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Chapter 4
Tax withholding and estimated tax

Introduction

April 15 is the date by which most people file their income tax return for the previous year, but it is not the day most people actually pay their taxes. The bulk of your tax liability is paid during the year, either through money withheld from your paycheck by your employer or through payment of estimated taxes every quarter. The tax system operates on a pay-as-you-go basis, which generally requires that at least 90% of your tax liability be paid during the year.

The tax law imposes severe penalties if you under-withhold or underpay your estimated taxes. Yet, it is clearly not in your best interest to over-withhold or overpay estimated taxes, as the U.S. government does not pay interest on such overpayments. Therefore, it makes financial sense for you to estimate your tax liability as accurately as possible so you neither underpay nor overpay your taxes. This chapter helps you do just that.

Salaries and wages are subject to withholding by your employer regardless of the amount you are paid, the frequency of payment, or the form of payment. Nevertheless, you are entitled to reduce the amount of withholding by filing a completed Form W-4, Employees Withholding Allowance Certificate, with your employer. This form takes into account not only your marital status, personal exemptions, and dependents, but also your estimated deductions and tax credits. Form W-4 may prove especially beneficial if you have large itemized deductions.

Estimated tax payments cover sources of income not subject to withholding, for example, income from partnerships, S corporations, rental property, royalties, self-employment, trusts and estates, interest, dividends, and capital gains. While your tax withholding and estimated payments generally have to cover 90% of your tax liability for you to avoid paying some stiff penalties, this is not always the case. This chapter discusses all the important exceptions.

TAXPLANNER

Starting in 2013, the Affordable Care Act (ACA) imposed two permanent taxes on income. Taxpayers are still learning how these taxes may impact their tax liability and tax returns.

Additional Medicare Tax on wages and compensation. The ACA imposes an Additional Medicare Tax of 0.9% on earned income in excess of $200,000 ($250,000 for married filing jointly, $125,000 for married taxpayers filing separately). For married couples filing jointly, the additional 0.9% tax applies to the couple’s combined wages in excess of $250,000. (These thresholds are not adjusted annually for inflation.) This 0.9% tax is assessed in addition to the basic 1.45% Medicare tax employees already pay. Earned income includes wages and other compensation, as well as self-employment income. There is, however, no corresponding employer portion of the Additional Medicare Tax.

Employers are required to withhold the 0.9% Additional Medicare Tax on wages paid to an employee in excess of $200,000 regardless of the tax filing status (married or single) of the individual indicated on the Form W-4 that you submit to your employer and without regard to any other earned income on which the 0.9% Additional Medicare Tax may be owed. So, you may see this additional tax being withheld even though you may not even be liable for it because, for example, your wages or other compensation together with those of your spouse (when filing a joint return) does not exceed the $250,000 threshold that would make you liable for the 0.9% additional tax. If this is the case, any Additional Medicare Tax withheld from you can be credited against your total tax liability—including income taxes—shown on your income tax return (Form 1040).

On the other hand, since an employer is only allowed to withhold the 0.9% Additional Medicare Tax on wages paid in excess of $200,000, married employees who file separately may have too little of this additional tax withheld. This is because the threshold at which the 0.9% tax kicks in is only $125,000 for married taxpayers filing separately. If this is your situation, you may need to make quarterly estimated tax payments to the IRS to make up the difference and avoid a tax underpayment penalty.

Net investment income tax (NIIT). The other tax enacted by the ACA is the 3.8% NIIT imposed on certain unearned income. It is assessed on the lesser of your net investment income or the excess of your modified adjusted gross income over $200,000 ($250,000 if you are married filing jointly or a qualifying widow(er) with dependent child; $125,000 if married filing separately). Income subject to the 0.9% Additional Medicare Tax is specifically exempted from the 3.8% NIIT, and certain allocable deductions are permitted in arriving at net investment income.

The NIIT falls broadly into three categories:

Investment income including interest, dividends, rents, and annuities not derived in the ordinary course of a trade or business
Trade or business income from passive activities or from trading in financial instruments or commodities
Net gains from the disposition of property not used in a trade or business

For a more complete discussion of the NIIT, see chapter 49.

TAXPLANNER

When employers provide investment-type benefits, which ACA tax do employees pay?

A challenge arises when employers award employees compensation under stock, nonqualified deferred compensation (NQDC), or similar investment-type plans. As explained above, compensation provided by employers to their employees is subject to the 0.9% Additional Medicare Tax while unearned income is subject to the 3.8% NIIT. But, in some cases, the question arises as to which of the two taxes will apply, since the 3.8% NIIT is assessed at a substantially higher rate than the 0.9% Additional Medicare Tax.

Following are two examples where this question may arise:

Qualified retirement and NQDC plans. Compensation deferred from current ordinary federal income tax under qualified retirement plans (e.g., 401(k)) and NQDC plans is subject to the Additional Medicare Tax of 0.9% tax when FICA tax—i.e., Social Security and 1.45% Medicare tax—is due. Subsequent distributions of contributions and earnings from such plans previously subject to FICA tax are exempt from both the Additional Medicare Tax and the NIIT.

An amount paid by an employer to an employee that is treated as wages subject to federal income tax withholding is not considered investment income. So, for example, amounts paid to an employee under an NQDC plan that includes interest credited or other earnings on the deferred amounts are included in wages, and, therefore, are not subject to the 3.8% NIIT.

Restricted stock awards. Under normal federal income tax withholding rules, an employee is taxed when a restricted stock award vests. Upon vesting, federal income tax withholding is required on the excess of the fair market value of the stock award price over the grant price. This amount is also subject to FICA tax, including the new 0.9% Additional Medicare Tax. Subsequent dividends received on the restricted stock award and any capital gains generated if the employee subsequently sells the shares are not subject to the 0.9% Additional Medicare Tax. On the other hand, these dividends and capital gains are considered investment income subject to the 3.8% NIIT.

Tax Breaks and Deductions You Can Use Checklist

Tax withholding. Most people pay their tax liability through withholding from their wages. But there are a number of other items of income that are subject to withholding (either mandatory or at your election). These items include pension distributions, IRA distributions, gambling winnings, and social security benefits. If you don’t want to have to make quarterly estimated tax payments, you can ask that taxes be withheld from some of these payments. And no matter when the withholding takes place during the year, the IRS will treat it as being withheld equally throughout the year, unless you ask otherwise.

Tax refunds. Some people enjoy receiving a large income tax refund after they file their tax return. But a refund isn’t necessarily a good thing—it means you overpaid your taxes during the year. And, because the IRS doesn’t pay you interest on that overpayment, you’ve essentially made an interest-free loan to Uncle Sam. From a financial perspective, you’re probably better off breaking even or paying a balance when you file. However, some people treat over-withholding as forced savings, because they’re afraid they’ll spend the money if it’s included in their paycheck.

Estimated taxes. For people receiving income not subject to withholding, such as income from self-employment, partnerships, S corporations, rental property, royalties, trusts and estates, interest, dividends, and capital gains, the tax liability associated with such income is generally covered through quarterly estimated tax payments. Because many individuals don’t know what their tax liability will be in the coming year, the law allows them to base their estimated tax payments on the previous year’s tax liability. Continue reading this chapter for more details on how to calculate the amount of estimated taxes you need to pay in order to avoid underpayment penalties.

What’s New for 2018

Tax law changes for 2018. When you figure how much income tax you want withheld from your pay and when you figure your estimated tax, consider tax law changes effective in 2018. For more information, see Pub. 505, Tax Withholding and Estimated Tax.

Reminders

Estimated tax safe harbor for higher income taxpayers. If your 2017 adjusted gross income was more than $150,000 ($75,000 if you are married filing a separate return), you must pay the smaller of 90% of your expected tax for 2018 or 110% of the tax shown on your 2017 return to avoid an estimated tax penalty.

Introduction

This chapter discusses how to pay your tax as you earn or receive income during the year. In general, the federal income tax is a pay-as-you-go tax. There are two ways to pay as you go.

Withholding. If you are an employee, your employer probably withholds income tax from your pay. Tax also may be withheld from certain other income, such as pensions, bonuses, commissions, and gambling winnings. The amount withheld is paid to the IRS in your name.
Estimated tax. If you do not pay your tax through withholding, or do not pay enough tax that way, you may have to pay estimated tax. People who are in business for themselves generally will have to pay their tax this way. Also, you may have to pay estimated tax if you receive income such as dividends, interest, capital gains, rent, and royalties. Estimated tax is used to pay not only income tax, but self-employment tax and alternative minimum tax as well.

This chapter explains these methods. In addition, it also explains the following.

