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Form 1040 2010

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Form 1040 2010

Form 1040 2010 6. Form 1040 2010   Retail Tax on Heavy Trucks, Trailers, and Tractors Table of Contents Highway vehicle. Form 1040 2010 Vehicles not considered highway vehicles. Form 1040 2010 Idling reduction device. Form 1040 2010 Separate purchase. Form 1040 2010 Leases. Form 1040 2010 Exported vehicle. Form 1040 2010 Tax on resale of tax-paid trailers and semitrailers. Form 1040 2010 Use treated as sale. Form 1040 2010 Sale. Form 1040 2010 Long-term lease. Form 1040 2010 Short-term lease. Form 1040 2010 Related person. Form 1040 2010 Exclusions from tax base. Form 1040 2010 Sales not at arm's length. Form 1040 2010 Installment sales. Form 1040 2010 Repairs and modifications. Form 1040 2010 Further manufacture. Form 1040 2010 Rail trailers and rail vans. Form 1040 2010 Parts and accessories. Form 1040 2010 Trash containers. Form 1040 2010 House trailers. Form 1040 2010 Camper coaches or bodies for self-propelled mobile homes. Form 1040 2010 Farm feed, seed, and fertilizer equipment. Form 1040 2010 Ambulances and hearses. Form 1040 2010 Truck-tractors. Form 1040 2010 Concrete mixers. Form 1040 2010 Registration requirement. Form 1040 2010 Further manufacture. Form 1040 2010 A tax of 12% of the sales price is imposed on the first retail sale of the following articles, including related parts and accessories sold on or in connection with, or with the sale of, the articles. Form 1040 2010 Truck chassis and bodies. Form 1040 2010 Truck trailer and semitrailer chassis and bodies. Form 1040 2010 Tractors of the kind chiefly used for highway transportation in combination with a trailer or semitrailer. Form 1040 2010 A truck is a highway vehicle primarily designed to transport its load on the same chassis as the engine, even if it is equipped to tow a vehicle, such as a trailer or semitrailer. Form 1040 2010 A tractor is a highway vehicle designed to tow a vehicle, such as a trailer or semitrailer. Form 1040 2010 A tractor may carry incidental items of cargo when towing or limited amounts of cargo when not towing. Form 1040 2010 A sale of a truck, truck trailer, or semitrailer is considered a sale of a chassis and a body. Form 1040 2010 The seller is liable for the tax. Form 1040 2010 Chassis or body. Form 1040 2010   A chassis or body is taxable only if you sell it for use as a component part of a highway vehicle that is a truck, truck trailer or semitrailer, or a tractor of the kind chiefly used for highway transportation in combination with a trailer or semitrailer. Form 1040 2010 Highway vehicle. Form 1040 2010   A highway vehicle is any self-propelled vehicle designed to carry a load over public highways, whether or not it is also designed to perform other functions. Form 1040 2010 Examples of vehicles designed to carry a load over public highways are passenger automobiles, motorcycles, buses, and highway-type trucks and truck tractors. Form 1040 2010 A vehicle is a highway vehicle even though the vehicle's design allows it to perform a highway transportation function for only one of the following. Form 1040 2010 A particular type of load, such as passengers, furnishings, and personal effects (as in a house, office, or utility trailer). Form 1040 2010 A special kind of cargo, goods, supplies, or materials. Form 1040 2010 Some off-highway task unrelated to highway transportation, except as discussed next. Form 1040 2010 Vehicles not considered highway vehicles. Form 1040 2010   Generally, the following kinds of vehicles are not considered highway vehicles for purposes of the retail tax. Form 1040 2010 Specially designed mobile machinery for nontransportation functions. Form 1040 2010 A self-propelled vehicle is not a highway vehicle if all the following apply. Form 1040 2010 The chassis has permanently mounted to it machinery or equipment used to perform certain operations (construction, manufacturing, drilling, mining, timbering, processing, farming, or similar operations) if the operation of the machinery or equipment is unrelated to transportation on or off the public highways. Form 1040 2010 The chassis has been specially designed to serve only as a mobile carriage and mount (and power source, if applicable) for the machinery or equipment, whether or not the machinery or equipment is in operation. Form 1040 2010 The chassis could not, because of its special design and without substantial structural modification, be used as part of a vehicle designed to carry any other load. Form 1040 2010 Vehicles specially designed for off-highway transportation. Form 1040 2010 A vehicle is not treated as a highway vehicle if the vehicle is specially designed for the primary function of transporting a particular type of load other than over the public highway and because of this special design, the vehicles's capability to transport a load over a public highway is substantially limited or impaired. Form 1040 2010 To make this determination, you can take into account the vehicle's size, whether the vehicle is subject to licensing, safety, or other requirements, and whether the vehicle can transport a load at a sustained speed of at least 25 miles per hour. Form 1040 2010 It does not matter that the vehicle can carry heavier loads off highway than it is allowed to carry over the highway. Form 1040 2010 Nontransportation trailers and semitrailers. Form 1040 2010 A trailer or semitrailer is not treated as a highway vehicle if it is specially designed to function only as an enclosed stationary shelter for carrying on a nontransportation function at an off-highway site. Form 1040 2010 For example, a trailer that is capable only of functioning as an office for an off-highway construction operation is not a highway vehicle. Form 1040 2010 Gross vehicle weight. Form 1040 2010   The tax does not apply to truck chassis and bodies suitable for use with a vehicle that has a gross vehicle weight (defined below) of 33,000 pounds or less. Form 1040 2010 It also does not apply to truck trailer and semitrailer chassis and bodies suitable for use with a trailer or semitrailer that has a gross vehicle weight of 26,000 pounds or less. Form 1040 2010 Tractors that have a gross vehicle weight of 19,500 pounds or less and a gross combined weight of 33,000 pounds or less are excluded from the 12% retail tax. Form 1040 2010   The following four classifications of truck body types meet the suitable for use standard and will be excluded from the retail excise tax. Form 1040 2010 Platform truck bodies 21 feet or less in length. Form 1040 2010 Dry freight and refrigerated truck van bodies 24 feet or less in length. Form 1040 2010 Dump truck bodies with load capacities of 8 cubic yards or less. Form 1040 2010 Refuse packer truck bodies with load capacities of 20 cubic yards or less. Form 1040 2010 For more information on these classifications, see Revenue Procedure 2005-19, which is on page 832 of I. Form 1040 2010 R. Form 1040 2010 B. Form 1040 2010 2005-14 at www. Form 1040 2010 irs. Form 1040 2010 gov/pub/irs-irbs/irb05-14. Form 1040 2010 pdf. Form 1040 2010   The gross vehicle weight means the maximum total weight of a loaded vehicle. Form 1040 2010 Generally, this maximum total weight is the gross vehicle weight rating provided by the manufacturer or determined by the seller of the completed article. Form 1040 2010 The seller's gross vehicle weight rating is determined solely on the basis of the strength of the chassis frame and the axle capacity and placement. Form 1040 2010 The seller may not take into account any readily attachable components (such as tires or rim assemblies) in determining the gross vehicle weight. Form 1040 2010 See Regulations section 145. Form 1040 2010 4051-1(e)(3) for more information. Form 1040 2010 Parts or accessories. Form 1040 2010   The tax applies to parts or accessories sold on or in connection with, or with the sale of, a taxable article. Form 1040 2010 For example, if at the time of the sale by the retailer, the part or accessory has been ordered from the retailer, the part or accessory will be considered as sold in connection with the sale of the vehicle. Form 1040 2010 The tax applies in this case whether or not the retailer bills the parts or accessories separately. Form 1040 2010   If the retailer sells a taxable chassis, body, or tractor without parts or accessories considered essential for the operation or appearance of the taxable article, the sale of the parts or accessories by the retailer to the purchaser is considered made in connection with the sale of the taxable article even though they are shipped separately, at the same time, or on a different date. Form 1040 2010 The tax applies unless there is evidence to the contrary. Form 1040 2010 For example, if a retailer sells to any person a chassis and the bumpers for the chassis, or sells a taxable tractor and the fifth wheel and attachments, the tax applies to the parts or accessories regardless of the method of billing or the time at which the shipments were made. Form 1040 2010 The tax does not apply to parts and accessories that are spares or replacements. Form 1040 2010   The tax imposed on parts and accessories sold on or in connection with the taxable articles listed earlier and the tax imposed on the separate purchase of parts and accessories (discussed next) for the taxable articles listed earlier do not apply to an idling reduction device or insulation that has an R value of at least R35 per inch. Form 1040 2010 Idling reduction device. Form 1040 2010   An idling reduction device is any device or system of devices that provide the tractor with services, such as heat, air conditioning, and electricity, without the use of the main drive engine while the tractor is temporarily parked or stationary. Form 1040 2010 The device must be affixed to the tractor and determined by the Administrator of the EPA, in consultation with the Secretary of Energy and Secretary of Transportation, to reduce idling while parked or stationary. Form 1040 2010 The EPA discusses idling reduction technologies on its website at www. Form 1040 2010 