free 1040ez Credit or debit card. File free 1040ez To pay by direct transfer from your bank account, call EFTPS Customer Service at 1-800-555-4477 (English), 1-800-244-4829 (Espanol), or TTY/TDD 1-800-733-4829. File free 1040ez To pay using a credit or debit card, you can call one of the following service providers. File free 1040ez There is a convenience fee charged by these providers that varies by provider, card type, and payment amount. File free 1040ez WorldPay 1-888-9-PAY-TAXTM (1-888-972-9829) www. File free 1040ez payUSAtax. File free 1040ez com Official Payments Corporation 1-888-UPAY-TAXTM (1-888-872-9829) www. File free 1040ez officialpayments. File free 1040ez com Link2GOV Corporation 1-888-PAY-1040TM (1-888-729-1040) www. File free 1040ez PAY1040. File free 1040ez com For the latest details on how to pay by phone, go to www. File free 1040ez irs. File free 1040ez gov/e-pay. File free 1040ez 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. File free 1040ez 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. File free 1040ez Do not use the address shown in the Form 1040 or Form 1040A instructions. File free 1040ez If you did not pay estimated tax last year, get a copy of Form 1040-ES from the IRS (see chapter 5). File free 1040ez Follow the instructions to make sure you use the vouchers correctly. File free 1040ez Joint estimated tax payments. File free 1040ez    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. File free 1040ez Change of address. File free 1040ez    You must notify the IRS if you are making estimated tax payments and you changed your address during the year. File free 1040ez Complete Form 8822, Change of Address, and mail it to the address shown in the instructions for that form. File free 1040ez Worksheets for Chapter 2 Use the following worksheets and tables to figure your correct estimated tax. File free 1040ez IF you need. File free 1040ez . File free 1040ez . File free 1040ez THEN use. File free 1040ez . File free 1040ez . File free 1040ez 2014 Tax Rate Schedules   the 2014 Estimated Tax Worksheet Worksheet 2-1 to estimate your taxable social security and railroad retirement benefits—line 1 of ES Worksheet (or Annualized ES Worksheet (Worksheet 2-9)) Worksheet 2-2 to estimate your self-employment (SE) tax and your deduction for SE tax—lines 1 and 11 of ES Worksheet (lines 1 and 17 of Annualized ES Worksheet (Worksheet 2-9)) Worksheet 2-3 to estimate your standard deduction—line 2 of ES Worksheet (line 7 of Annualized ES Worksheet (Worksheet 2-9)) Worksheet 2-4 to reduce your itemized deductions because your estimated AGI is more than $152,525—line 2 of ES Worksheet Worksheet 2-5 to reduce your exemption amount because your estimated AGI is more than $152,525—line 4 of ES Worksheet Worksheet 2-6 to estimate your income tax if line 1 of your ES Worksheet includes a net capital gain or qualified dividends—line 6 of ES Worksheet Worksheet 2-7 to estimate your income tax if you expect to claim a foreign earned income exclusion or foreign housing exclusion or deduction on Form 2555 or Form 2555-EZ—line 6 of ES Worksheet Worksheet 2-8 the 2014 Annualized Estimated Tax Worksheet (Annualized ES Worksheet) Worksheet 2-9 to reduce your itemized deductions because your estimated annualized AGI is more than $152,525—line 6 of Annualized ES Worksheet Worksheet 2-10 to reduce your exemption amount because your estimated annualized AGI is more than $152,525—line 10 of Annualized ES Worksheet Worksheet 2-11 to estimate your income tax if line 1 of your Annualized ES Worksheet includes a net capital gain or qualified dividends—line 12 of Annualized ES Worksheet Worksheet 2-12 to estimate your income tax if you expect to claim a foreign earned income exclusion or foreign housing exclusion or deduction on Form 2555 or Form 2555-EZ—line 12 of Annualized ES Worksheet Worksheet 2-13 to refigure (amend) your estimated tax during the year Worksheet 2-14 2014 Tax Rate Schedules Do not use these Tax Rate Schedules to figure your 2013 taxes. File free 1040ez Use them only to figure your 2014 estimated taxes. File free 1040ez Schedule X—Use if your 2014 filing status is  Single Schedule Z—Use if your 2014 filing status is Head of household If line 5 is: The tax is:     If line 5 is: The tax is:     Over— But not  over—         of the  amount  over— Over— But not  over—         of the  amount  over— $0 $9,075     10. File free 1040ez 0%   $0 $0 $12,950     10. File free 1040ez 0%   $0 9,075 36,900 $907. File free 1040ez 50 + 15. File free 1040ez 0%   9,075 12,950 49,400 $1,295. File free 1040ez 00 + 15. File free 1040ez 0%   12,950 36,900 89,350 5,081. File free 1040ez 25 + 25. File free 1040ez 0%   36,900 49,400 127,550 6,762. File free 1040ez 50 + 25. File free 1040ez 0%   49,400 89,350 186,350 18,193. File free 1040ez 75 + 28. File free 1040ez 0%   89,350 127,550 206,600 26,300. File free 1040ez 00 + 28. File free 1040ez 0%   127,550 186,350 405,100 45,353. File free 1040ez 75 + 33. File free 1040ez 0%   186,350 206,600 405,100 48,434. File free 1040ez 00 + 33. File free 1040ez 0%   206,600 405,100 406,750 117,541. File free 1040ez 25 + 35. File free 1040ez 0%   405,100 405,100 432,200 113,939. File free 1040ez 00 + 35. File free 1040ez 0%   405,100 406,750 - - - - - - 118,118. File free 1040ez 75 + 39. File free 1040ez 6%   406,750 432,200 - - - - - - 123,424. File free 1040ez 00 + 39. File free 1040ez 6%   432,200 Schedule Y-1—Use if your 2014 filing status is Married filing jointly or Qualifying widow(er) Schedule Y-2—Use if your 2014 filing status is  Married filing separately If line 5 is: The tax is:     If line 5 is: The tax is:     Over— But not  over—         of the  amount  over— Over— But not  over—         of the  amount  over— $0 $18,150     10. File free 1040ez 0%   $0 $0 $9,075     10. File free 1040ez 0%   $0 18,150 73,800 $1,815. File free 1040ez 00 + 15. File free 1040ez 0%   18,150 9,075 36,900 $907. File free 1040ez 50 + 15. File free 1040ez 0%   9,075 73,800 148,850 10,162. File free 1040ez 50 + 25. File free 1040ez 0%   73,800 36,900 74,425 5,081. File free 1040ez 25 + 25. File free 1040ez 0%   36,900 148,850 226,850 28,925. File free 1040ez 00 + 28. File free 1040ez 0%   148,850 74,425 113,425 14,462. File free 1040ez 50 + 28. File free 1040ez 0%   74,425 226,850 405,100 50,765. File free 1040ez 00 + 33. File free 1040ez 0%   226,850 113,425 202,550 25,382. File free 1040ez 50 + 33. File free 1040ez 0%   113,425 405,100 457,600 109,587. File free 1040ez 50 + 35. File free 1040ez 0%   405,100 202,550 228,800 54,793. File free 1040ez 75 + 35. File free 1040ez 0%   202,550 457,600 - - - - - - 127,962. File free 1040ez 50 + 39. File free 1040ez 6%   457,600 228,800 - - - - - - 63,981. File free 1040ez 25 + 39. File free 1040ez 6%   228,800                             Worksheet 2-1. File free 1040ez 2014 Estimated Tax Worksheet When this worksheet refers you to instructions, you can find those instructions in the Instructions for 2014 Form 1040-ES. File free 1040ez 1 Adjusted gross income you expect in 2014 (see instructions) 1     2 If you plan to itemize deductions, enter the estimated total of your itemized deductions. File free 1040ez  Caution: If line 1 is over $152,525, your deduction may be reduced. File free 1040ez See Worksheet 2-5. File free 1040ez If you do not plan to itemize deductions, enter your standard deduction. File free 1040ez 2     3 Subtract line 2 from line 1 3     4 Exemptions. File free 1040ez Multiply $3,950 by the number of personal exemptions. File free 1040ez  Caution: If line 1 is over $152,525, the amount of your personal exemptions may be limited. File free 1040ez See Worksheet 2-6. File free 1040ez 4     5 Subtract line 4 from line 3 5     6 Tax. File free 1040ez Figure your tax on the amount on line 5 by using the 2014 Tax Rate Schedules Caution: If you will have qualified dividends or a net capital gain, or expect to exclude or deduct foreign earned income or housing, see Worksheets 2-7 and 2-8 to figure the tax 6     7 Alternative minimum tax from Form 6251 or included on Form 1040A, line 28 7     8 Add lines 6 and 7. File free 1040ez Add to this amount any other taxes you expect to include in the total on Form 1040, line 44 8     9 Credits (see instructions). File free 1040ez Do not include any income tax withholding on this line 9     10 Subtract line 9 from line 8. File free 1040ez If zero or less, enter -0- 10     11 Self-employment tax (see instructions) 11     12 Other taxes including, if applicable, Additional Medicare Tax and/or NIIT (see instructions) 12     13a Add lines 10 through 12 13a     b Earned income credit, additional child tax credit, fuel tax credit, and refundable American opportunity credit 13b     c Total 2014 estimated tax. File free 1040ez Subtract line 13b from line 13a. File free 1040ez If zero or less, enter -0- ▶ 