Credit for withholding and estimated tax. When you file your 2017 income tax return, take credit for all the income tax withheld from your salary, wages, pensions, etc., and for the estimated tax you paid for 2017. Also take credit for any excess social security or railroad retirement tax withheld (discussed in chapter 38).
Underpayment penalty. If you did not pay enough tax during the year, either through withholding or by making estimated tax payments, you may have to pay a penalty. In most cases, the IRS can figure this penalty for you. See Underpayment Penalty for 2017, at the end of this chapter.

Useful Items

You may want to see:

Publication

505 Tax Withholding and Estimated Tax

Form (and Instructions)

W-4 Employee’s Withholding Allowance Certificate
W-4P Withholding Certificate for Pension or Annuity Payments
W-4S Request for Federal Income Tax Withholding From Sick Pay
W-4V Voluntary Withholding Request
1040-ES Estimated Tax for Individuals
2210 Underpayment of Estimated Tax by Individuals, Estates, and Trusts
2210-F Underpayment of Estimated Tax by Farmers and Fishermen

Tax Withholding for 2018

This section discusses income tax withholding on:

Salaries and wages,
Tips,
Taxable fringe benefits,
Sick pay,
Pensions and annuities,
Gambling winnings,
Unemployment compensation, and
Certain federal payments.

This section explains the rules for withholding tax from each of these types of income.

This section also covers backup withholding on interest, dividends, and other payments.

Salaries and Wages

Income tax is withheld from the pay of most employees. Your pay includes your regular pay, bonuses, commissions, and vacation allowances. It also includes reimbursements and other expense allowances paid under a nonaccountable plan. See Supplemental Wages, later, for more information about reimbursements and allowances paid under a nonaccountable plan. If your income is low enough that you will not have to pay income tax for the year, you may be exempt from withholding. This is explained under Exemption From Withholding, later.

You can ask your employer to withhold income tax from noncash wages and other wages not subject to withholding. If your employer does not agree to withhold tax, or if not enough is withheld, you may have to pay estimated tax, as discussed later under Estimated Tax for 2018.

Military retirees. Military retirement pay is treated in the same manner as regular pay for income tax withholding purposes, even though it is treated as a pension or annuity for other tax purposes.

Household workers. If you are a household worker, you can ask your employer to withhold income tax from your pay. A household worker is an employee who performs household work in a private home, local college club, or local fraternity or sorority chapter. Tax is withheld only if you want it withheld and your employer agrees to withhold it. If you do not have enough income tax withheld, you may have to pay estimated tax, as discussed later under Estimated Tax for 2018.

Farmworkers. Generally, income tax is withheld from your cash wages for work on a farm unless your employer does both of these:

Pays you cash wages of less than $150 during the year, and
Has expenditures for agricultural labor totaling less than $2,500 during the year.

Differential wage payments. When employees are on leave from employment for military duty, some employers make up the difference between the military pay and civilian pay. Payments to an employee who is on active duty for a period of more than 30 days will be subject to income tax withholding, but not subject to social security, Medicare, or federal unemployment (FUTA) tax withholding. The wages and withholding will be reported on Form W-2, Wage and Tax Statement.

Determining Amount of Tax Withheld Using Form W-4

The amount of income tax your employer withholds from your regular pay depends on two things.

The amount you earn in each payroll period.
The information you give your employer on Form W-4.

Form W-4 includes four types of information that your employer will use to figure your withholding.

Whether to withhold at the single rate or at the lower married rate.
How many withholding allowances you claim (each allowance reduces the amount withheld).
Whether you want an additional amount withheld.
Whether you are claiming an exemption from withholding in 2018. See Exemption From Withholding, later.

Note. You must specify a filing status and a number of withholding allowances on Form W-4. You cannot specify only a dollar amount of withholding.

New Job

When you start a new job, you must fill out Form W-4 and give it to your employer. Your employer should have copies of the form. If you need to change the information later, you must fill out a new form. If you work only part of the year (for example, you start working after the beginning of the year), too much tax may be withheld. You may be able to avoid over-withholding if your employer agrees to use the part-year method. See Part-Year Method in chapter 1 of Pub. 505 for more information.

Employee also receiving pension income. If you receive pension or annuity income and begin a new job, you will need to file Form W-4 with your new employer. However, you can choose to split your withholding allowances between your pension and job in any manner.

Changing Your Withholding

During the year changes may occur to your marital status, exemptions, adjustments, deductions, or credits you expect to claim on your tax return. When this happens, you may need to give your employer a new Form W-4 to change your withholding status or your number of allowances.

If the changes reduce the number of allowances you are claiming or change your marital status from married to single, you must give your employer a new Form W-4 within 10 days.

Generally, you can submit a new Form W-4 whenever you wish to change the number of your withholding allowances for any other reason.

Changing your withholding for 2019. If events in 2018 will decrease the number of your withholding allowances for 2019, you must give your employer a new Form W-4 by December 1, 2018. If the event occurs in December 2018, submit a new Form W-4 within 10 days.

Checking Your Withholding

After you have given your employer a Form W-4, you can check to see whether the amount of tax withheld from your pay is too little or too much. If too much or too little tax is being withheld, you should give your employer a new Form W-4 to change your withholding. You should try to have your withholding match your actual tax liability. If not enough tax is withheld, you will owe tax at the end of the year and may have to pay interest and a penalty. If too much tax is withheld, you will lose the use of that money until you get your refund. Always check your withholding if there are personal or financial changes in your life or changes in the law that might change your tax liability.

Note. You cannot give your employer a payment to cover withholding on salaries and wages for past pay periods or a payment for estimated tax.

Completing Form W-4 and Worksheets

Form W-4 has worksheets to help you figure how many withholding allowances you can claim. The worksheets are for your own records. Do not give them to your employer.

Multiple jobs. If you have income from more than one job at the same time, complete only one set of Form W-4 worksheets. Then split your allowances between the Forms W-4 for each job. You cannot claim the same allowances with more than one employer at the same time. You can claim all your allowances with one employer and none with the other(s), or divide them any other way.

Married individuals. If both you and your spouse are employed and expect to file a joint return, figure your withholding allowances using your combined income, adjustments, deductions, exemptions, and credits. Use only one set of worksheets. You can divide your total allowances any way, but you cannot claim an allowance that your spouse also claims.

If you and your spouse expect to file separate returns, figure your allowances using separate worksheets based on your own individual income, adjustments, deductions, exemptions, and credits.

Alternative method of figuring withholding allowances. You do not have to use the Form W-4 worksheets if you use a more accurate method of figuring the number of withholding allowances. For more information, see Alternative method of figuring withholding allowances under Completing Form W-4 and Worksheets in Pub. 505, chapter 1.

Personal Allowances Worksheet. Use the Personal Allowances Worksheet on Form W-4 to figure your withholding allowances based on exemptions and any special allowances that apply.

Deduction and Adjustments Worksheet. Use the Deduction and Adjustments Worksheet on Form W-4 if you plan to itemize your deductions, claim certain credits, or claim adjustments to the income on your 2018 tax return and you want to reduce your withholding. Also, complete this worksheet when you have changes to these items to see if you need to change your withholding.

Two-Earners/Multiple Jobs Worksheet. You may need to complete the Two-Earners/Multiple Jobs Worksheet on Form W-4 if you have more than one job, a working spouse, or are also receiving a pension. Also, on this worksheet you can add any additional withholding necessary to cover any amount you expect to owe other than income tax, such as self-employment tax.

Getting the Right Amount of Tax Withheld

In most situations, the tax withheld from your pay will be close to the tax you figure on your return if you follow these two rules.

You accurately complete all the Form W-4 worksheets that apply to you.
You give your employer a new Form W-4 when changes occur.

But because the worksheets and withholding methods do not account for all possible situations, you may not be getting the right amount withheld. This is most likely to happen in the following situations.

You are married and both you and your spouse work.
You have more than one job at a time.
You have nonwage income, such as interest, dividends, alimony, unemployment compensation, or self-employment income.
You will owe additional amounts with your return, such as self-employment tax.
Your withholding is based on obsolete Form W-4 information for a substantial part of the year.
Your earnings are more than the amount shown under Check your withholding in the instructions at the top of page 1 of Form W-4.
You work only part of the year.
You change the number of your withholding allowances during the year.

Cumulative wage method. If you change the number of your withholding allowances during the year, too much or too little tax may have been withheld for the period before you made the change. You may be able to compensate for this if your employer agrees to use the cumulative wage withholding method for the rest of the year. You must ask your employer in writing to use this method.

To be eligible, you must have been paid for the same kind of payroll period (weekly, biweekly, etc.) since the beginning of the year.

TAXPLANNER

You are liable for severe penalties if you complete a Form W-4 with false information in an attempt to reduce your withholding below the amount you are legally allowed. The form should be filled out carefully and accurately so that the amount of your withholding is the least you are legally allowed but enough to avoid underpayment penalties.