epa. Form 1040 2010 gov/smartway/technology/idling. Form 1040 2010 htm. Form 1040 2010 Separate purchase. Form 1040 2010   The tax generally applies to the price of a part or accessory and its installation if the following conditions are met. Form 1040 2010 The owner, lessee, or operator of any vehicle that contains a taxable article installs any part or accessory on the vehicle. Form 1040 2010 The installation occurs within 6 months after the vehicle is first placed in service. Form 1040 2010   The owners of the trade or business installing the parts or accessories are secondarily liable for the tax. Form 1040 2010   A vehicle is placed in service on the date the owner takes actual possession of the vehicle. Form 1040 2010 This date is established by a signed delivery ticket or other comparable document indicating delivery to and acceptance by the owner. Form 1040 2010   The tax does not apply if the installed part or accessory is a replacement part or accessory. Form 1040 2010 The tax also does not apply if the total price of the parts and accessories, including installation charges, during the 6-month period is $1,000 or less. Form 1040 2010 However, if the total price is more than $1,000, the tax applies to the cost of all parts and accessories (and installation charges) during that period. Form 1040 2010 Example. Form 1040 2010 You bought a taxable vehicle and placed it in service on April 8. Form 1040 2010 On May 3, you bought and installed parts and accessories at a cost of $850. Form 1040 2010 On July 15, you bought and installed parts and accessories for $300. Form 1040 2010 Tax of $138 (12% of $1,150) applies on July 15. Form 1040 2010 Also, tax will apply to any costs of additional parts and accessories installed on the vehicle before October 8. Form 1040 2010 First retail sale defined. Form 1040 2010   The sale of an article is treated as the first retail sale, and the seller will be liable for the tax imposed on the sale unless one of the following exceptions applies. Form 1040 2010 There has been a prior taxable sale, lease, or use of the article (however, see Tax on resale of tax-paid trailers and semitrailers, later). Form 1040 2010 The sale qualifies as a tax-free sale under section 4221 (see Sales exempt from tax, later). Form 1040 2010 The seller in good faith accepts from the purchaser a statement signed under penalties of perjury and executed in good faith that the purchaser intends to resell the article or lease it on a long-term basis. Form 1040 2010 There is no registration requirement. Form 1040 2010 Leases. Form 1040 2010   A long-term lease (a lease with a term of 1 year or more, taking into account options to renew) before a first retail sale is treated as a taxable sale. Form 1040 2010 The tax is imposed on the lessor at the time of the lease. Form 1040 2010   A short-term lease (a lease with a term of less than 1 year, taking into account options to renew) before a first retail sale is treated as a taxable use. Form 1040 2010 The tax is imposed on the lessor at the time of the lease. Form 1040 2010 Exported vehicle. Form 1040 2010   A vehicle exported before its first retail sale, used in a foreign country, and then returned to the United States is subject to the retail tax on its first domestic use or retail sale after importation. Form 1040 2010 Tax on resale of tax-paid trailers and semitrailers. Form 1040 2010   The tax applies to a trailer or semitrailer resold within 6 months after having been sold in a taxable sale. Form 1040 2010 The seller liable for the tax on the resale can claim a credit equal to the tax paid on the prior taxable sale. Form 1040 2010 The credit cannot exceed the tax on the resale. Form 1040 2010 See Regulations section 145. Form 1040 2010 4052-1(a)(4) for information on the conditions to allowance for the credit. Form 1040 2010 Use treated as sale. Form 1040 2010   If any person uses a taxable article before the first retail sale of the article, that person is liable for the tax as if the article had been sold at retail by that person. Form 1040 2010 Figure the tax on the price at which similar articles are sold in the ordinary course of trade by retailers. Form 1040 2010 The tax attaches when the use begins. Form 1040 2010   If the seller of an article regularly sells the articles at retail in arm's-length transactions, figure the tax on its use on the lowest established retail price for the articles in effect at the time of the taxable use. Form 1040 2010   If the seller of an article does not regularly sell the articles at retail in arm's-length transactions, a constructive price on which the tax is figured will be determined by the IRS after considering the selling practices and price structures of sellers of similar articles. Form 1040 2010   If a seller of an article incurs liability for tax on the use of the article and later sells or leases the article in a transaction that otherwise would be taxable, liability for tax is not incurred on the later sale or lease. Form 1040 2010 Presumptive retail sales price. Form 1040 2010   There are rules to ensure that the tax base of transactions considered to be taxable sales includes either an actual or presumed markup percentage. Form 1040 2010 If the person liable for tax is the vehicle's manufacturer, producer, or importer, the following discussions show how you figure the presumptive retail sales price depending on the type of transaction and the persons involved in the transaction. Form 1040 2010 Table 6-1 outlines the appropriate tax base calculation for various transactions. Form 1040 2010   The presumed markup percentage to be used for trucks and truck-tractors is 4%. Form 1040 2010 But for truck trailers and semitrailers and remanufactured trucks and tractors, the presumed markup percentage is zero. Form 1040 2010 Sale. Form 1040 2010   For a taxable sale by a manufacturer, producer, importer, or related person, you generally figure the tax on a tax base of the sales price plus an amount equal to the presumed markup percentage times that sales price. Form 1040 2010 Long-term lease. Form 1040 2010   In the case of a long-term lease by a manufacturer, producer, importer, or related person, figure the tax on a tax base of the constructive sales price plus an amount equal to the presumed markup percentage times the constructive sales price. Form 1040 2010 Short-term lease. Form 1040 2010   When a manufacturer, producer, importer, or related person leases an article in a short-term lease considered a taxable use, figure the tax on a constructive sales price at which those or similar articles generally are sold in the ordinary course of trade by retailers. Form 1040 2010   But if the lessor in this situation regularly sells articles at retail in arm's-length transactions, figure the tax on the lowest established retail price in effect at the time of the taxable use. Form 1040 2010   If a person other than the manufacturer, producer, importer, or related person leases an article in a short-term lease considered a taxable use, figure the tax on a tax base of the price for which the article was sold to the lessor plus the cost of parts and accessories installed by the lessor and a presumed markup percentage. Form 1040 2010 Related person. Form 1040 2010   A related person is any member of the same controlled group as the manufacturer, producer, or importer. Form 1040 2010 Do not treat as a related person a person that sells the articles through a permanent retail establishment in the normal course of being a retailer if that person has records to prove the article was sold for a price that included a markup equal to or greater than the presumed markup percentage. Form 1040 2010 Table 6-1. Form 1040 2010 Tax Base IF the transaction is a. Form 1040 2010 . Form 1040 2010 . Form 1040 2010 THEN figuring the base by using the. Form 1040 2010 . Form 1040 2010 . Form 1040 2010 Sale by the manufacturer, producer, importer, or related person Sales price plus (presumed markup percentage × sales price) Sale by the dealer Total consideration paid for the item including any charges incident to placing it in a condition ready for use Long-term lease by the manufacturer, producer, importer, or related person Constructive sales price plus (presumed markup percentage × constructive sales price) Short-term lease by the manufacturer, producer, importer, or related person Constructive sales price at which such or similar articles are sold Short-term lease by a lessor other than the manufacturer, producer, importer, or related person Price for which the article was sold to the lessor plus the cost of parts and accessories installed by the lessor plus a presumed markup percentage Short-term lease where the articles are regularly sold at arm's length Lowest established retail price in effect at the time of the taxable use General rule for sales by dealers to the consumer. Form 1040 2010   For a taxable sale, other than a long-term lease, by a person other than a manufacturer, producer, importer, or related person, your tax base is the retail sales price as discussed next under Determination of tax base. Form 1040 2010   When you sell an article to the consumer, generally you do not add a presumed markup to the tax base. Form 1040 2010 However, you do add a markup if all the following apply. Form 1040 2010 You do not perform any significant activities relating to the processing of the sale of a taxable article. Form 1040 2010 The main reason for processing the sale through you is to avoid or evade the presumed markup. Form 1040 2010 You do not have records proving that the article was sold for a price that included a markup equal to or greater than the presumed markup percentage. Form 1040 2010 In these situations, your tax base is the sales price plus an amount equal to the presumed markup percentage times that selling price. Form 1040 2010 Determination of tax base. Form 1040 2010   These rules apply to both normal retail sales price and presumptive retail sales price computations. Form 1040 2010 To arrive at the tax base, the price is the total consideration paid (including trade-in allowance) for the item and includes any charge incident