13c     14a Multiply line 13c by 90% (662/3% for farmers and fishermen) 14a           b Required annual payment based on prior year's tax (see instructions) 14b           c Required annual payment to avoid a penalty. File free 1040ez 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. File free 1040ez To avoid a penalty, make sure your estimate on line 13c is as accurate as possible. File free 1040ez Even if you pay the required annual payment, you may still owe tax when you file your return. File free 1040ez If you prefer, you can pay the amount shown on line 13c. File free 1040ez                         15 Income tax withheld and estimated to be withheld during 2014 (including income tax withholding on pensions, annuities, certain deferred income, etc. File free 1040ez ) 15     16a Subtract line 15 from line 14c 16a             Is the result zero or less? □ Yes. File free 1040ez Stop here. File free 1040ez You are not required to make estimated tax payments. File free 1040ez  □ No. File free 1040ez Go to line 16b. File free 1040ez             b Subtract line 15 from line 13c 16b             Is the result less than $1,000? □ Yes. File free 1040ez Stop here. File free 1040ez You are not required to make estimated tax payments. File free 1040ez  □ No. File free 1040ez Go to line 17 to figure your required payment. File free 1040ez                         17 If the first payment you are required to make is due April 15, 2014, enter ¼ of line 16a (minus any 2013 overpayment that you are applying to this installment) here, and on your estimated tax payment voucher(s) if you are paying by check or money order 17     Worksheet 2-2. File free 1040ez 2014 Estimated Tax Worksheet—Line 1 Estimated Taxable Social Security and Railroad Retirement Benefits Note. File free 1040ez If you are using this worksheet to estimate your taxable social security or railroad retirement benefits for Worksheet 2-9, 2014 Annualized Estimated Tax Worksheet, multiply the expected amount of benefits for each period by the annualization amount shown on Worksheet 2-9, line 2, for the same period before entering it on line 1 below. File free 1040ez     1. File free 1040ez Enter your expected social security and railroad retirement benefits 1. File free 1040ez   2. File free 1040ez Enter one-half of line 1 2. File free 1040ez   3. File free 1040ez Enter your expected total income. File free 1040ez Do not include any social security and railroad retirement benefits, nontaxable interest income, nontaxable IRA distributions, or nontaxable pension distributions 3. File free 1040ez   4. File free 1040ez Enter your expected nontaxable interest income 4. File free 1040ez   5. File free 1040ez Enter (as a positive amount) the total of any expected exclusions or deductions for: U. File free 1040ez S. File free 1040ez savings bond interest used for higher education expenses (Form 8815) Employer-provided adoption benefits (Form 8839) Foreign earned income or housing (Form 2555 or 2555-EZ) Income by bona fide residents of American Samoa (Form 4563) or Puerto Rico 5. File free 1040ez   6. File free 1040ez Add lines 2, 3, 4, and 5 6. File free 1040ez   7. File free 1040ez Enter your expected adjustments to income. File free 1040ez Do not include any student loan interest deduction 7. File free 1040ez   8. File free 1040ez Subtract line 7 from line 6. File free 1040ez If zero or less, stop here. File free 1040ez  Note. File free 1040ez Do not include any social security or railroad retirement benefits in the amount on line 1 of your 2014 Estimated Tax Worksheet (Worksheet 2-1) (or Annualized Estimated Tax Worksheet (Worksheet 2-9)) 8. File free 1040ez   9. File free 1040ez 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. File free 1040ez   10. File free 1040ez Subtract line 9 from line 8. File free 1040ez If zero or less, stop here. File free 1040ez  Note. File free 1040ez 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. File free 1040ez   11. File free 1040ez 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. File free 1040ez   12. File free 1040ez Subtract line 11 from line 10. File free 1040ez If zero or less, enter -0- 12. File free 1040ez   13. File free 1040ez Enter the smaller of line 10 or line 11 13. File free 1040ez   14. File free 1040ez Enter one-half of line 13 14. File free 1040ez   15
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Understanding IRS Guidance - A Brief Primer