On the other hand, contrary to the belief of many taxpayers, there is not a penalty for over-withholding.

So much emphasis has been put on the accuracy of various worksheets that some taxpayers may have increased their withholding more than they actually want. If you are more comfortable claiming fewer exemptions than you are entitled to so that you can get a nice refund when you file your return, feel free to do so, but remember, it is like giving the government an interest-free loan during the year.

TAXPLANNER

Your Form W-4 should be reviewed periodically as your sources and levels of income change and as your deductible expenses and credits increase or decrease.

Example 1

You have an estimated net loss from a partnership of $2,000, which you would report on Schedule E of your Form 1040. You are not required to make any payments of estimated tax. You may use your $2,000 partnership loss to figure the number of withholding allowances you may claim on your Form W-4.

Example 2

In addition to wages, you have alimony income of $5,000 and an estimated net loss from business of $3,000, which you would report on Schedule C. If you did not have the estimated business loss, you would have been required to make payments of estimated tax on your alimony income of $5,000. The business loss can be netted against the alimony income in order to figure the amount of net income on which you would be required to pay estimated tax—$2,000 in this case. You may not use your business loss to figure your withholding allowances since the loss is already used to offset the alimony income.

Example 3

You have an estimated net loss from your farm of $5,000, which you would report on Schedule F. You would otherwise be required to make payments of estimated tax on rental income of $4,000. To figure your withholding allowances, you may include only $1,000 of your farm loss ($5,000 estimated net loss minus $4,000 income subject to estimated tax).

Example 4

You expect to have itemized deductions of $15,000, which you would report on Schedule A. You also expect to have $9,000 of self-employment income on which you would otherwise have to pay estimated tax. To figure your withholding allowances for Form W-4, you should include only $6,000 of your itemized deductions ($15,000 total itemized deductions minus the $9,000 self-employment income subject to estimated tax). This will, in effect, allow you to withhold through your salary any estimated tax due on your self-employment income. However, you will still be subject to self-employment tax on the $9,000 income.

Rules relating to when you may properly claim withholding allowances. For the purpose of figuring your withholding allowances for estimated deductions and estimated tax credits, estimated means the dollar amount of each item you reasonably expect to claim on your 2018 return. That dollar amount should be no more than the sum of the following:

The amount of each item shown or expected to be shown on your 2017 return that you also reasonably expect to show on your 2018 return
Additional amounts that you can determine for each item for 2018

Additional amounts that can be determined. These are amounts that are not included in (1) and that can be shown to result from identifiable events in 2017 or 2018. Amounts can be shown to result from identifiable events if the amounts relate to payments already made during 2018, to binding obligations to make payments (including payments of taxes) during 2018, and to other events or transactions that have been started and that you can prove at the time you file your Form W-4.

Amounts disallowed by the Internal Revenue Service. Generally, to figure your withholding allowances for 2018, you should not include any amount shown on your 2017 return that has been disallowed by the IRS. If you have not yet filed your 2017 return, you should not include any amount shown on your 2016 return that has been disallowed by the IRS.

Publication 505

To make sure you are getting the right amount of tax withheld, get Pub. 505. It will help you compare the total tax to be withheld during the year with the tax you can expect to figure on your return. It also will help you determine how much, if any, additional withholding is needed each payday to avoid owing tax when you file your return. If you do not have enough tax withheld, you may have to pay estimated tax, as explained under Estimated Tax for 2018, later.

Rules Your Employer Must Follow

It may be helpful for you to know some of the withholding rules your employer must follow. These rules can affect how to fill out your Form W-4 and how to handle problems that may arise.

New Form W-4. When you start a new job, your employer should have you complete a Form W-4. Beginning with your first payday, your employer will use the information you give on the form to figure your withholding.

If you later fill out a new Form W-4, your employer can put it into effect as soon as possible. The deadline for putting it into effect is the start of the first payroll period ending 30 or more days after you turn it in.

No Form W-4. If you do not give your employer a completed Form W-4, your employer must withhold at the highest rate, as if you were single and claimed no withholding allowances.

Repaying withheld tax. If you find you are having too much tax withheld because you did not claim all the withholding allowances you are entitled to, you should give your employer a new Form W-4. Your employer cannot repay any of the tax previously withheld. Instead, claim the full amount withheld when you file your tax return.

However, if your employer has withheld more than the correct amount of tax for the Form W-4 you have in effect, you do not have to fill out a new Form W-4 to have your withholding lowered to the correct amount. Your employer can repay the amount that was withheld incorrectly. If you are not repaid, your Form W-2 will reflect the full amount actually withheld, which you would claim when you file your tax return.

Exemption From Withholding

If you claim exemption from withholding, your employer will not withhold federal income tax from your wages. The exemption applies only to income tax, not to social security, Medicare, or FUTA tax withholding.

You can claim exemption from withholding for 2018 only if both of the following situations apply.

For 2017 you had a right to a refund of all federal income tax withheld because you had no tax liability.
For 2018 you expect a refund of all federal income tax withheld because you expect to have no tax liability.

Students. If you are a student, you are not automatically exempt. See chapter 1 to find out if you must file a return. If you work only part time or only during the summer, you may qualify for exemption from withholding.

Age 65 or older or blind. If you are 65 or older or blind, use Worksheet 1-3 or 1-4 in chapter 1 of Pub. 505, to help you decide if you qualify for exemption from withholding. Do not use either worksheet if you will itemize deductions, claim exemptions for dependents, or claim tax credits on your 2018 return. Instead, see Itemizing deductions or claiming exemptions or credits in chapter 1 of Pub. 505.

Claiming exemption from withholding. To claim exemption, you must give your employer a Form W-4. Do not complete lines 5 and 6. Enter “Exempt” on line 7.

If you claim exemption, but later your situation changes so that you will have to pay income tax after all, you must file a new Form W-4 within 10 days after the change. If you claim exemption in 2018, but you expect to owe income tax for 2019, you must file a new Form W-4 by December 1, 2018.

Your claim of exempt status may be reviewed by the IRS.

An exemption is good for only 1 year. You must give your employer a new Form W-4 by February 15 each year to continue your exemption.

Supplemental Wages

Supplemental wages include bonuses, commissions, overtime pay, vacation allowances, certain sick pay, and expense allowances under certain plans. The payer can figure withholding on supplemental wages using the same method used for your regular wages. However, if these payments are identified separately from your regular wages, your employer or other payer of supplemental wages can withhold income tax from these wages at a flat rate.

TAXALERT

The current flat rate of withholding on supplemental wages is 25%. However, once annual supplemental wage payments to an employee exceed $1 million, any additional supplemental wage payments in that year would be subject to withholding at the highest individual regular income tax rate, which is 39.6%. IRS regulations provide that mandatory withholding at the highest individual income tax rate on supplemental wage payments in excess of $1 million applies regardless of the withholding method used by the employer for regular wages, and even if the employee has a Form W-4 asserting either exempt status or claiming a reduced rate of withholding.

Example

Jillian works as an employee of Corporation R. She receives regular wage payments of $200,000 per month in 2018 from Corporation R and income tax is withheld from those wages. In addition, Jillian receives the following payments:

June 29, 2018	$3,000,000 (bonus from Corporation R)
October 31, 2018	$50,000 (sick pay from Corporation U, one of the subsidiaries of Corporation R)
December 28, 2018	$100,000 (bonus from Corporation T, another subsidiary of Corporation R)

All payments would be treated as made by one employer. The withholding on the regular monthly wage payment would be based upon Jillian’s withholding allowances claimed on Form W-4. For the first $1,000,000 of the $3,000,000 bonus paid on June 29, 2018, income tax may be withheld using the same method used for regular wages. Alternatively, Jillian can elect to withhold income tax at the flat rate of 25% or $250,000. For the rest of the supplemental payments, including the remaining $2,000,000 of the bonus paid on June 29, income tax withheld is required to be calculated at the highest individual income tax rate (39.6% for 2018).

Expense allowances. Reimbursements or other expense allowances paid by your employer under a nonaccountable plan are treated as supplemental wages.

Reimbursements or other expense allowances paid under an accountable plan that are more than your proven expenses are treated as paid under a nonaccountable plan if you do not return the excess payments within a reasonable period of time.

For more information about accountable and nonaccountable expense allowance plans, see Reimbursements in chapter 27.

Penalties

You may have to pay a penalty of $500 if both of the following apply.

You make statements or claim withholding allowances on your Form W-4 that reduce the amount of tax withheld.
You have no reasonable basis for those statements or allowances at the time you prepare your Form W-4.

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

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

Tips

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

See chapter 6 for information on reporting your tips to your employer. For more information on the withholding rules for tip income, see Pub. 531, Reporting Tip Income.