to placing the article in a condition ready for use. Form 1040 2010 However, see Presumptive retail sales price, earlier. Form 1040 2010 Exclusions from tax base. Form 1040 2010   Exclude from the tax base the retail excise tax imposed on the sale. Form 1040 2010 Exclude any state or local retail sales tax if stated as a separate charge from the price whether the sales tax is imposed on the seller or purchaser. Form 1040 2010 Also exclude the value of any used component of the article furnished by the first user of the article. Form 1040 2010   Exclude charges for transportation, delivery, insurance, and installation (other than installation charges for parts and accessories, discussed earlier) and other expenses incurred in connection with the delivery of an article to a purchaser. Form 1040 2010 These expenses are those incurred in delivery from the retail dealer to the customer. Form 1040 2010 In the case of delivery directly from the manufacturer to the dealer's customer, include the transportation and delivery charges to the extent the charges do not exceed what it would have cost to ship the article to the dealer. Form 1040 2010   Exclude amounts charged for machinery or equipment that does not contribute to the highway transportation function of the vehicle, provided those charges are supported by adequate records. Form 1040 2010 For example, for an industrial vacuum loader vehicle, exclude amounts charged for the vacuum pump and hose, filter system, material separator, silencer or muffler, control cabinet, and ladder. Form 1040 2010 Similarly, for a sewer cleaning vehicle, exclude amounts charged for the high pressure water pump, hose components, and the vacuum pipe. Form 1040 2010 Sales not at arm's length. Form 1040 2010   For any taxable article sold (not at arm's length) at less than the fair market price, figure the excise tax on the price for which similar articles are sold at retail in the ordinary course of trade. Form 1040 2010   A sale is not at arm's length if either of the following apply. Form 1040 2010 One of the parties is controlled (in law or in fact) by the other or there is common control, whether or not the control is actually exercised to influence the sales price. Form 1040 2010 The sale is made under special arrangements between a seller and a purchaser. Form 1040 2010 Installment sales. Form 1040 2010   If the first retail sale is an installment sale, or other form of sale in which the sales price is paid in installments, tax liability arises at the time of the sale. Form 1040 2010 The tax is figured on the entire sales price. Form 1040 2010 No part of the tax is deferred because the sales price is paid in installments. Form 1040 2010 Repairs and modifications. Form 1040 2010   The tax does not apply to the sale or use of an article that has been repaired or modified unless the cost of the repairs and modifications is more than 75% of the retail price of a comparable new article. Form 1040 2010 This includes modifications that change the transportation function of an article or restore a wrecked article to a functional condition. Form 1040 2010 However, this exception generally does not apply to an article that was not subject to the tax when it was new. Form 1040 2010 Further manufacture. Form 1040 2010   The tax does not apply to the use by a person of a taxable article as material in the manufacture or production of, or as a component part of, another article to be manufactured or produced by that person. Form 1040 2010 Do not treat a person as engaged in the manufacture of any article merely because that person combines the article with a: Coupling device (including any fifth wheel); Wrecker crane; Loading and unloading equipment (including any crane, hoist, winch, or power liftgate); Aerial ladder or tower; Ice and snow control equipment; Earth moving, excavation, and construction equipment; Spreader; Sleeper cab; Cab shield; or Wood or metal floor. Form 1040 2010 Combining an article with an item in this list does not give rise to taxability. Form 1040 2010 However, see Parts or accessories discussed earlier. Form 1040 2010 Articles exempt from tax. Form 1040 2010   The tax on heavy trucks, trailers, and tractors does not apply to sales of the articles described in the following discussions. Form 1040 2010 Rail trailers and rail vans. Form 1040 2010   This is any chassis or body of a trailer or semitrailer designed for use both as a highway vehicle and a railroad car (including any parts and accessories designed primarily for use on and in connection with it). Form 1040 2010 Do not treat a piggyback trailer or semitrailer as designed for use as a railroad car. Form 1040 2010 Parts and accessories. Form 1040 2010   This is any part or accessory sold separately from the truck or trailer, except as described earlier under Parts or accessories and Separate purchase. Form 1040 2010 Trash containers. Form 1040 2010   This is any box, container, receptacle, bin, or similar article that meets all the following conditions. Form 1040 2010 It is designed to be used as a trash container. Form 1040 2010 It is not designed to carry freight other than trash. Form 1040 2010 It is not designed to be permanently mounted on or affixed to a truck chassis or body. Form 1040 2010 House trailers. Form 1040 2010   This is any house trailer (regardless of size) suitable for use in connection with either passenger automobiles or trucks. Form 1040 2010 Camper coaches or bodies for self-propelled mobile homes. Form 1040 2010   This is any article designed to be mounted or placed on trucks, truck chassis, or automobile chassis and to be used primarily as living quarters or camping accommodations. Form 1040 2010 Further, the tax does not apply to chassis specifically designed and constructed to accommodate and transport self-propelled mobile home bodies. Form 1040 2010 Farm feed, seed, and fertilizer equipment. Form 1040 2010   This is any body primarily designed to process or prepare, haul, spread, load, or unload feed, seed, or fertilizer to or on farms. Form 1040 2010 This exemption applies only to the farm equipment body (and parts and accessories) and not to the chassis upon which the farm equipment is mounted. Form 1040 2010 Ambulances and hearses. Form 1040 2010   This is any ambulance, hearse, or combination ambulance-hearse. Form 1040 2010 Truck-tractors. Form 1040 2010   This is any truck-tractor specifically designed for use in shifting semitrailers in and around freight yards and freight terminals. Form 1040 2010 Concrete mixers. Form 1040 2010   This is any article designed to be placed or mounted on a truck, truck trailer, or semitrailer chassis to be used to process or prepare concrete. Form 1040 2010 This exemption does not apply to the chassis on which the article is mounted. Form 1040 2010 Sales exempt from tax. Form 1040 2010   The following sales are ordinarily exempt from tax. Form 1040 2010 Sales to a state or local government for its exclusive use. Form 1040 2010 Sales to Indian tribal governments, but only if the transaction involves the exercise of an essential tribal government function. Form 1040 2010 Sales to a nonprofit educational organization for its exclusive use. Form 1040 2010 Sales to a qualified blood collector organization (as defined under Communications Tax in chapter 4) for its exclusive use in the collection, storage, or transportation of blood. Form 1040 2010 Sales for use by the purchaser for further manufacture of other taxable articles (see below). Form 1040 2010 Sales for export or for resale by the purchaser to a second purchaser for export. Form 1040 2010 Sales to the United Nations for official use. Form 1040 2010 Registration requirement. Form 1040 2010   In general, the seller and buyer must be registered for a sale to be tax free. Form 1040 2010 See the Form 637 instructions for more information. Form 1040 2010 Certain registration exceptions apply in the case of sales to state and local governments, sales to foreign purchasers for export, and sales for resale or long term leasing. Form 1040 2010 Further manufacture. Form 1040 2010   If you buy articles tax free and resell or use them other than in the manufacture of another article, you are liable for the tax on their resale or use just as if you had manufactured and made the first retail sale of them. Form 1040 2010 Credits or refunds. Form 1040 2010   A credit or refund (without interest) of the retail tax on the taxable articles described earlier may be allowable if the tax has been paid with respect to an article and, before any other use, such article is used by any person as a component part of another taxable article manufactured or produced. Form 1040 2010 The person using the article as a component part is eligible for the credit or refund. Form 1040 2010   A credit or refund is allowable if, before any other use, an article is, by any person: Exported, Used or sold for use as supplies for vessels, Sold to a state or local government for its exclusive use, Sold to a nonprofit educational organization for its exclusive use, or Sold to a qualified blood collector organization (as defined under Communications Tax in chapter 4) for its exclusive use in the collection, storage, or transportation of blood. Form 1040 2010 A credit or refund is also allowable if there is a price readjustment by reason of the return or repossession of an article or by reason of a bona fide discount, rebate, or allowance. Form 1040 2010   See also Conditions to allowance in chapter 5. Form 1040 2010 Tire credit. Form 1040 2010   A credit is allowed against the retail tax on the taxable articles described earlier if taxable tires are sold on or in connection with the sale of the article. Form 1040 2010 The credit is equal to the manufacturers excise tax imposed on the taxable tires (discussed earlier). Form 1040 2010 This is the section 4051(d) taxable tire credit and is claimed on Schedule C (Form 720) for the same quarter for which the tax on the heavy vehicle is reported. Form 1040 2010 Prev  Up  Next   Home   More Online Publications
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Understanding Your CP2531 Notice