For anyone not familiar with the inner workings of tax administration, the array of IRS guidance may seem, well, a little puzzling at first glance. To take a little of the mystery away, here's a brief look at seven of the most common forms of guidance.

In its role in administering the tax laws enacted by the Congress, the IRS must take the specifics of these laws and translate them into detailed regulations, rules and procedures. The Office of Chief Counsel fills this crucial role by producing several different kinds of documents and publications that provide guidance to taxpayers, firms and charitable groups.

Regulation

A regulation is issued by the Internal Revenue Service and Treasury Department to provide guidance for new legislation or to address issues that arise with respect to existing Internal Revenue Code sections. Regulations interpret and give directions on complying with the law. Regulations are published in the Federal Register. Generally, regulations are first published in proposed form in a Notice of Proposed Rulemaking (NPRM). After public input is fully considered through written comments and even a public hearing, a final regulation or a temporary regulation is published as a Treasury Decision (TD), again, in the Federal Register.

Revenue Ruling

A revenue ruling is an official interpretation by the IRS of the Internal Revenue Code, related statutes, tax treaties and regulations. It is the conclusion of the IRS on how the law is applied to a specific set of facts. Revenue rulings are published in the Internal Revenue Bulletin for the information of and guidance to taxpayers, IRS personnel and tax professionals. For example, a revenue ruling may hold that taxpayers can deduct certain automobile expenses.

Revenue Procedure

A revenue procedure is an official statement of a procedure that affects the rights or duties of taxpayers or other members of the public under the Internal Revenue Code, related statutes, tax treaties and regulations and that should be a matter of public knowledge. It is also published in the Internal Revenue Bulletin. While a revenue ruling generally states an IRS position, a revenue procedure provides return filing or other instructions concerning an IRS position. For example, a revenue procedure might specify how those entitled to deduct certain automobile expenses should compute them by applying a certain mileage rate in lieu of calculating actual operating expenses.

Private Letter Ruling

A private letter ruling, or PLR, is a written statement issued to a taxpayer that interprets and applies tax laws to the taxpayer's specific set of facts. A PLR is issued to establish with certainty the federal tax consequences of a particular transaction before the transaction is consummated or before the taxpayer's return is filed. A PLR is issued in response to a written request submitted by a taxpayer and is binding on the IRS if the taxpayer fully and accurately described the proposed transaction in the request and carries out the transaction as described. A PLR may not be relied on as precedent by other taxpayers or IRS personnel. PLRs are generally made public after all information has been removed that could identify the taxpayer to whom it was issued.

Technical Advice Memorandum

A technical advice memorandum, or TAM, is guidance furnished by the Office of Chief Counsel upon the request of an IRS director or an area director, appeals, in response to technical or procedural questions that develop during a proceeding. A request for a TAM generally stems from an examination of a taxpayer's return, a consideration of a taxpayer's claim for a refund or credit, or any other matter involving a specific taxpayer under the jurisdiction of the territory manager or the area director, appeals. Technical Advice Memoranda are issued only on closed transactions and provide the interpretation of proper application of tax laws, tax treaties, regulations, revenue rulings or other precedents. The advice rendered represents a final determination of the position of the IRS, but only with respect to the specific issue in the specific case in which the advice is issued. Technical Advice Memoranda are generally made public after all information has been removed that could identify the taxpayer whose circumstances triggered a specific memorandum.

Notice

A notice is a public pronouncement that may contain guidance that involves substantive interpretations of the Internal Revenue Code or other provisions of the law. For example, notices can be used to relate what regulations will say in situations where the regulations may not be published in the immediate future.
 

Announcement

An announcement is a public pronouncement that has only immediate or short-term value. For example, announcements can be used to summarize the law or regulations without making any substantive interpretation; to state what regulations will say when they are certain to be published in the immediate future; or to notify taxpayers of the existence of an approaching deadline.