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

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

Not enough pay to cover taxes. If your regular pay is not enough for your employer to withhold all the tax (including income tax and social security and Medicare taxes (or the equivalent railroad retirement tax)) due on your pay plus your tips, you can give your employer money to cover the shortage. See Giving your employer money for taxes in chapter 6.

Allocated tips. Your employer should not withhold income tax, Medicare tax, social security tax, or railroad retirement tax on any allocated tips. Withholding is based only on your pay plus your reported tips. Your employer should refund to you any incorrectly withheld tax. See Allocated Tips in chapter 6 for more information.

Taxable Fringe Benefits

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

For information on fringe benefits, see Fringe Benefits under Employee Compensation in chapter 5.

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

For more information on withholding on taxable fringe benefits, see chapter 1 of Pub. 505.

Sick Pay

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

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

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

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

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

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

Estimated tax. If you do not request withholding on Form W-4S, or if you do not have enough tax withheld, you may have to make estimated tax payments. If you do not pay enough tax, either through estimated tax or withholding, or a combination of both, you may have to pay a penalty. See Underpayment Penalty for 2017, at the end of this chapter.

Pensions and Annuities

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

A traditional individual retirement arrangement (IRA);
A life insurance company under an endowment, annuity, or life insurance contract;
A pension, annuity, or profit-sharing plan;
A stock bonus plan; and
Any other plan that defers the time you receive compensation.

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

TAXALERT

Under normal federal income tax withholding rules, an employee is taxed when a restricted stock award vests. Upon vesting, federal income tax withholding is required on the excess of the fair market value of the stock award price over the grant price. This amount is also subject to FICA tax (i.e., social security and 1.45% Medicare tax), plus the 0.9% Additional Medicare Tax (for taxpayers with total wages, compensation, or self-employment income above specified thresholds) that took effect beginning 2013 under the ACA. Subsequent dividends received on the restricted stock award and any capital gains generated if the employee subsequently sells the shares are not, however, subject to the 0.9% Additional Medicare Tax. On the other hand, these dividends and capital gains are considered investment income subject to the 3.8% Net Investment Income Tax (NIIT) that also took effect under the ACA.

TAXALERT

A written explanation of the direct rollover option and related rules (including the rules governing withholding) must generally be provided to participants not more than 90 days and not less than 30 days before the distribution date. For a series of periodic payments that are eligible for direct rollover, an initial timely notice must be given and an additional notice must be provided at least annually for as long as the payments continue.

Failure to provide such notice could cause the plan to become disqualified under the Internal Revenue Code. The IRS has issued a model notice that plan administrators are allowed to customize by deleting any portions that do not apply to the plan and adding additional information that is not inconsistent with the model notice.

Periodic Payments

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

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

If you do not fill out a withholding certificate, tax will be withheld as if you were married and were claiming three withholding allowances.
Your certificate will not be sent to the IRS regardless of the number of allowances you claim on it.
You can choose not to have tax withheld, regardless of how much tax you owed last year or expect to owe this year. You do not have to qualify for exemption. See Choosing Not To Have Income Tax Withheld, later.
Tax will be withheld as if you were single and claiming no withholding allowances if:
1. You do not give the payer your social security number (in the required manner), or
2. The IRS notifies the payer, before any payment or distribution is made, that you gave it an incorrect social security number.

Note: Military retirement pay generally is treated in the same manner as wages and not as a pension or annuity for income tax withholding purposes. Military retirees should use Form W-4, not Form W-4P.

TAXALERT

If a series of periodic payments began prior to January 1, 1993, you determine whether post–December 31, 1992, payments are a series of substantially equal periodic payments over a specified period by taking into account all payments, including payments made before January 1, 1993. If the post–December 31, 1992, payments are not a series of substantially equal periodic payments, they will be subject to the direct rollover rules, including mandatory 20% withholding.

Nonperiodic Payments

Tax will be withheld at a 10% rate on any nonperiodic payments you receive.

Because withholding on nonperiodic payments does not depend on withholding allowances or whether you are married or single, you cannot use Form W-4P to tell the payer how much to withhold. However, you can use Form W-4P to specify that an additional amount be withheld. You can also use Form W-4P to choose not to have tax withheld or to revoke a choice not to have tax withheld. See Choosing Not To Have Income Tax Withheld, later.

Eligible Rollover Distributions (ERDs)

Distributions you receive that are eligible to be rolled over tax-free into qualified retirement or annuity plans are subject to a 20% withholding tax.

An eligible rollover distribution (ERD) is any distribution of all or any part of the balance to your credit in a qualified retirement plan except:

Any of a series of substantially equal distributions paid at least once a year over:
1. Your lifetime or life expectancy,
2. The joint lives or life expectancies of you and your beneficiary, or
3. A period of 10 years or more.
A required minimum distribution (discussed in Publication 575, Pension and Annuity Income, under Tax on Excess Accumulation),
Hardship distributions,
Corrective distributions of excess contributions or excess deferrals, and any income allocable to these distributions, or of excess annual additions and any allocable gains (see Corrective distributions of excess plan contributions, at the beginning of Taxation of Nonperiodic Payments in Publication 575),
A loan treated as a distribution because it does not satisfy certain requirements either when made or later (such as upon default), unless the participant’s accrued benefits are reduced (offset) to repay the loan (see Loans Treated as Distributions, in Publication 575),
Dividends paid on employer securities, and
The cost of life insurance coverage.

In addition, a distribution to the plan participant’s beneficiary generally is not treated as an eligible rollover distribution. However, see Qualified domestic relations order, Rollover by surviving spouse, and Rollovers by nonspouse beneficiary, later.

For more information about eligible rollover distributions, see Publication 575, Pension and Annuity Income.

EXPLANATION

The withholding rules for non-ERD distributions are discussed earlier under Periodic Payments and Nonperiodic Payments.

A distribution is subject to withholding if it is not substantially equal to the periodic payments.

For example, upon retirement you receive 30% of your accrued pension benefits in the form of a single sum distribution with the balance payable in annuity form. The 30% distribution is an ERD subject to 20% withholding. The annuity payments are periodic payments subject to withholding only if you choose to have withholding taken out.

The payer of a distribution must withhold at a 20% rate on any part of an ERD that is not rolled over directly to another qualified plan. You cannot elect not to have withholding on these distributions.

If tax is withheld on the ERD, it will be withheld only on the taxable portion of the distribution. You must either:

Contribute to the new plan (within 60 days from the date of the distribution) an amount equal to the taxable part of the total ERD, including the amount withheld, to avoid including the distribution as taxable income on your 2018 tax return or
Include in your income for the year of the distribution any amount withheld for which you did not make a matching contribution to the new plan.

The matching contribution to cover the withheld amount, as explained in 1 above, must be in addition to the rollover of the net amount that you actually received. If all or any portion of an amount equal to the amount withheld is not contributed as a rollover, it must be included in your income to the extent of the difference between the taxable part of the distribution and the actual rollover amount.

Exception to withholding rule. The only way to avoid withholding on an ERD is to have it directly rolled over from the employer’s plan to a qualified plan or IRA. This direct rollover is made only at your direction. You must first make sure that the receiving trustee agrees to accept a direct roll-over. The transferor or trustee must allow you to make such a rollover and provide to you, within a reasonable period of time, written instructions on how to do so. You must also follow spousal consent and other participant and beneficiary protection rules.

TAXSAVER

If you receive an eligible rollover distribution from which the mandatory 20% withholding tax has been withheld, and you then decide you wish to roll the distribution over to an IRA within the allowed 60 days, you must come up with the 20% that was withheld from other funds within the 60-day period in order to roll the entire balance over. Otherwise the 20% that has been withheld will be treated as a taxable distribution and ineligible for rollover.

Choosing Not To Have Income Tax Withheld

You can choose not to have income tax withheld from your pension or annuity, whether the payments are periodic or nonperiodic. This rule does not apply to eligible rollover distributions. The payer will tell you how to make this choice. If you use Form W-4P, check the box on line 1 to make this election. Your choice will stay in effect until you decide you want withholding. The payer will ignore your request not to have income tax withheld if:

You do not give the payer your social security number (in the required manner), or
The IRS notifies the payer, before any payment or distribution is made, that you gave it an incorrect social security number.

TAXPLANNER

You should choose to have no tax withheld from nonperiodic payments (total distributions within 1 year) from an employer pension or profit-sharing plan if you intend to defer taxation by putting the money directly into an individual retirement arrangement (IRA).

If you choose not to have any income tax withheld from your pension or annuity, or if you do not have enough withheld, you may have to make estimated tax payments. See Estimated Tax, later.

If you do not pay enough tax through either estimated tax or withholding, you may have to pay a penalty. See Underpayment Penalty, later in this chapter.