You need to contact us. We’ve received information not reported on your tax return.

What you need to do

  • Read your notice carefully – it explains the information we received. Complete the notice response form to indicate if you agree or disagree with the information reported.
  • Compare the information in the two columns - "Shown on return" and "Reported to IRS by others". Did you receive the income? If you received the income, was it reported on your tax return? IRS employees search the tax return to locate all income, but they may be unable to determine the source if some items are combined.
  • If it wasn't reported on your tax return, you don't need to file an amended return to report the income. Simply check the box indicating that you agree with the information reported by others, sign and date the CP 2531 response page and return it.
  • If you don't agree with the information we sent you, check the box indicating that you don’t agree with some or all of the information on the CP 2531 response page and return it with a signed statement explaining each item of discrepancy. If applicable, attach copies of documents to support the entries on the original return behind this.  

You may want to

  • Send us the name, address and taxpayer identification number of the other party that received the income if it isn't yours.  
  • Notify the payers to correct their records to show the name and taxpayer identification number of the person or business who actually received the income, so that future reports to us are accurate.  

Answers to Common Questions

Is this notice a bill?


No. It informs you about the information we’ve received.

Why did it take you so long to contact me about this matter?

Tax years generally end on Dec. 31, but we don't receive information from banks, businesses, and other payers until much later. Once we receive all the tax returns and payer information, we compare the information you reported with the information the third party payers provided to us. It can take 8 months or more to complete the review.

Should I call with my response or mail it in?

If you have a simple response, such as directing us to a specific line on your original return where you reported the income, you can call a Customer Service Representative and provide the information. A toll-free number is listed in the top right hand corner of the notice.   

A written response may be required if the issue is more involved, especially if you disagree with some of the proposed changes. You may want to mail copies of payer information documents, such as Form(s) 1099 or Schedule(s) K-1. Include any other letters or documents that support your position. You should submit a written statement to fully explain any unusual tax situations.

I need more time to find my records and go through them all.  Will you allow me additional time to respond?

Your response is due by the date shown on the notice or we'll use the proposed changes to continue processing the case. If you need more time to research your records, you can call the toll-free number at the top of your notice to request a 30 day extension. We may also provide additional time to respond if you have unusual circumstances.  

What should I do to avoid problems like this in the future?

Keep accurate payment information from banks and other payers to verify you've received all payment information for filing your return. Review the documents to be sure they show your most current address.  

Take the following actions when filing your tax return to avoid similar issues in the future:

  • Report specific income type on the correct line on the Form 1120, U.S. Corporation Income Tax Return. For example, rental income should be claimed on Form 1120, line 6 (Gross Rents).  For additional information, please see the reporting instructions for Form 1120.
  • If you report income on a line not traditionally reserved for that type of income, please provide us with a statement indicating where the income was reported. For example, your business is related to investment activity and you're reporting all interest income (including amounts reported to the IRS on Form 1099-INT, Interest Income) with your gross receipts on Form 1120, line 1.
  • Always attach a statement identifying the source of the amount reported on Form 1120, line 10 (Other Income).
  • Provide an attached statement explaining your percentage of gross proceeds (ex; reported to us on Form 1099-MISC) that you would be liable to claim on your tax return. 
  • Generally, if you receive a Form 1099 for amounts that actually belong to another person, you are considered a nominee recipient.  You must file a Form 1099 with the IRS (the same type of Form 1099 you received) for each of the other owners showing the amounts applicable to each.  

Tax publications you may find useful

 

Page Last Reviewed or Updated: 28-Feb-2014

How to get help

  • Call the 1-800 number listed on the top right corner of your notice.
  • Authorize someone (e.g., accountant) to contact the IRS on your behalf using Form 2848.
  • See if you qualify for help from a Low Income Taxpayer Clinic.
     

