Page 26 - Tax withholding and Estimated Taxes

12:15 - 17-Jun-2020
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The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.
Gross income from fishing includes the fol- and both you and your spouse have net earn-
lowing amounts. How To Figure ings from self-employment, each of you must
• Schedule C (Form 1040 or 1040-SR), complete a separate worksheet.
Profit or Loss From Business, line 7. Estimated Tax
• Income for services as an officer or crew
member of a vessel while the vessel is en- To figure your estimated tax, you must figure Expected Taxable Income—
gaged in fishing. Line 2
• Your share of the gross fishing income your expected AGI, taxable income, taxes, de-
ductions, and credits for the year.
from a partnership, S corporation, estate or Reduce your expected AGI for 2020 (line 1) by
trust, from Schedule K-1 (Form 1065), When figuring your 2020 estimated tax, it either your expected itemized deductions or
Schedule K-1 (Form 1120S), or Sched- may be helpful to use your income, deductions, your standard deduction.
ule K-1 (Form 1041). and credits for 2019 as a starting point. Use
• Certain taxable interest and punitive dam- your 2019 federal tax return as a guide. You Itemized deductions—line 2a. If you expect
age awards received in connection with can use Form 1040-ES to figure your estimated to claim itemized deductions on your 2020 tax
the Exxon Valdez litigation. tax. Nonresident aliens use Form 1040-ES (NR) return, enter the estimated amount on line 2a.
• Income for services normally performed in to figure estimated tax. Itemized deductions are the deductions that
connection with fishing. can be claimed on Schedule A (Form 1040 or
Services normally performed in connection with You must make adjustments both for 1040-SR).
fishing include: changes in your own situation and for recent Standard deduction—line 2a. If you expect
• Shore service as an officer or crew mem- changes in the tax law. Some of these changes to claim the standard deduction on your 2020
ber of a vessel engaged in fishing; and are discussed earlier under What's New for tax return, enter the amount on line 2a. Use
• Services that are necessary for the imme- 2020. For information about these and other Worksheet 2-4 to figure your standard deduc-
diate preservation of the catch, such as changes in the law, visit the IRS website at tion.
cleaning, icing, and packing the catch. IRS.gov.
The instructions for Form 1040-ES include a No standard deduction. The standard de-
Higher-Income Taxpayers worksheet to help you figure your estimated tax. duction for some individuals is zero. Your
Keep the worksheet for your records. standard deduction will be zero if you:
If your AGI for 2019 was more than $150,000 • File a separate return and your spouse
($75,000 if your filing status for 2020 is married 2020 Estimated Tax itemizes deductions,
filing a separate return), substitute 110% for • Are a dual-status alien, or
100% in (2b) under General Rule, later. Worksheet • File a return for a period of less than 12
months because you change your ac-
For 2019, AGI is the amount shown on Form Use Worksheet 2-1 to help guide you through counting period.
1040 or 1040-SR, line 8b. the information about completing the 2020 Esti-
mated Tax Worksheet. You can also find a copy Expected Taxes and Credits—
Note. This rule does not apply to farmers of the worksheet in the instructions for Form Lines 4–11c
and fishermen. 1040-ES.
After you have figured your expected taxable in-
Aliens Expected AGI—Line 1 come (line 3), follow the steps next to figure
your expected taxes, credits, and total tax for
Resident and nonresident aliens may also have Your expected AGI for 2020 (line 1) is your ex- 2020. Most people will have entries for only a
to pay estimated tax. Resident aliens should fol- pected total income minus your expected ad- few of these steps. However, you should check
low the rules in this publication, unless noted justments to income. every step to be sure you don’t overlook any-
otherwise. Nonresident aliens should get Form thing.
1040-ES (NR), U.S. Estimated Tax for Nonresi- Total income. Include in your total income all
dent Alien Individuals. the income you expect to receive during the Step 1. Figure your expected income tax
year, even income that is subject to withholding. (line 4). Generally, you will use the 2020 Tax
You are an alien if you are not a citizen or However, don’t include income that is tax ex- Rate Schedules to figure your expected income
national of the United States. You are a resident empt. tax.
alien if you either have a green card or meet the Total income includes all income and loss However, see below for situations where
substantial presence test. for 2020 that, if you had received it in 2019, you must use a different method to figure your
For more information about withholding, the would have been included on your 2019 tax re- estimated tax.
substantial presence test, and Form 1040-ES turn in the total on line 7b of Form 1040 or Tax on child's investment income. You
(NR), see Pub. 519. 1040-SR. must use a special method to figure tax on the
Social security and railroad retire- income of the following children who have more
Estates and Trusts ment benefits. If you expect to receive than $2,200 of investment income.
social security or tier 1 railroad retire- 1. Children under age 18 at the end of 2020.
Estates and trusts must also pay estimated tax. ment benefits during 2020, use Worksheet 2-2
However, estates (and certain grantor trusts to figure the amount of expected taxable bene- 2. The following children if their earned in-
that receive the residue of the decedent's es- fits you should include on line 1. come isn’t more than half their support.
tate under the decedent's will) are exempt from a. Children age 18 at the end of 2020.
paying estimated tax for the first 2 years after Adjustments to income. Be sure to subtract
the decedent's death. from your expected total income all of the ad- b. Children who are full-time students at
least age 19 but under age 24 at the
Estates and trusts must use Form 1041-ES, justments you expect to take on your 2020 tax end of 2020.
Estimated Income Tax for Estates and Trusts, return.
to figure and pay estimated tax. Self-employed. If you expect to have See Pub. 929, Tax Rules for Children and De-
income from self-employment, use pendents. Although the ages and dollar
Worksheet 2-3 to figure your expected amounts in the publication may be different in
self-employment tax and your allowable deduc- the 2019 revision, this reference will give you
tion for self-employment tax. Include the basic information for figuring the tax.
amount from Worksheet 2-3 in your expected
adjustments to income. If you file a joint return
Page 24 Chapter 2 Estimated Tax for 2020