Outside the United States. If you are a U.S. citizen or resident alien and you choose not to have tax withheld from pension or annuity benefits, you must give the payer of the benefits a home address in the United States or in a U.S. possession. Otherwise, the payer must withhold tax. For example, the payer would have to withhold tax if you provide a U.S. address for a nominee, trustee, or agent to whom the benefits are to be delivered but do not provide your own home address in the United States or in a U.S. possession.

Revoking a choice not to have tax withheld. If you want to revoke your choice not to have tax withheld, the payer of your pension or annuity will tell you how. If the payer gives you Form W-4P, write “Revoked” by the checkbox on line 1 of the form.

If you get periodic payments and do not complete the rest of the form, the payer will withhold tax as if you were married and claiming three allowances. If you want tax withheld at a different rate, you must complete the rest of the form.

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

More information. For more information on taxation of annuities and distributions (including ERDs) from qualified retirement plans, see chapter 10. For information on IRAs, see chapter 17. For more information on withholding on pensions and annuities, including a discussion of Form W-4P, see Pensions and Annuities in chapter 1 of Pub. 505.

Gambling Winnings

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

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

Any sweepstakes; wagering pool, including payments made to winners of poker tournaments; or lottery.
Any other wager, if the proceeds are at least 300 times the amount of the bet.

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

Exception. Gambling winnings from bingo, keno, and slot machines generally are not subject to income tax withholding. However, you may need to provide the payer with a social security number to avoid withholding. See Backup withholding on gambling winnings in chapter 1 of Pub. 505. If you receive gambling winnings not subject to withholding, you may need to pay estimated tax. See Estimated Tax for 2018, later.

If you do not pay enough tax, either through withholding or estimated tax, or a combination of both, you may have to pay a penalty. See Underpayment Penalty for 2017, at the end of this chapter.

Form W-2G. If a payer withholds income tax from your gambling winnings, you should receive a Form W-2G, Certain Gambling Winnings, showing the amount you won and the amount withheld. Report the tax withheld on line 64 of Form 1040.

Unemployment Compensation

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

All unemployment compensation is taxable. If you do not have income tax withheld, you may have to pay estimated tax. See Estimated Tax for 2018, later.

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. For information, see Underpayment Penalty for 2017, at the end of this chapter.

Federal Payments

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

Social security benefits,
Tier 1 railroad retirement benefits,
Commodity credit corporation loans you choose to include in your gross income,
Payments under the Agricultural Act of 1949 (7 U.S.C. 1421 et. Seq.), as amended, or title II of the Disaster Assistance Act of 1988, that are treated as insurance proceeds and that you receive because:
1. Your crops were destroyed or damaged by drought, flood, or any other natural disaster, or
2. You were unable to plant crops because of a natural disaster described in (a), and
Any other payment under federal law as determined by the Secretary.

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

If you do not choose to have income tax withheld, you may have to pay estimated tax. See Estimated Tax for 2018, later.

More information. For more information about the tax treatment of social security and railroad retirement benefits, see chapter 11. Get Pub. 225, Farmer’s Tax Guide, for information about the tax treatment of commodity credit corporation loans or crop disaster payments.

Backup Withholding

Banks or other businesses that pay you certain kinds of income must file an information return (Form 1099) with the IRS. The information return shows how much you were paid during the year. It also includes your name and taxpayer identification number (TIN). TINs are explained in chapter 1 under Social Security Number (SSN). These payments generally are not subject to withholding. However, “backup” withholding is required in certain situations. Backup withholding can apply to most kinds of payments that are reported on Form 1099.

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

You do not give the payer your TIN in the required manner.
The IRS notifies the payer that the TIN you gave is incorrect.
You are required, but fail, to certify that you are not subject to backup withholding.
The IRS notifies the payer to start withholding on interest or dividends because you have underreported interest or dividends on your income tax return. The IRS will do this only after it has mailed you four notices over at least a 210-day period.

See Backup Withholding in chapter 1 of Pub. 505 for more information.

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

Estimated Tax for 2018

Estimated tax is the method used to pay tax on income that is not subject to withholding. This includes income from self-employment, interest, dividends, alimony, rent, gains from the sale of assets, prizes, and awards. You also may have to pay estimated tax if the amount of income tax being withheld from your salary, pension, or other income is not enough.

Estimated tax is used to pay both income tax and self-employment tax, as well as other taxes and amounts reported on your tax return. If you do not pay enough tax, either through withholding or estimated tax, or a combination of both, you may have to pay a penalty. If you do not pay enough by the due date of each payment period (see When To Pay Estimated Tax, later), you may be charged a penalty even if you are due a refund when you file your tax return. For information on when the penalty applies, see Underpayment Penalty for 2017, at the end of this chapter.

Who Does Not Have To Pay Estimated Tax

If you receive salaries or wages, you can avoid having to pay estimated tax by asking your employer to take more tax out of your earnings. To do this, give a new Form W-4 to your employer. See chapter 1 of Pub. 505.

Estimated tax not required. You do not have to pay estimated tax for 2018 if you meet all three of the following conditions.

You had no tax liability for 2017.
You were a U.S. citizen or resident alien for the whole year.
Your 2017 tax year covered a 12-month period.

You had no tax liability for 2017 if your total tax was zero or you did not have to file an income tax return. For the definition of “total tax” for 2017, see Pub. 505, chapter 2.

Who Must Pay Estimated Tax

If you owe additional tax for 2017, you may have to pay estimated tax for 2018.

You can use the following general rule as a guide during the year to see if you will have enough withholding, or if you should increase your withholding or make estimated tax payments.

General rule. In most cases, you must pay estimated tax for 2018 if both of the following apply.

You expect to owe at least $1,000 in tax for 2018, after subtracting your withholding and refundable credits.
You expect your withholding plus your refundable credits to be less than the smaller of:
1. 90% of the tax to be shown on your 2018 tax return, or
2. 100% of the tax shown on your 2017 tax return (but see Special rules for farmers, fishermen, and higher income taxpayers, later). Your 2017 tax return must cover all 12 months.

Special rules for farmers, fishermen, and higher income taxpayers. If at least two-thirds of your gross income for tax year 2017 or 2018 is from farming or fishing, substitute 66% for 90% in (2a) under the General rule, earlier. If your AGI for 2017 was more than $150,000 ($75,000 if your filing status for 2018 is married filing a separate return), substitute 110% for 100% in (2b) under General rule, earlier. See Figure 4-A and Pub. 505, chapter 2, for more information.

Flowchart shows checking whether taxpayer owes 1000 dollars or more for 2018 after subtracting income tax holding and refundable credits, whether tax holding is at least 90 percent of tax shown on 2018 tax return and so forth. — **Figure 4-A** Do You Have To Pay Estimated Tax?

^*Use the refundable credits shown on the 2018 Estimated Tax Worksheet, line 13b.

^**110% if less than two-thirds of your gross income for 2017 and 2018 is from farming or fishing and your 2017 adjusted gross income was more than $150,000 ($75,000 if your filing status for 2018 is married filing a separate return).

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

You are an alien if you are not a citizen or national of the United States. You are a resident alien if you either have a green card or meet the substantial presence test. For more information about the substantial presence test, see Pub. 519, U.S. Tax Guide for Aliens.

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

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

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

You are legally separated under a decree of divorce or separate maintenance,
You and your spouse have different tax years, or
Either spouse is a nonresident alien (unless that spouse elected to be treated as a resident alien for tax purposes (see chapter 1 of Pub. 519).

If you do not qualify to make joint estimated tax payments, apply these rules to your separate estimated income. Making joint or separate estimated tax payments will not affect your choice of filing a joint tax return or separate returns for 2018.

2017 separate returns and 2018 joint return. If you plan to file a joint return with your spouse for 2018, but you filed separate returns for 2017, your 2017 tax is the total of the tax shown on your separate returns. You filed a separate return if you filed as single, head of household, or married filing separately.

2017 joint return and 2018 separate returns. If you plan to file a separate return for 2018 but you filed a joint return for 2017, your 2017 tax is your share of the tax on the joint return. You file a separate return if you file as single, head of household, or married filing separately.

To figure your share of the tax on the joint return, first figure the tax both you and your spouse would have paid had you filed separate returns for 2017 using the same filing status as for 2018. Then multiply the tax on the joint return by the following fraction.

Example. Joe and Heather filed a joint return for 2017 showing taxable income of $48,500 and a tax of $6,343. Of the $48,500 taxable income, $40,100 was Joe’s and the rest was Heather’s. For 2018, they plan to file married filing separately. Joe figures his share of the tax on the 2017 joint return as follows.