The Form 1040 2010

Form 1040 2010 4. Form 1040 2010   Underpayment Penalty for 2013 Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: General RuleFarmers and fishermen. Form 1040 2010 Higher income taxpayers. Form 1040 2010 Minimum required for higher income taxpayers. Form 1040 2010 Estate or trust payments of estimated tax. Form 1040 2010 Lowering or eliminating the penalty. Form 1040 2010 ExceptionsLess Than $1,000 Due No Tax Liability Last Year Figuring Your Required Annual Payment (Part I) Short Method for Figuring the Penalty (Part III) Regular Method for Figuring the Penalty (Part IV)Figuring Your Underpayment (Part IV, Section A) Worksheet for Form 2210, Part IV, Section B—Figuring the Penalty Annualized Income Installment Method (Schedule AI) Farmers and Fishermen Waiver of PenaltyFarmers and fishermen. Form 1040 2010 Introduction If you did not pay enough tax, either through withholding or by making timely estimated tax payments, you will have underpaid your estimated tax and may have to pay a penalty. Form 1040 2010 You may understand this chapter better if you can refer to a copy of your latest federal income tax return. Form 1040 2010 No penalty. Form 1040 2010   Generally, you will not have to pay a penalty for 2013 if any of the following apply. Form 1040 2010 The total of your withholding and timely estimated tax payments was at least as much as your 2012 tax. Form 1040 2010 (See Special rules for certain individuals for higher income taxpayers and farmers and fishermen. Form 1040 2010 ) The tax balance due on your 2013 return is no more than 10% of your total 2013 tax, and you paid all required estimated tax payments on time. Form 1040 2010 Your total tax for 2013 (defined later) minus your withholding is less than $1,000. Form 1040 2010 You did not have a tax liability for 2012. Form 1040 2010 You did not have any withholding taxes and your current year tax (less any household employment taxes) is less than $1,000. Form 1040 2010 IRS can figure the penalty for you. Form 1040 2010   If you think you owe the penalty, but you do not want to figure it yourself when you file your tax return, you may not have to. Form 1040 2010 Generally, the IRS will figure the penalty for you and send you a bill. Form 1040 2010   You only need to figure your penalty in the following three situations. Form 1040 2010 You are requesting a waiver of part, but not all, of the penalty. Form 1040 2010 You are using the annualized income installment method to figure the penalty. Form 1040 2010 You are treating the federal income tax withheld from your income as paid on the dates actually withheld. Form 1040 2010 However, if these situations do not apply to you, and you think you can lower or eliminate your penalty, complete Form 2210 or Form 2210-F and attach it to your return. Form 1040 2010 See Form 2210 , later. Form 1040 2010 Topics - This chapter discusses: The general rule for the underpayment penalty, Special rules for certain individuals, Exceptions to the underpayment penalty, How to figure your underpayment and the amount of your penalty on Form 2210, and How to ask the IRS to waive the penalty. Form 1040 2010 Useful Items - You may want to see: Form (and Instructions) 2210 Underpayment of Estimated Tax by Individuals, Estates, and Trusts 2210-F Underpayment of Estimated Tax by Farmers and Fishermen See chapter 5 for information about getting these forms. Form 1040 2010 General Rule In general, you may owe a penalty for 2013 if the total of your withholding and timely estimated tax payments did not equal at least the smaller of: 90% of your 2013 tax, or 100% of your 2012 tax. Form 1040 2010 (Your 2012 tax return must cover a 12-month period. Form 1040 2010 ) Your 2013 tax, for this purpose, is defined under Total tax for 2013 , later. Form 1040 2010 Special rules for certain individuals. Form 1040 2010   There are special rules for farmers and fishermen and certain higher income taxpayers. Form 1040 2010 Farmers and fishermen. Form 1040 2010   If at least two-thirds of your gross income for 2012 or 2013 is from farming or fishing, substitute  662/3% for 90% in (1) above. Form 1040 2010   See Farmers and Fishermen , later. Form 1040 2010 Higher income taxpayers. Form 1040 2010   If your AGI for 2012 was more than $150,000 ($75,000 if your 2013 filing status is married filing a separate return), substitute 110% for 100% in (2) under General Rule . Form 1040 2010 This rule does not apply to farmers or fishermen. Form 1040 2010   For 2012, AGI is the amount shown on Form 1040, line 37; Form 1040A, line 21; and Form 1040EZ, line 4. Form 1040 2010 Penalty figured separately for each period. Form 1040 2010   Because the penalty is figured separately for each payment period, you may owe a penalty for an earlier payment period even if you later paid enough to make up the underpayment. Form 1040 2010 This is true even if you are due a refund when you file your income tax return. Form 1040 2010 Example. Form 1040 2010 You did not make estimated tax payments for 2013 because you thought you had enough tax withheld from your wages. Form 1040 2010 Early in January 2014, you made an estimate of your total 2013 tax. Form 1040 2010 Then you realized that your withholding was $2,000 less than the amount needed to avoid a penalty for underpayment of estimated tax. Form 1040 2010 On January 10, you made an estimated tax payment of $3,000, which is the difference between your withholding and your estimate of your total tax. Form 1040 2010 Your final return shows your total tax to be $50 less than your estimate, so you are due a refund. Form 1040 2010 You do not owe a penalty for your payment due January 15, 2014. Form 1040 2010 However, you may owe a penalty through January 10, 2014, the day you made the $3,000 payment, for your underpayments for the earlier payment periods. Form 1040 2010 Minimum required each period. Form 1040 2010   You will owe a penalty for any 2013 payment period for which your estimated tax payment plus your withholding for the period and overpayments applied from previous periods was less than the smaller of: 22. Form 1040 2010 5% of your 2013 tax, or 25% of your 2012 tax. Form 1040 2010 (Your 2012 tax return must cover a 12-month period. Form 1040 2010 ) Minimum required for higher income taxpayers. Form 1040 2010   If you are subject to the rule for higher income taxpayers, discussed above, substitute 27. Form 1040 2010 5% for 25% in (2) under General Rule . Form 1040 2010 When penalty is charged. Form 1040 2010   If you miss a payment or you paid less than the minimum required in a period, you may be charged an underpayment penalty from the date the amount was due to the date the payment is made. Form 1040 2010 If a payment is mailed, the date of the U. Form 1040 2010 S. Form 1040 2010 postmark is considered the date of payment. Form 1040 2010   If a payment is made electronically, the date the payment is shown on your payment account (checking, savings, etc. Form 1040 2010 ) is considered to be the date of payment. Form 1040 2010 Estate or trust payments of estimated tax. Form 1040 2010   If you have estimated taxes credited to you from an estate or trust (Schedule K-1 (Form 1041)), treat the payment as made by you on January 15, 2014. Form 1040 2010 Amended returns. Form 1040 2010    If you file an amended return by the due date of your original return, use the tax shown on your amended return to figure your required estimated tax payments. Form 1040 2010 If you file an amended return after the due date of the original return, use the tax shown on the original return. Form 1040 2010   However, if you and your spouse file a joint return after the due date to replace separate returns you originally filed by the due date, use the tax shown on the joint return to figure your required estimated tax payments. Form 1040 2010 This rule applies only if both original separate returns were filed on time. Form 1040 2010 2012 separate returns and 2013 joint return. Form 1040 2010    If you file a joint return with your spouse for 2013, but you filed separate returns for 2012, your 2012 tax is the total of the tax shown on your separate returns. Form 1040 2010 You filed a separate return if you filed as single, head of household, or married filing separately. Form 1040 2010 2012 joint return and 2013 separate returns. Form 1040 2010    If you file a separate return for 2013, but you filed a joint return with your spouse for 2012, your 2012 tax is your share of the tax on the joint return. Form 1040 2010 You are filing a separate return if you file as single, head of household, or married filing separately. Form 1040 2010   To figure your share of the taxes on a joint return, first figure the tax both you and your spouse would have paid had you filed separate returns for 2012 using the same filing status as for 2013. Form 1040 2010 Then multiply the tax on the joint return by the following fraction. Form 1040 2010   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. Form 1040 2010 Lisa and Paul filed a joint return for 2012 showing taxable income of $49,000 and a tax of $6,484. Form 1040 2010 Of the $49,000 taxable income, $41,000 was Lisa's and the rest was Paul's. Form 1040 2010 For 2013, they file married filing separately. Form 1040 2010 Lisa figures her share of the tax on the 2012 joint return as follows. Form 1040 2010 2012 tax on $41,000 based on a separate return $ 6,286 2012 tax on $8,000 based on a  separate return 803 Total $ 7,089 Lisa's percentage of total tax  ($6,286 ÷ $ 7,089) 88. Form 1040 2010 67% Lisa's part of tax on joint return ($6,484 × 88. Form 1040 2010 67%) $ 5,749 Form 2210. Form 1040 2010   In most cases, you do not need to file Form 2210. Form 1040 2010 The IRS will figure the penalty for you and send you a bill. Form 1040 2010 If you want us to figure the penalty for you, leave the penalty line on your return blank. Form 1040 2010 Do not file Form 2210. Form 1040 2010   To determine if you should file Form 2210, see Part II of Form 2210. Form 1040 2010 If you decide to figure your penalty, complete Part I, Part II, and either Part III or Part IV of the form and the Penalty Worksheet in the Instructions for Form 2210. Form 1040 2010 If you use Form 2210, you cannot file Form 1040EZ. Form 1040 2010   On Form 1040, enter the amount of your penalty on line 77. Form 1040 2010 If you owe tax on line 76, add the penalty to your tax due and show your total payment on line 76. Form 1040 2010 If you are due a refund, subtract the penalty from the overpayment and enter the result on line 73. Form 1040 2010   On Form 1040A, enter the amount of your penalty on line 46. Form 1040 2010 If you owe tax on line 45, add the penalty to your tax due and show your total payment on line 45. Form 1040 2010 If you are due a refund, subtract the penalty from the overpayment and enter the result on line 42. Form 1040 2010 Lowering or eliminating the penalty. Form 1040 2010    You may be able