Page Last Reviewed or Updated: 12-Feb-2014

The File Free 1040ez

File free 1040ez 1. File free 1040ez   403(b) Plan Basics Table of Contents What Is a 403(b) Plan? What Are the Benefits of Contributing to a 403(b) Plan?Excluded. File free 1040ez Deducted. File free 1040ez Who Can Participate in a 403(b) Plan?Ministers. File free 1040ez Who Can Set Up a 403(b) Account? How Can Contributions Be Made to My 403(b) Account? Do I Report Contributions on My Tax Return? How Much Can Be Contributed to My 403(b) Account? This chapter introduces you to 403(b) plans and accounts. File free 1040ez Specifically, the chapter answers the following questions. File free 1040ez What is a 403(b) plan? What are the benefits of contributing to a 403(b) plan? Who can participate in a 403(b) plan? Who can set up a 403(b) account? How can contributions be made to my 403(b) account? Do I report contributions on my tax return? How much can be contributed to my 403(b) account? What Is a 403(b) Plan? A 403(b) plan, also known as a tax-sheltered annuity (TSA) plan, is a retirement plan for certain employees of public schools, employees of certain tax-exempt organizations, and certain ministers. File free 1040ez Individual accounts in a 403(b) plan can be any of the following types. File free 1040ez An annuity contract, which is a contract provided through an insurance company, A custodial account, which is an account invested in mutual funds, or A retirement income account set up for church employees. File free 1040ez Generally, retirement income accounts can invest in either annuities or mutual funds. File free 1040ez We use the term “403(b) account” to refer to any one of these funding arrangements throughout this publication, unless otherwise specified. File free 1040ez What Are the Benefits of Contributing to a 403(b) Plan?  There are three benefits to contributing to a 403(b) plan. File free 1040ez The first benefit is that you do not pay income tax on allowable contributions until you begin making withdrawals from the plan, usually after you retire. File free 1040ez Allowable contributions to a 403(b) plan are either excluded or deducted from your income. File free 1040ez However, if your contributions are made to a Roth contribution program, this benefit does not apply. File free 1040ez Instead, you pay income tax on the contributions to the plan but distributions from the plan (if certain requirements are met) are tax free. File free 1040ez Note. File free 1040ez Generally, employees must pay social security and Medicare tax on their contributions to a 403(b) plan, including those made under a salary reduction agreement. File free 1040ez See chapter 4, Limit on Elective Deferrals , for more information. File free 1040ez The second benefit is that earnings and gains on amounts in your 403(b) account are not taxed until you withdraw them. File free 1040ez Earnings and gains on amounts in a Roth contribution program are not taxed if your withdrawals are qualified distributions. File free 1040ez Otherwise, they are taxed when you withdraw them. File free 1040ez The third benefit is that you may be eligible to take a credit for elective deferrals contributed to your 403(b) account. File free 1040ez See chapter 10, Retirement Savings Contributions Credit (Saver's Credit) . File free 1040ez Excluded. File free 1040ez   If an amount is excluded from your income, it is not included in your total wages on your Form W-2. File free 1040ez This means that you do not report the excluded amount on your tax return. File free 1040ez Deducted. File free 1040ez   If an amount is deducted from your income, it is included with your other wages on your Form W-2. File free 1040ez You report this amount on your tax return, but you are allowed to subtract it when figuring the amount of income on which you must pay tax. File free 1040ez Who Can Participate in a 403(b) Plan? Any eligible employee can participate in a 403(b) plan. File free 1040ez Eligible employees. File free 1040ez   The following employees are eligible to participate in a 403(b) plan. File free 1040ez Employees of tax-exempt organizations established under section 501(c)(3). File free 1040ez These organizations are usually referred to as section 501(c)(3) organizations or simply 501(c)(3) organizations. File free 1040ez Employees of public school systems who are involved in the day-to-day operations of a school. File free 1040ez Employees of cooperative hospital service organizations. File free 1040ez Civilian faculty and staff of the Uniformed Services University of the Health Sciences. File free 1040ez Employees of public school systems organized by Indian tribal governments. File free 1040ez Certain ministers (explained next). File free 1040ez Ministers. File free 1040ez   The following ministers are eligible employees for whom a 403(b) account can be established. File free 1040ez Ministers employed by section 501(c)(3) organizations. File free 1040ez Self-employed ministers. File free 1040ez A self-employed minister is treated as employed by a tax-exempt organization that is a qualified employer. File free 1040ez Ministers (chaplains) who meet both of the following requirements. File free 1040ez They are