Tax on $40,100 based on a separate return	$5,764
Tax on $8,400 based on a separate return	840
Total	$6,604
Joe’s percentage of total ($5,764 ÷ $6,604)	87.3%
Joe’s share of tax on joint return ($6,343 × 87.3%)	$5,537

How To Figure Estimated Tax

To figure your estimated tax, you must figure your expected adjusted gross income (AGI), taxable income, taxes, deductions, and credits for the year.

When figuring your 2018 estimated tax, it may be helpful to use your income, deductions, and credits for 2017 as a starting point. Use your 2017 federal tax return as a guide. You can use Form 1040-ES and Pub. 505 to figure your estimated tax. Nonresident aliens use Form 1040-ES (NR) and Pub. 505 to figure estimated tax (see chapter 8 of Pub. 519 for more information).

You must make adjustments both for changes in your own situation and for recent changes in the tax law. For a discussion of these changes, visit IRS.gov.

For more complete information on how to figure your estimated tax for 2018, see chapter 2 of Pub. 505.

TAXPLANNER

A convenient way to figure your estimated tax is to list all your sources of income from last year. Then enter the estimated income from each source for this year. Add to this list all new sources of income that you expect this year. Repeat this procedure for all deductions and exemptions. If your itemized deductions are more than the standard deduction, use your itemized deductions. Then compute your estimated tax liability for 2018 based on your estimated taxable income.

After you have calculated your estimated tax liability, add any additional taxes, including self-employment taxes, household employment taxes, and alternative minimum taxes, that you expect to pay for the current year. Then subtract the various tax credits you expect to claim for the current year, and also subtract the income tax you expect to have withheld. The remaining tax liability is your estimated tax.

If your estimated tax exceeds $1,000, equal estimated tax payments generally have to be made on April 15, June 15, September 15, and January 15. Special exceptions, described later in this chapter, may reduce or eliminate this requirement.

When To Pay Estimated Tax

For estimated tax purposes, the tax year is divided into four payment periods. Each period has a specific payment due date. If you do not pay enough tax by the due date of each payment period, you may be charged a penalty even if you are due a refund when you file your income tax return. The payment periods and due dates for estimated tax payments are shown next.

For the period:	Due date:¹
Jan. 1 – March 31 ….	April 15
April 1 – May 31 ….	June 15
June 1 – August 31 ….	Sept. 15
Sept. 1 – Dec. 31 ….	Jan. 15, next year

1 See Saturday, Sunday, holiday rule, and January payment.

Saturday, Sunday, holiday rule. If the due date for an estimated tax payment falls on a Saturday, Sunday, or legal holiday, the payment will be on time if you make it on the next day that is not a Saturday, Sunday, or legal holiday.

January payment. If you file your 2018 Form 1040 or Form 1040A by January 31, 2019, and pay the rest of the tax you owe, you do not need to make the payment due on January 15.

Fiscal year taxpayers. If your tax year does not start on January 1, see the Form 1040-ES instructions for your payment due dates.

When To Start

You do not have to make estimated tax payments until you have income on which you will owe income tax. If you have income subject to estimated tax during the first payment period, you must make your first payment by the due date for the first payment period. You can pay all your estimated tax at that time, or you can pay it in installments. If you choose to pay in installments, make your first payment by the due date for the first payment period. Make your remaining installment payments by the due dates for the later periods.

No income subject to estimated tax during first period. If you do not have income subject to estimated tax until a later payment period, you must make your first payment by the due date for that period. You can pay your entire estimated tax by the due date for that period or you can pay it in installments by the due date for that period and the due dates for the remaining periods. The following chart shows when to make 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 15 Sept. 15 Jan. 15, next year
April 1–May 31	June 15	Sept. 15 Jan. 15, next year
June 1–Aug. 31	Sept. 15	Jan. 15, next year
After Aug. 31	Jan. 15 next year	(None)

¹ See Saturday, Sunday, holiday rule and January payment.

How much to pay to avoid a penalty. To determine how much you should pay by each payment due date, see How To Figure Each Payment, next.

EXPLANATION

The discussion that follows shows in detail how to compute your annualized income installment.

Figure your installment for each payment period as follows:

Figure your adjusted gross income (AGI), alternative minimum taxable income (AMTI), and adjusted self-employment income (SEI) for the months in 2018 ending before the due date of the payment period. (Your AGI is your actual total income minus your actual adjustments to income for the months in the period.) See chapter 31, How to figure your tax, for more information on AMTI. Also, see chapter 39, Self-employment income: How to file Schedule C, for more information on SEI.
Multiply each of the amounts in step (1) by
1. 4, if the payment due date is April 17, 2018.
2. 2.4, if the payment due date is June 15, 2018.
3. 1.5, if the payment due date is September 17, 2018.
4. 1, if the payment due date is January 15, 2019. These amounts are your annualized AGI, AMTI, and SEI.
Determine the greater of your
1. Actual allowable itemized deductions for the months in the period multiplied by the same figure used in step (2), or
2. Standard deduction for the year.
Multiply your exemptions by the 2018 exemption amount (see chapter 3, Personal exemptions and dependents).
Add the amounts from steps (3) and (4), and subtract the total from your annualized AGI determined in step (2). This amount is your annualized taxable income.
Figure the appropriate tax on your annualized taxable income [from step (5)], the alternative minimum tax on your annualized AMTI, and self-employment tax on SEI [from step (2)].
Total the amounts figured in step (6).
Add any additional taxes that you may owe because of events that occurred during the months in 2018 ending before the due date of the payment period. “Other Taxes” are the ones listed on lines 56–60 of the 2017 Form 1040.
Subtract from this total any nonrefundable credits that you may be able to claim because of events that occurred during the months in 2018 ending before the due date of the payment period. These are the credits that make up the total on line 54 of the 2017 Form 1040. If these credits are more than the total of step (7) plus additional taxes figured in step (8), use zero as the result and go on to the next step.
Add to the result of step (9) any of the taxes listed below that you may owe because of events that occurred during the months in 2018 ending before the due date of the payment period:
1. Uncollected social security and Medicare tax or RRTA tax on tips or group-term life insurance.
2. Excise tax on golden parachute payments.
3. Tax from Form 4952, Tax on Lump Sum Distributions, Form 8814, Parent’s Election to Report Child’s Interest and Dividends, and alternative minimum tax.
Subtract the following credits that apply to your situation for the months in 2018 ending before the due date of the payment period:
1. Earned income credit.
2. Adoption credit.
3. Etc.
Multiply the result of step (11) by
1. 22.5%, if the payment due date is April 17, 2018.
2. 45%, if the payment due date is June 15, 2018.
3. 67.5%, if the payment due date is September 17, 2018.
4. 90%, if the payment due date is January 15, 2019.
Figure the total estimated tax you had to pay by the due date of each of the preceding payment periods. This is the total of the lower of the required installment or the annualized income installment for each payment period.
Subtract the step (13) amount from the step (12) amount.

If the annualized income installment for the payment period is less than the required installment, you only need to pay the annualized income installment.

When you pay the annualized income installment for the next payment period, you must add the difference between the required installment for that subsequent payment period (as increased) and the annualized income installment for the previous payment period to the required installment for the next payment period.

How To Figure Each Payment

You should pay enough estimated tax by the due date of each payment period to avoid a penalty for that period. You can figure your required payment for each period by using either the regular installment method or the annualized income installment method. These methods are described in chapter 2 of Pub. 505. If you do not pay enough during each payment period, you may be charged a penalty even if you are due a refund when you file your tax return.

If the earlier discussion of No income subject to estimated tax during first period or the later discussion of Change in estimated tax applies to you, you may benefit from reading Annualized Income Installment Method in chapter 2 of Pub. 505 for information on how to avoid a penalty.

Underpayment penalty. Under the regular installment method, if your estimated tax payment for any period is less than one-fourth of your estimated tax, you may be charged a penalty for underpayment of estimated tax for that period when you file your tax return. Under the annualized income installment method, your estimated tax payments vary with your income, but the amount required must be paid each period. See chapter 4 of Pub. 505 for more information.

Change in estimated tax. After you make an estimated tax payment, changes in your income, adjustments, deductions, credits, or exemptions may make it necessary for you to refigure your estimated tax. Pay the unpaid balance of your amended estimated tax by the next payment due date after the change or in installments by that date and the due dates for the remaining payment periods.

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.

You also do not have to pay estimated tax if you will pay enough through withholding to keep the amount you owe with your return under $1,000.

How To Pay Estimated Tax

There are several ways to pay estimated tax.

Credit an overpayment on your 2017 return to your 2018 estimated tax.
Pay by direct transfer from your bank account, or pay by debit or credit card using a pay-by-phone system or the Internet.
Send in your payment (check or money order) with a payment voucher from Form 1040-ES.