to lower or eliminate your penalty if you file Form 2210. Form 1040 2010 You must file Form 2210 with your return if any of the following applies. Form 1040 2010 You request a waiver. Form 1040 2010 See Waiver of Penalty , later. Form 1040 2010 You use the annualized income installment method. Form 1040 2010 See the explanation of this method under Annualized Income Installment Method (Schedule AI) . Form 1040 2010 You use your actual withholding for each payment period for estimated tax purposes. Form 1040 2010 See Actual withholding method under Figuring Your Underpayment (Part IV, Section A). Form 1040 2010 You base any of your required installments on the tax shown on your 2012 return and you filed or are filing a joint return for either 2012 or 2013, but not for both years. Form 1040 2010 Exceptions Generally, you do not have to pay an underpayment penalty if either: Your total tax is less than $1,000, or You had no tax liability last year. Form 1040 2010 Less Than $1,000 Due You do not owe a penalty if the total tax shown on your return minus the amount you paid through withholding (including excess social security and tier 1 railroad retirement (RRTA) tax withholding) is less than $1,000. Form 1040 2010 Total tax for 2013. Form 1040 2010   For 2013, your total tax on Form 1040 is the amount on line 61 reduced by the following. Form 1040 2010    Unreported social security and Medicare tax or RRTA tax from Forms 4137 or 8919 (line 57). Form 1040 2010 Any tax included on line 58 for excess contributions to IRAs, Archer MSAs, Coverdell education savings accounts, and health savings accounts, or any tax on excess accumulations in qualified retirement plans. Form 1040 2010 The following write-ins on line 60: Uncollected social security and Medicare tax or RRTA tax on tips or group-term life insurance, Tax on excess golden parachute payments, Excise tax on insider stock compensation from an expatriated corporation, Look-back interest due under section 167(g), Look-back interest due under section 460(b), Recapture of federal mortgage subsidy, and Additional tax on advance payments of health coverage tax credit when not eligible. Form 1040 2010 Any refundable credit amounts listed on lines 64a, 65, 66, 70, and any credit from Form 8885 included on line 71. Form 1040 2010   If you filed Form 1040A, your 2013 total tax is the amount on line 35 reduced by any refundable credits on lines 38a, 39, and 40. Form 1040 2010   If you filed Form 1040EZ, your 2013 total tax is the amount on line 10 reduced by the amount on line 8a. Form 1040 2010 Note. Form 1040 2010 When figuring the amount on line 60, include household employment taxes only if you had federal income tax withheld from your income or you would owe the penalty even if you did not include those taxes. Form 1040 2010 Paid through withholding. Form 1040 2010    For 2013, the amount you paid through withholding on Form 1040 is the amount on line 62 plus any excess social security or tier 1 RRTA tax withholding on line 69. Form 1040 2010 Add to that any write-in amount on line 72 identified as “Form 8689. Form 1040 2010 ” On Form 1040A, the amount you paid through withholding is the amount on line 36 plus any excess social security or tier 1 RRTA tax withholding included on line 41. Form 1040 2010 On Form 1040EZ, it is the amount on line 7. Form 1040 2010 No Tax Liability Last Year You do not owe a penalty if you had no tax liability last year and you were a U. Form 1040 2010 S. Form 1040 2010 citizen or resident for the whole year. Form 1040 2010 For this rule to apply, your tax year must have included all 12 months of the year. Form 1040 2010 You had no tax liability for 2012 if your total tax was zero or you were not required to file an income tax return. Form 1040 2010 Example. Form 1040 2010 Ray, who is single and 22 years old, was unemployed for a few months during 2012. Form 1040 2010 He earned $6,700 in wages before he was laid off, and he received $1,400 in unemployment compensation afterwards. Form 1040 2010 He had no other income. Form 1040 2010 Even though he had gross income of $8,100, he did not have to pay income tax because his gross income was less than the filing requirement for a single person under age 65 ($9,750 for 2012). Form 1040 2010 He filed a return only to have his withheld income tax refunded to him. Form 1040 2010 In 2013, Ray began regular work as an independent contractor. Form 1040 2010 Ray made no estimated tax payments in 2013. Form 1040 2010 Even though he did owe tax at the end of the year, Ray does not owe the underpayment penalty for 2013 because he had no tax liability in 2012. Form 1040 2010 Total tax for 2012. Form 1040 2010   For 2012, your total tax on Form 1040 is the amount on line 61 reduced by the following. Form 1040 2010    Unreported social security and Medicare tax or RRTA tax from Forms 4137 or 8919 (line 57). Form 1040 2010 Any tax included on line 58 for excess contributions to IRAs, Archer MSAs, Coverdell education savings accounts, and health savings accounts, or any tax on excess accumulations in qualified retirement plans. Form 1040 2010 The following write-ins on line 60: Uncollected social security and Medicare tax or RRTA tax on tips or group-term life insurance, Tax on excess golden parachute payments, Excise tax on insider stock compensation from an expatriated corporation, Look-back interest due under section 167(g), Look-back interest due under section 460(b), Recapture of federal mortgage subsidy, and Additional tax on advance payments of health coverage tax credit when not eligible. Form 1040 2010 Any refundable credit amounts listed on lines 64a, 65, 66, 70, and credits from Forms 8801 (line 27 only), and 8885 included on line 71. Form 1040 2010   If you filed Form 1040A, your 2012 total tax is the amount on line 35 reduced by any refundable credits on lines 38a, 39, and 40. Form 1040 2010   If you filed Form 1040EZ, your 2012 total tax is the amount on line 11 reduced by the amount on line 8a. Form 1040 2010 Figuring Your Required Annual Payment (Part I) Figure your required annual payment in Part I of Form 2210, following the line-by-line instructions. Form 1040 2010 If you rounded the entries on your tax return to whole dollars, you can round on Form 2210. Form 1040 2010 Example. Form 1040 2010 The tax on Lori Lane's 2012 return was $12,400. Form 1040 2010 Her AGI was not more than $150,000 for either 2012 or 2013. Form 1040 2010 The tax on her 2013 return (Form 1040, line 55) is $13,044. Form 1040 2010 Line 56 (self-employment tax) is $8,902. Form 1040 2010 Her 2013 total tax is $21,946. Form 1040 2010 For 2013, Lori had $1,600 income tax withheld and made four equal estimated tax payments ($1,000 each). Form 1040 2010 90% of her 2013 tax is $19,751. Form 1040 2010 Because she paid less than her 2012 tax ($12,400) and less than 90% of her 2013 tax ($19,751), and does not meet an exception, Lori knows that she owes a penalty for underpayment of estimated tax. Form 1040 2010 The IRS will figure the penalty for Lori, but she decides to figure it herself on Form 2210 and pay it with her taxes when she files her tax return. Form 1040 2010 Lori's required annual payment is $12,400 (100% of 2012 tax) because that is smaller than 90% of her 2013 tax. Form 1040 2010 Different 2012 filing status. Form 1040 2010    If you file a separate return for 2013, but you filed a joint return with your spouse for 2012, see 2012 joint return and 2013 separate returns , earlier, to figure the amount to enter as your 2012 tax on line 8 of Form 2210. Form 1040 2010 Short Method for Figuring the Penalty (Part III) You may be able to use the short method in Part III of Form 2210 to figure your penalty for underpayment of estimated tax. Form 1040 2010 If you qualify to use this method, it will result in the same penalty amount as the regular method. Form 1040 2010 However, either the annualized income installment method or the actual withholding method, explained later, may result in a smaller penalty. Form 1040 2010 You can use the short method only if you meet one of the following requirements. Form 1040 2010 You made no estimated tax payments for 2013 (it does not matter whether you had income tax withholding). Form 1040 2010 You paid the same amount of estimated tax on each of the four payment due dates. Form 1040 2010 If you do not meet either requirement, figure your penalty using the regular method in Part IV of Form 2210 and the Penalty Worksheet in the instructions. Form 1040 2010 Note. Form 1040 2010 If any payment was made before the due date, you can use the short method, but the penalty may be less if you use the regular method. Form 1040 2010 However, if the payment was only a few days early, the difference is likely to be small. Form 1040 2010 You cannot use the short method if any of the following apply. Form 1040 2010 You made any estimated tax payments late. Form 1040 2010 You checked box C or D in Part II of Form 2210. Form 1040 2010 You are filing Form 1040NR or 1040NR-EZ and you did not receive wages as an employee subject to U. Form 1040 2010 S. Form 1040 2010 income tax withholding. Form 1040 2010 If you use the short method, you cannot use the annualized income installment method to figure your underpayment for each payment period. Form 1040 2010 Also, you cannot use your actual withholding during each period to figure your payments for each period. Form 1040 2010 These methods, which may give you a smaller penalty amount, are explained under Figuring Your Underpayment (Part IV, Section A). Form 1040 2010 Complete Part III of Form 2210 following the line-by-line instructions in the Instructions for Form 2210. Form 1040 2010 Regular Method for Figuring the Penalty (Part IV) You can use the regular method in Part IV of Form 2210 to figure your penalty for underpayment of estimated tax if you paid one or more estimated tax payments earlier than the due date. Form 1040 2010 You must use the regular method in Part IV of Form 2210 to figure your penalty for underpayment of estimated tax if any of the following apply to you. Form 1040 2010 You paid one or more estimated tax payments on a date after the due date. Form 1040 2010 You paid at least one, but less than four, installments of estimated tax. Form 1040 2010 You paid estimated tax payments in un- equal amounts. Form 1040 2010 You use the annualized income installment method to figure your underpayment for each payment period. Form 1040 2010 You use your actual withholding during each payment period to figure your payments. Form 1040 2010 Under the regular method, figure your underpayment for each payment period in Section A, then figure your penalty using the Penalty Worksheet in the Instructions for Form 2210. Form 1040 2010 Enter the results on line 27 of Section B. Form 1040 2010 Figuring Your Underpayment (Part IV, Section A) Figure your underpayment of estimated tax for each payment period in Section A following the line-by-line