employed by organizations that are not section 501(c)(3) organizations. File free 1040ez They function as ministers in their day-to-day professional responsibilities with their employers. File free 1040ez   Throughout this publication, the term chaplain will be used to mean ministers described in the third category in the list above. File free 1040ez Example. File free 1040ez A minister employed as a chaplain by a state-run prison and a chaplain in the United States Armed Forces are eligible employees because their employers are not section 501(c)(3) organizations and they are employed as ministers. File free 1040ez Who Can Set Up a 403(b) Account? You cannot set up your own 403(b) account. File free 1040ez Only employers can set up 403(b) accounts. File free 1040ez A self-employed minister cannot set up a 403(b) account for his or her benefit. File free 1040ez If you are a self-employed minister, only the organization (denomination) with which you are associated can set up an account for your benefit. File free 1040ez How Can Contributions Be Made to My 403(b) Account? Generally, only your employer can make contributions to your 403(b) account. File free 1040ez However, some plans will allow you to make after-tax contributions (defined below). File free 1040ez The following types of contributions can be made to 403(b) accounts. File free 1040ez Elective deferrals . File free 1040ez These are contributions made under a salary reduction agreement. File free 1040ez This agreement allows your employer to withhold money from your paycheck to be contributed directly into a 403(b) account for your benefit. File free 1040ez Except for Roth contributions, you do not pay income tax on these contributions until you withdraw them from the account. File free 1040ez If your contributions are Roth contributions, you pay taxes on your contributions but any qualified distributions from your Roth account are tax free. File free 1040ez Nonelective contributions . File free 1040ez These are employer contributions that are not made under a salary reduction agreement. File free 1040ez Nonelective contributions include matching contributions, discretionary contributions, and mandatory contributions from your employer. File free 1040ez You do not pay income tax on these contributions until you withdraw them from the account. File free 1040ez After-tax contributions . File free 1040ez These are contributions (that are not Roth contributions) you make with funds that you must include in income on your tax return. File free 1040ez A salary payment on which income tax has been withheld is a source of these contributions. File free 1040ez If your plan allows you to make after-tax contributions, they are not excluded from income and you cannot deduct them on your tax return. File free 1040ez A combination of any of the three contribution types listed above. File free 1040ez Self-employed minister. File free 1040ez   If you are a self-employed minister, you are considered both an employee and an employer, and you can contribute to a retirement income account for your own benefit. File free 1040ez Do I Report Contributions on My Tax Return? Generally, you do not report contributions to your 403(b) account (except Roth contributions) on your tax return. File free 1040ez Your employer will report contributions on your 2013 Form W-2. File free 1040ez Elective deferrals will be shown in box 12 and the Retirement plan box will be checked in box 13. File free 1040ez If you are a self-employed minister or chaplain, see the discussions next. File free 1040ez Self-employed ministers. File free 1040ez   If you are a self-employed minister, you must report the total contributions as a deduction on your tax return. File free 1040ez Deduct your contributions on line 28 of the 2013 Form 1040. File free 1040ez Chaplains. File free 1040ez   If you are a chaplain and your employer does not exclude contributions made to your 403(b) account from your earned income, you may be able to take a deduction for those contributions on your tax return. File free 1040ez    However, if your employer has agreed to exclude the contributions from your earned income, you will not be allowed a deduction on your tax return. File free 1040ez   If you can take a deduction, include your contributions on line 36 of the 2013 Form 1040. File free 1040ez Enter the amount of your deduction and write “403(b)” on the dotted line next to line 36. File free 1040ez How Much Can Be Contributed to My 403(b) Account? There are limits on the amount of contributions that can be made to your 403(b) account each year. File free 1040ez If contributions made to your 403(b) account are more than these contribution limits, penalties may apply. File free 1040ez Chapters 2 through 6 provide information on how to determine the amount that can be contributed to your 403(b) account. File free 1040ez Worksheets are provided in Chapter 9 to help you determine the maximum amount that can be contributed to your 403(b) account each year. File free 1040ez Chapter 7, Excess Contributions , describes how to prevent excess contributions and how to get an excess contribution corrected. 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