Credit an Overpayment

If you show an overpayment of tax after completing your Form 1040 or Form 1040A for 2017, you can apply part or all of it to your estimated tax for 2018. On line 77 of Form 1040, or line 49 of Form 1040A, enter the amount you want credited to your estimated tax rather than refunded. Take the amount you have credited into account when figuring your estimated tax payments. You cannot have any of the amount you credited to your estimated tax refunded to you until you file your tax return for the following year. You also cannot use that overpayment in any other way.

Pay Online

The IRS offers an electronic payment option that is right for you. Paying online is convenient, secure, and helps make sure the IRS gets your payments on time. To pay your taxes online or for more information, go to IRS.gov/payments. You can pay using any of the following methods.

IRS Direct Pay for online transfers directly from your checking or savings account at no cost to you. Go to IRS.gov/payments.
Pay by Card to pay by debit or credit card. Go to IRS.gov/payments. A convenience fee is charged by these service providers.
Electronic Funds Withdrawal (EFW) is an integrated e-file/e-pay option offered when filing your federal taxes electronically using tax preparation software, through a tax professional, or the IRS at IRS.gov/ payments.
Online Payment Agreement if you can’t pay in full by the due date of your tax return. You can apply for an online monthly installment agreement at IRS.gov/ payments. Once you complete the online process, you will receive immediate notification of whether your agreement has been approved. A convenience fee is charged.
IRS2GO is the mobile application of the IRS. You can access Direct Pay or Pay By Card by downloading the application.

Pay by Phone

Paying by phone is another safe and secure method of paying electronically. Use one of the following methods. (1) call one of the debit or credit card providers or (2) use the Electronic Federal Tax Payment System (EFTPS).

Debit or credit card. Call one of the IRS’s service providers. Each charges a fee that varies by provider, card type, and payment amount.
1. Link2Gov Corporation 1-888-PAY-1040TM (1-888-729-1040) www.PAY1040.com
2. WorldPay US, Inc. 1-844-PAY-TAX-8TM (1-844-729-8298) www.payUSAtax.com
3. Official Payments Corporation 1888-UPAY-TAXTM (1-888-872-9829) www.officialpayments.com
EFTPS. To use EFTPS, you must be enrolled either online or have an enrollment form mailed to you. To make a payment using EFTPS, call 1-800-555-4477 (English) or 1-800-244-4829 (Español). People who are deaf, hard of hearing, or have a speech disability and who have access to TTY/TDD equipment can call 1-800-733-4829. For more information about EFTPS, go to IRS.gov/payments or www.eftps.gov.

For the latest details on how to pay by phone, go to IRS.gov/payments.

Pay by Mobile Device

To pay through your mobile device, download the IRS2Go application.

Pay With Cash

Paying with cash is a new in-person payment option for individuals. This service is provided through retail partners and is limited $1,000 per day per transaction. To make a cash payment, you must first be registered online at www.officialpayments.com, the IRS Official Payment provider.

Pay by Check or Money Order Using the Estimated Tax Payment Voucher

Before submitting a payment through the mail using the estimated tax payment voucher, please consider alternative methods. One of the IRS’s safe, quick, and easy electronic payment options might be right for you.

If you choose to mail in your payment, each payment of estimated tax by check or money order must be accompanied by a payment voucher from Form 1040-ES.

During 2017, if you:

made at least one estimated tax payment but not by electronic means,
did not use software or a paid preparer to prepare or file your return,

then you should receive a copy of the 2018 Form 1040-ES/V.

The enclosed payment vouchers will be preprinted with your name, address, and social security number. Using the preprinted vouchers will speed processing, reduce the chance of error, and help save processing costs.

Use the window envelopes that came with your Form 1040-ES package. If you use your own envelopes, make sure you mail your payment vouchers to the address shown in the Form 1040-ES instructions for the place where you live.

Note. These criteria can change without notice. If you do not receive a Form 1040-ES/V package and you are required to make an estimated tax payment, you should go to www.IRS.gov/form1040es and print a copy of Form 1040-ES which includes four blank payment vouchers. Complete one of these and make your payment timely to avoid penalties for paying late.

If you did not pay estimated tax last year you can order Form 1040-ES from the IRS (see inside back cover of this publication) or download it from IRS.gov. Follow the instructions to make sure you use the vouchers correctly.

Joint estimated tax payments. If you file a joint return and are making joint estimated tax payments, enter the names and social security numbers on the payment voucher in the same order as they will appear on the joint return.

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

Credit for Withholding and Estimated Tax for 2017

When you file your 2017 income tax return, take credit for all the income tax and excess social security or railroad retirement tax withheld from your salary, wages, pensions, etc. Also take credit for the estimated tax you paid for 2017. These credits are subtracted from your total tax. Because these credits are refundable, you should file a return and claim these credits, even if you do not owe tax.

Two or more employers. If you had two or more employers in 2017 and were paid wages of more than $118,500, too much social security or tier 1 railroad retirement tax may have been withheld from your pay. You may be able to claim the excess as a credit against your income tax when you file your return. See Credit for Excess Social Security Tax or Railroad Retirement Tax Withheld in chapter 38.

Withholding

If you had income tax withheld during 2017, you should be sent a statement by January 31, 2018, showing your income and the tax withheld. Depending on the source of your income, you should receive:

Form W-2, Wage and Tax Statement,
Form W-2G, Certain Gambling Winnings, or
A form in the 1099 series.

Forms W-2 and W-2G. If you file a paper return, always file Form W-2 with your income tax return. File Form W-2G with your return only if it shows any federal income tax withheld from your winnings.

You should get at least two copies of each form. If you file a paper return, attach one copy to the front of your federal income tax return. Keep one copy for your records. You also should receive copies to file with your state and local returns.

EXAMPLE

Eric is employed by ABC Company, Inc. His Form W-2, box 2, reflects that he had $10,675.00 in federal tax withheld by ABC Company on wages of $46,958.

His state income tax of $2,817.48 withheld for the state of Georgia is reflected in box 17 on the same amount of wages. Box 12 (Code D—code definitions can be found on the back of Form W-2) indicates that Eric contributed $2,546.21 to his company’s 401(k) plan. That amount of income was not included in the federal or state wages, but it is included in determining how much was withheld from Eric’s income for social security and Medicare purposes. Refer to boxes 3 and 5. The social security tax withheld is in box 4, and the Medicare tax withheld is in box 6. The retirement plan box is checked in box 13 and lets Eric (and the IRS) know that he is covered by a retirement plan and therefore may be limited in his ability to make deductible IRA contributions.

Form W-2

Your employer is required to provide or send Form W-2 to you no later than January 31, 2018. You should receive a separate Form W-2 from each employer you worked for.

If you stopped working before the end of 2017, your employer could have given you your Form W-2 at any time after you stopped working. However, your employer must provide or send it to you by January 31, 2018.

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

If you have not received your Form W-2 by January 31, you should ask your employer for it. If you do not receive it by February 15, call the IRS.

Form W-2 shows your total pay and other compensation and the income tax, social security tax, and Medicare tax that was withheld during the year. Include the federal income tax withheld (as shown in box 2 of Form W-2) on:

Line 64 if you file Form 1040,
Line 40 if you file Form 1040A, or
Line 7 if you file Form 1040EZ.

In addition, Form W-2 is used to report any taxable sick pay you received and any income withheld from your sick pay.

Form shows employee’s social security number, employer identification number, employer’s name and address, control number, wages and other compensation, federal income tax withheld et cetera.

Form W-2G

If you had gambling winnings in 2017, the payer may have withheld income tax. If tax was withheld, the payer will give you a Form W-2G showing the amount you won and the amount of tax withheld.

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

The 1099 Series

Most forms in the 1099 series are not filed with your return. These forms should be furnished to you by January 31, 2018 (or, for Forms 1099-B, 1099-S, and certain Forms 1099-MISC, by February 15, 2018). Unless instructed to file any of these forms with your return, keep them for your records. There are several different forms in this series, including:

Form 1099-B, Proceeds From Broker and Barter Exchange Transactions;
Form 1099-DIV, Dividends and Distributions;
Form 1099-G, Certain Government Payments;
Form 1099-INT, Interest Income;
Form 1099-K, Payment Card and Third Party Network Transactions;
Form 1099-MISC, Miscellaneous Income;
Form 1099-OID, Original Issue Discount;
Form 1099-PATR, Taxable Distributions Received from Cooperatives;
Form 1099-Q, Payments From Qualified Education Programs;
Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.;
Form 1099-S, Proceeds From Real Estate Transactions;
Form RRB-1099, Payments by the Railroad Retirement Board.

If you received the types of income reported on some forms in the 1099 series, you may not be able to use Form 1040A or Form 1040EZ. See the instructions to these forms for details.