instructions in the Instructions for Form 2210. Form 1040 2010 Complete lines 20 through 26 of the first column before going to line 20 of the next column. Form 1040 2010 Required installments—line 18. Form 1040 2010   Your required payment for each payment period (line 18) is usually one-fourth of your required annual payment (Part I, line 9). Form 1040 2010 This method—the regular method—is the one to use if you received your income evenly throughout the year. Form 1040 2010   However, if you did not receive your income evenly throughout the year, you may be able to lower or eliminate your penalty by figuring your underpayment using the annualized income installment method. Form 1040 2010 First complete Schedule AI (Form 2210), then enter the amounts from line 25 of that schedule on line 18 of Form 2210, Part IV. Form 1040 2010 See Annualized Income Installment Method (Schedule AI), later. Form 1040 2010 Payments made—line 19. Form 1040 2010   Enter in each column the total of: Your estimated tax paid after the due date for the previous column and by the due date shown at the top of the column, and One-fourth of your withholding. Form 1040 2010 For special rules for figuring your payments, see Form 2210 instructions for line 19. Form 1040 2010   If you file Form 1040, your withholding is the amount on line 62, plus any excess social security or tier 1 RRTA tax withholding on line 69. Form 1040 2010 If you file Form 1040A, your withholding is the amount on line 36 plus any excess social security or tier 1 RRTA tax withholding included in line 41. Form 1040 2010 Actual withholding method. Form 1040 2010    Instead of using one-fourth of your withholding for each quarter, you can choose to use the amounts actually withheld by each due date. Form 1040 2010 You can make this choice separately for the tax withheld from your wages and for all other withholding. Form 1040 2010 This includes any excess social security and tier 1 RRTA tax withheld. Form 1040 2010   Using your actual withholding may result in a smaller penalty if most of your withholding occurred early in the year. Form 1040 2010   If you use your actual withholding, you must check box D in Form 2210, Part II. Form 1040 2010 Then complete Form 2210 using the regular method (Part IV) and file it with your return. Form 1040 2010 Worksheet for Form 2210, Part IV, Section B—Figuring the Penalty Figure the amount of your penalty for Section B using the Penalty Worksheet in the Form 2210 instructions. Form 1040 2010 The penalty is imposed on each underpayment amount shown on Form 2210, Section A, line 25, for the number of days that it remained unpaid. Form 1040 2010 For 2013, there are four rate periods—April 16 through June 30, July 1 through September 30, October 1 through December 31, and January 1, 2014 through April 15, 2014. Form 1040 2010 A 3% rate applies to all four periods. Form 1040 2010 Payments. Form 1040 2010    Before completing the Penalty Worksheet, it may be helpful to make a list of the payments you made and income tax withheld after the due date (or the last day payments could be made on time) for the earliest payment period an underpayment occurred. Form 1040 2010 For example, if you had an underpayment for the first payment period, list your payments after April 15, 2013. Form 1040 2010 You can use the table in the Form 2210 instructions to make your list. Form 1040 2010 Follow those instructions for listing income tax withheld and payments made with your return. Form 1040 2010 Use the list to determine when each underpayment was paid. Form 1040 2010   If you mail your estimated tax payments, use the date of the U. Form 1040 2010 S. Form 1040 2010 postmark as the date of payment. Form 1040 2010 Line 1b. Form 1040 2010   Apply the payments listed to underpayment balance in the first column until it is fully paid. Form 1040 2010 Apply payments in the order made. Form 1040 2010 Figuring the penalty. Form 1040 2010   If an underpayment was paid in two or more payments on different dates, you must figure the penalty separately for each payment. Form 1040 2010 On line 3 of the Penalty Worksheet enter the number of days between the due date (line 2) and the date of each payment on line 1b. Form 1040 2010 On line 4 figure the penalty for the amount of each payment applied on line 1b or the amount remaining unpaid. Form 1040 2010 If no payments are applied, figure the penalty on the amount on line 1a. Form 1040 2010 Aid for counting days. Form 1040 2010    Table 4-1 provides a simple method for counting the number of days between a due date and a payment date. Form 1040 2010 Find the number for the date the payment was due by going across to the column of the month the payment was due and moving down the column to the due date. Form 1040 2010 In the same manner, find the number for the date the payment was made. Form 1040 2010 Subtract the due date “number” from the payment date “number. Form 1040 2010 ”   For example, if a payment was due on June 15 (61), but was not paid until September 1 (139), the payment was 78 (139 – 61) days late. Form 1040 2010 Table 4-1. Form 1040 2010 Calendar To Determine the Number of Days a Payment Is Late Instructions. Form 1040 2010 Use this table with Form 2210 if you are completing Part IV, Section B. Form 1040 2010 First, find the number for the payment due date by going across to the column of the month the payment was due and moving down the column to the due date. Form 1040 2010 Then, in the same manner, find the number for the date the payment was made. Form 1040 2010 Finally, subtract the due date number from the payment date number. Form 1040 2010 The result is the number of days the payment is late. Form 1040 2010 Example. Form 1040 2010 The payment due date is June 15 (61). Form 1040 2010 The payment was made on November 4 (203). Form 1040 2010 The payment is 142 days late (203 – 61). Form 1040 2010 Tax Year 2013 Day of 2013 2013 2013 2013 2013 2013 2013 2013 2013 2014 2014 2014 2014 Month April May June July Aug. Form 1040 2010 Sept. Form 1040 2010 Oct. Form 1040 2010 Nov. Form 1040 2010 Dec. Form 1040 2010 Jan. Form 1040 2010 Feb. Form 1040 2010 Mar. Form 1040 2010 Apr. Form 1040 2010 1   16 47 77 108 139 169 200 230 261 292 320 351 2   17 48 78 109 140 170 201 231 262 293 321 352 3   18 49 79 110 141 171 202 232 263 294 322 353 4   19 50 80 111 142 172 203 233 264 295 323 354 5   20 51 81 112 143 173 204 234 265 296 324 355 6   21 52 82 113 144 174 205 235 266 297 325 356 7   22 53 83 114 145 175 206 236 267 298 326 357 8   23 54 84 115 146 176 207 237 268 299 327 358 9   24 55 85 116 147 177 208 238 269 300 328 359 10   25 56 86 117 148 178 209 239 270 301 329 360 11   26 57 87 118 149 179 210 240 271 302 330 361 12   27 58 88 119 150 180 211 241 272 303 331 362 13   28 59 89 120 151 181 212 242 273 304 332 363 14   29 60 90 121 152 182 213 243 274 305 333 364 15 0 30 61 91 122 153 183 214 244 275 306 334 365 16 1 31 62 92 123 154 184 215 245 276 307 335   17 2 32 63 93 124 155 185 216 246 277 308 336   18 3 33 64 94 125 156 186 217 247 278 309 337   19 4 34 65 95 126 157 187 218 248 279 310 338   20 5 35 66 96 127 158 188 219 249 280 311 339   21 6 36 67 97 128 159 189 220 250 281 312 340   22 7 37 68 98 129 160 190 221 251 282 313 341   23 8 38 69 99 130 161 191 222 252 283 314 342   24 9 39 70 100 131 162 192 223 253 284 315 343   25 10 40 71 101 132 163 193 224 254 285 316 344   26 11 41 72 102 133 164 194 225 255 286 317 345   27 12 42 73 103 134 165 195 226 256 287 318 346   28 13 43 74 104 135 166 196 227 257 288 319 347   29 14 44 75 105 136 167 197 228 258 289   348   30 15 45 76 106 137 168 198 229 259 290   349   31   46   107 138   199   260 291   350   Annualized Income Installment Method (Schedule AI) If you did not receive your income evenly throughout the year (for example, your income from a shop you operated at a marina was much larger in the summer than it was during the rest of the year), you may be able to lower or eliminate your penalty by figuring your underpayment using the annualized income installment method. Form 1040 2010 Under this method, your required installment (Part IV, line 18) for one or more payment periods may be less than one-fourth of your required annual payment. Form 1040 2010 To figure your underpayment using this method, complete Form 2210, Schedule AI. Form 1040 2010 Schedule AI annualizes your tax at the end of each payment period based on your income, deductions, and other items relating to events that occurred from the beginning of the tax year through the end of the period. Form 1040 2010 If you use the annualized income installment method, you must check box C in Part II of Form 2210. Form 1040 2010 Also, you must attach Form 2210 and Schedule AI to your return. Form 1040 2010 If you use Schedule AI for any payment due date, you must use it for all payment due dates. Form 1040 2010 Completing Schedule AI. Form 1040 2010   Follow the Form 2210 instructions to complete Schedule AI. Form 1040 2010 For each period shown on Schedule AI, figure your income and deductions based on your method of accounting. Form 1040 2010 If you use the cash method of accounting (used by most people), include all income actually or constructively received during the period and all deductions actually paid during the period. Form 1040 2010 Note. Form 1040 2010 Each period includes amounts from the previous period(s). Form 1040 2010 Period (a) includes items for January 1 through March 31. Form 1040 2010 Period (b) includes items for January 1 through May 31. Form 1040 2010 Period (c) includes items for January 1 through August 31. Form 1040 2010 Period (d) includes items for the entire year. Form 1040 2010 Farmers and Fishermen If you are a farmer or fisherman, the following special rules for underpayment of estimated tax apply to you. Form 1040 2010 The penalty for underpaying your 2013 estimated tax will not apply if you file your return and pay all the tax due by March 3, 2014. Form 1040 2010 If you are a fiscal year taxpayer, the penalty will not apply if you file your return and pay the tax due by the first day of the third month after the end of your tax year. Form 1040 2010 Any penalty you owe for underpaying your 2013 estimated tax will be figured from one payment due date, January 15, 2014. Form 1040 2010 The underpayment penalty for 2013 is figured on the difference between the amount of 2013 withholding plus estimated tax paid by the due date and the smaller of: 662/3% (rather than 90%) of your 2013 tax, or 100% of the tax shown on your 2012 return. Form 1040 2010 Even if these special rules apply to you, you will not owe the penalty if you meet either of the two conditions discussed under Exceptions . Form 1040 2010 See Who Must Pay Estimated Tax in chapter 2 for the definition of a farmer or fisherman who is eligible for these special rules. Form 1040 2010 Form 2210-F. Form 1040 2010   Use Form 2210-F to figure any underpayment penalty. Form 1040 2010 Do not attach it to your return unless you check a box in Part I. Form 1040 2010 However, if none of the boxes apply to you and you owe a penalty, you do not need to attach Form 2210-F. Form 1040 2010 Enter the amount from line 16 on Form 1040, line 77 and add the penalty to any balance due on your return or subtract it from your refund. Form 1040 2010 Keep your filled-in Form 2210-F for your records. Form 1040 2010    If none of the boxes on Form 2210-F apply to you and you owe a penalty, the IRS can figure your penalty and send you a bill. Form 1040 2010 Waiver of Penalty The IRS can waive the penalty for underpayment if either of the following applies. Form 1040 2010 You did not make a payment because of a casualty, disaster, or other unusual circumstance and it would be inequitable to impose the penalty. Form 1040 2010 You retired (after reaching age 62) or became disabled in 2012 or 2013 and both the following requirements are met. Form 1040 2010 You had a reasonable cause for not making the payment. Form 1040 2010 Your underpayment was not due to willful neglect. Form 1040 2010 How to request a waiver. Form 1040 2010   To request a waiver, see the Instructions for Form 2210. Form 1040 2010 Farmers and fishermen. Form 1040 2010   To request a waiver, see the Instructions for Form 2210-F. Form 1040 2010 Federally declared disaster. Form 1040 2010   Certain estimated tax payment deadlines for taxpayers who reside or have a business in a federally declared disaster area are postponed for a period during and after the disaster. Form 1040 2010 During the processing of your tax return, the IRS automatically identifies taxpayers located in a covered disaster area (by county or parish) and applies the appropriate penalty relief. Form 1040 2010 Do not file Form 2210 or 2210-F if your underpayment was due to a federally declared disaster. Form 1040 2010 If you still owe a penalty after the automatic waiver is applied, we will send you a bill. Form 1040 2010   Individuals, estates, and trusts not in a covered disaster area but whose books, records, or tax professionals' offices are in a covered area are also entitled to relief. Form 1040 2010 Also eligible are relief workers affiliated with a recognized government or charitable organization assisting in the relief activities in a covered disaster area. Form 1040 2010 If you meet either of these eligibility requirements, you must call the IRS disaster hotline at 1-866-562-5227 and identify yourself as eligible for this relief. Form 1040 2010   Details on the applicable disaster postponement period can be found at IRS. Form 1040 2010 gov. Form 1040 2010 Enter Tax Relief in Disaster Situations. Form 1040 2010 Select the federally declared disaster that affected you. Form 1040 2010    Worksheet 4-1. Form 1040 2010 2013 Form 2210, Schedule AI—Line 12 Qualified Dividends and Capital Gain Tax Worksheet Note. Form 1040 2010 To figure the annualized entries for lines 2, 3, and 5 below, multiply the expected amount for the period by the  annualization amount on line 2 of Schedule AI for the same period. Form 1040 2010                   1. Form 1040 2010 Enter line 11 of your Schedule AI, or line 3 from Worksheet 4-2 1. Form 1040 2010       2. Form 1040 2010 Enter your annualized qualified dividends for the period 2. Form 1040 2010           3. Form 1040 2010 Are you filing Schedule D?               □ Yes. Form 1040 2010 Enter the smaller of your annualized amount from line 15 or line 16 of Schedule D. Form 1040 2010 If either line 15 or line 16 is blank or a loss, enter -0-. Form 1040 2010 3. Form 1040 2010             □ No. Form 1040 2010 Enter your annualized capital gain distributions from Form 1040, line 13             4. Form 1040 2010 Add lines 2 and 3   4. Form 1040 2010           5. Form 1040 2010 If you are claiming investment interest expense on Form 4952, enter your annualized amount from line 4g of that form. Form 1040 2010 Otherwise, enter -0-   5. Form 1040 2010           6. Form 1040 2010 Subtract line 5 from line 4. Form 1040 2010 If zero or less, enter -0- 6. Form 1040 2010       7. Form 1040 2010 Subtract line 6 from line 1. Form 1040 2010 If zero or less, enter -0- 7. Form 1040 2010       8. Form 1040 2010 Enter: $36,900 if single or married filing separately, $73,800 if married filing jointly or qualifying widow(er), $49,400 if head of household. Form 1040 2010 8. Form 1040 2010       9. Form 1040 2010 Enter the smaller of line 1 or line 8 9. Form 1040 2010       10. Form 1040 2010 Enter the smaller of line 7 or line 9 10. Form 1040 2010       11. Form 1040 2010 Subtract line 10 from line 9. Form 1040 2010 This amount is taxed at 0% 11. Form 1040 2010       12. Form 1040 2010 Enter the smaller of line 1 or line 6 12. Form 1040 2010       13. Form 1040 2010 Enter the amount from line 11 13. Form 1040 2010       14. Form 1040 2010 Subtract line 13 from line 12 14. Form 1040 2010       15. Form 1040 2010 Multiply line 14 by 15% (. Form 1040 2010 15) 15. Form 1040 2010   16. Form 1040 2010 Figure the tax on the amount on line 7. Form 1040 2010 If the amount on line 7 is less than $100,000, use the Tax Table in the 2013 Form 1040 instructions to figure this tax. Form 1040 2010 If the amount on line 7 is $100,000 or more, use the Tax Computation Worksheet in the 2013 Form 1040 instructions 16. Form 1040 2010   17. Form 1040 2010 Add lines 15 and 16 17. Form 1040 2010   18. Form 1040 2010 Figure the tax on the amount on line 1. Form 1040 2010 If the amount on line 1 is less than $100,000, use the Tax Table in the 2013 Form 1040 instructions to figure this tax. Form 1040 2010 If the amount on line 1 is $100,000 or more, use the Tax Computation Worksheet in the 2013 Form 1040 instructions 18. Form 1040 2010   19. Form 1040 2010 Tax on all taxable income. Form 1040 2010 Enter the smaller of line 17 or line 18. Form 1040 2010 Also enter this amount on line 12 of Schedule AI in the appropriate column. Form 1040 2010 However, if you are using this worksheet to figure the tax on the amount on line 3 of Worksheet 4-2, enter the amount from line 19 on Worksheet 4-2, line 4 19. Form 1040 2010   Worksheet 4-2. Form 1040 2010 2013 Form 2210, Schedule AI—Line 12 Foreign Earned Income Tax Worksheet Before you begin:If Schedule AI, line 11, is zero for the period, do not complete this worksheet. Form 1040 2010             1. Form 1040 2010 Enter the amount from line 11 of Schedule AI for the period 1. Form 1040 2010   2. Form 1040 2010 Enter the annualized amount* of foreign earned income and housing amount excluded or deducted (from  Form 2555, lines 45 and 50, or Form 2555-EZ, line 18) in figuring the amount entered for the period on line 1  of Schedule AI 2. Form 1040 2010   3. Form 1040 2010 Add lines 1 and 2 3. Form 1040 2010   4. Form 1040 2010 Tax on the amount on line 3. Form 1040 2010 Use the Tax Table, Tax Computation Worksheet, Form 8615**, Qualified Dividends and Capital Gain Tax Worksheet***, or Schedule D Tax Worksheet***, whichever applies. Form 1040 2010 See the 2013 Instructions for Form 1040, line 44, to find out which tax computation method to use. Form 1040 2010 (Note. Form 1040 2010 You do not have to use the same method for each period on Schedule AI. Form 1040 2010 ) 4. Form 1040 2010   5. Form 1040 2010 Tax on the amount on line 2. Form 1040 2010 If the amount on line 2 is less than $100,000, use the Tax Table in the 2013 Form 1040 instructions to figure this tax. Form 1040 2010 If the amount on line 7 is $100,000 or more, use the Tax Computation Worksheet in the 2013 Form 1040 instructions 5. Form 1040 2010   6. Form 1040 2010 Subtract line 5 from line 4. Form 1040 2010 Enter the result here and on line 12 of Schedule AI. Form 1040 2010 If zero or less,  enter -0- 6. Form 1040 2010             * To figure the annualized amount for line 2, multiply the exclusion or deduction for the period by the annualization amount on line 2 of Schedule AI for the same period. Form 1040 2010     ** If you use Form 8615 to figure the tax on line 4 above, enter the amount from line 3 above on line 4 of Form 8615. Form 1040 2010 If the child's parent files Form 2555 or 2555-EZ, enter the amounts from lines 3 and 4 of the parent's Foreign Earned Income Tax Worksheet on lines 6 and 10, respectively, of Form 8615. Form 1040 2010 Complete the rest of Form 8615 according to its instructions. Form 1040 2010 Then complete lines 5 and 6 above. Form 1040 2010     *** Enter the amount from line 3 above on line 1 of the Qualified Dividends and Capital Gain Tax Worksheet (or Worksheet 4-1 in this chapter) or the Schedule D Tax Worksheet, whichever worksheet you use to figure the tax on line 4 above. Form 1040 2010 Complete that worksheet through line 6 (line 10 if you use the Schedule D Tax Worksheet). Form 1040 2010 Next, determine if you have a capital gain excess. Form 1040 2010     Figuring capital gain excess. Form 1040 2010 To find out if you have a capital gain excess for the appropriate period, subtract line 11 of Schedule AI from line 6 of Worksheet 4-1 or your Qualified Dividends and Capital Gain Tax Worksheet (line 10 of your Schedule D Tax Worksheet). Form 1040 2010 If the result is more than zero, that amount is your capital gain excess. Form 1040 2010     No capital gain excess. Form 1040 2010 If you do not have a capital gain excess, complete the rest of Worksheet 4-1, Qualified Dividends and Capital Gain Tax Worksheet, or the Schedule D Tax Worksheet according to the worksheet's instructions. Form 1040 2010 Then complete lines 5 and 6 above. Form 1040 2010     Capital gain excess. Form 1040 2010 If you have a capital gain excess, complete a second Worksheet 4-1, Qualified Dividends and Capital Gain Tax Worksheet, or Schedule D Tax Worksheet (whichever applies) as instructed above but in its entirety and with the following additional modifications. Form 1040 2010 Then complete lines 5 and 6 above. Form 1040 2010     Make the modifications below only for purposes of filling out Worksheet 4-2 above. Form 1040 2010     a. Form 1040 2010 Reduce (but not below zero) the amount you otherwise would enter on line 3 of your Worksheet 4-1, line 3 of your Qualified Dividends and Capital Gain Tax Worksheet, or line 9 of your Schedule D Tax Worksheet by your capital gain excess. Form 1040 2010     b. Form 1040 2010 Reduce (but not below zero) the amount you otherwise would enter on line 2 of your Worksheet 4-1, line 2 of your Qualified Dividends and Capital Gain Tax Worksheet, or line 6 of your Schedule D Tax Worksheet by any of your capital gain excess not used in (a) above. Form 1040 2010     c. Form 1040 2010 Reduce (but not below zero) the amount on your Schedule D (Form 1040), line 18, by your capital gain excess. Form 1040 2010     d. Form 1040 2010 Include your capital gain excess as a loss on line 16 of your Unrecaptured Section 1250 Gain Worksheet in the 2013 Instructions for Schedule D (Form 1040). Form 1040 2010   Prev  Up  Next   Home   More Online Publications