Form 1099-R. Attach Form 1099-R to your paper return if box 4 shows federal income tax withheld. Include the amount withheld in the total on line 64 of Form 1040 or line 40 of Form 1040A. You cannot use Form 1040EZ if you received payments reported on Form 1099-R.

Backup withholding. If you were subject to backup withholding on income you received during 2017, include the amount withheld, as shown on your Form 1099, in the total on line 64 of Form 1040, line 40 of Form 1040A, or line 7 of Form 1040EZ.

Form Not Correct

If you receive a form with incorrect information on it, you should ask the payer for a corrected form. Call the telephone number or write to the address given for the payer on the form. The corrected Form W-2G or Form 1099 you receive will have an “X” in the “CORRECTED” box at the top of the form. A special form, Form W-2c, Corrected Wage and Tax Statement, is used to correct a Form W-2.

In certain situations, you will receive two forms in place of the original incorrect form. This will happen when your taxpayer identification number is wrong or missing, your name and address are wrong, or you received the wrong type of form (for example, a Form 1099-DIV instead of a Form 1099-INT). One new form you receive will be the same incorrect form or have the same incorrect information, but all money amounts will be zero. This form will have an “X” in the “CORRECTED” box at the top of the form. The second new form should have all the correct information, prepared as though it is the original (the “CORRECTED” box will not be checked).

Form Received After Filing

If you file your return and you later receive a form for income that you did not include on your return, you should report the income and take credit for any income tax withheld by filing Form 1040X, Amended U.S. Individual Income Tax Return.

Separate Returns

If you are married but file a separate return, you can take credit only for the tax withheld from your own income. Do not include any amount withheld from your spouse’s income. However, different rules may apply if you live in a community property state.

Community property states are listed in chapter 2. For more information on these rules, and some exceptions, see Pub. 555, Community Property.

Fiscal Years

If you file your tax return on the basis of a fiscal year (a 12-month period ending on the last day of any month except December), you must follow special rules to determine your credit for federal income tax withholding. For a discussion of how to take credit for withholding on a fiscal year return, see Fiscal Years (FY) in chapter 3 of Pub. 505.

Estimated Tax

Take credit for all your estimated tax payments for 2017 on line 65 of Form 1040 or line 41 of Form 1040A. Include any overpayment from 2016 that you had credited to your 2017 estimated tax. You must use Form 1040 or Form 1040A if you paid estimated tax. You cannot use Form 1040EZ.

Name changed. If you changed your name, and you made estimated tax payments using your old name, attach a brief statement to the front of your paper tax return indicating:

When you made the payments,
The amount of each payment,
Your name when you made the payments, and
Your social security number.

The statement should cover payments you made jointly with your spouse as well as any you made separately.

Be sure to report the change to the Social Security Administration. This prevents delays in processing your return and issuing any refunds.

Separate Returns

If you and your spouse made separate estimated tax payments for 2017 and you file separate returns, you can take credit only for your own payments.

If you made joint estimated tax payments, you must decide how to divide the payments between your returns. One of you can claim all of the estimated tax paid and the other none, or you can divide it in any other way you agree on. If you cannot agree, you must divide the payments in proportion to each spouse’s individual tax as shown on your separate returns for 2017.

Divorced Taxpayers

If you made joint estimated tax payments for 2017, and you were divorced during the year, either you or your former spouse can claim all of the joint payments, or you each can claim part of them. If you cannot agree on how to divide the payments, you must divide them in proportion to each spouse’s individual tax as shown on your separate returns for 2017.

If you claim any of the joint payments on your tax return, enter your former spouse’s social security number (SSN) in the space provided on the front of Form 1040 or Form 1040A. If you divorced and remarried in 2017, enter your present spouse’s SSN in that space and write your former spouse’s SSN, followed by “DIV,” to the left of Form 1040, line 65, or Form 1040A, line 41.

Underpayment Penalty for 2017

If you did not pay enough tax, either through withholding or by making timely estimated tax payments, you will have an underpayment of estimated tax and you may have to pay a penalty.

Generally, you will not have to pay a penalty for 2017 if any of the following apply.

The total of your withholding and estimated tax payments was at least as much as your 2016 tax (or 110% of your 2016 tax if your AGI was more than $150,000, $75,000 if your 2017 filing status is married filing separately) and you paid all required estimated tax payments on time.
The tax balance due on your 2017 return is no more than 10% of your total 2017 tax, and you paid all required estimated tax payments on time.
Your total 2017 tax minus your withholding and refundable credits is less than $1,000.
You did not have a tax liability for 2016 and your 2016 tax year was 12 months, or
You did not have any withholding taxes and your current year tax less any household employment taxes is less than $1,000.

See Pub. 505, chapter 4, for a definition of “total tax” for 2016 and 2017.

Farmers and fishermen. Special rules apply if you are a farmer or fisherman. See Farmers and Fishermen in chapter 4 of Pub. 505 for more information.

IRS can figure the penalty for you. 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. Generally, the IRS will figure the penalty for you and send you a bill. However, if you think you are able to lower or eliminate your penalty, you must complete Form 2210 or Form 2210-F and attach it to your paper return. See chapter 4 of Pub. 505.

TAXPLANNER

The safest method of paying enough estimated tax and withholding, and thereby avoiding underpayment penalties, is to use last year’s tax. The tax shown on your previous year’s tax return less the tax that is expected to be withheld during the current year must be paid in estimated installments throughout the year.

Example

Paul’s 2017 tax return indicates that his 2017 tax liability (including self-employment tax and alternative minimum tax) was $14,000. In 2018, Paul estimates that his tax liability will jump to $24,000 due to several contemplated stock sales that should result in a substantial capital gain. Paul’s withholding on his 2018 salary is expected to be $13,000.

Because his withholding of $13,000 during 2018 is not expected to exceed his 2017 tax of $14,000, he should increase his withholding by at least $1,000 during the year. Even though he will have paid less than 90% of his tax liability for 2018, he will avoid an underpayment penalty because he has paid an amount at least equal to his 2017 tax. If he made this determination early enough in the year, he could accomplish the same result by making four quarterly estimated tax payments of $250.

However, Paul will have to pay an additional $10,000 ($24,000 − $14,000) when he files his 2018 tax return by April 15, 2019. Nevertheless, he will have had the use of this money from the time he sold his stock until the time he filed his 2018 tax return.

Explanation

Underpayment penalties. You may be penalized for not paying enough tax for a particular installment period. The amount subject to the penalty is the amount by which the required installment, defined as the lesser of items 1 or 2 below, exceeds the amount paid for the quarterly period:

90% of the tax shown on the return (after certain adjustments), allocated evenly to each of the quarterly periods; or
100% of the 2017 tax, allocated evenly to each of the quarterly periods (provided the prior year comprised 12 months and a return was filed for such year); if your 2017 adjusted gross income exceeded $150,000, you must have paid 110% of the 2017 tax liability to avoid underpayment penalties for 2018. Note: 100% of prior year tax is the tax liability as shown on the 2017 original return. The tax liability on an amended return is not used for purposes of quarterly estimated payments.

Example

Laura’s adjusted gross income in 2016 was $175,000, while her 2016 tax liability was $40,000. Her 2017 income tax liability is $55,000. Laura will avoid an underpayment penalty in 2017 if the total amount of tax withheld and estimated tax payments exceeds 110% of her 2016 tax liability, or $44,000. To avoid a penalty in 2018, she would have to pay in $60,500 (110% of $55,000), since her adjusted gross income also exceeded $150,000 in 2017.

The underpayment penalty may also be avoided by using a special rule based on your annualized income. Under the special rule, no penalty is imposed for a quarter if the cumulative amount paid by the installment date equals or exceeds 90% of the cumulative estimated tax as computed on annualized income.

In general, the annualized method allows you to calculate your quarterly payment based on taxable income received up to the end of the latest quarter, annualized to a 12-month period. You can usually benefit from the annualized method if you do not receive your taxable income evenly throughout the year (e.g., if you are the owner of a ski shop that receives most of its revenue during the winter months).

The use of the methods for determining the underpaid amount, described previously, may vary from quarter to quarter to provide the minimum underpayment amount by quarter. Remember, however, that if you pay the annualized income installment, you must add the difference between the amount you pay and the required installment to the required installment for the next period if the annualized income method is not used for the next period.

The tax computed for purposes of determining the quarterly payment required to avoid the underpayment penalty includes the self-employment tax and all other taxes (including the alternative minimum tax), minus any allowable credits.

If the amount paid for a quarterly period is greater than the amount required to avoid penalty, the excess is applied first against underpayments in prior quarters, and then against subsequent underpayments. Any penalty is assessed from the installment due date to the date paid or the original due date of the return, whichever is earlier. The rate of the penalty is the same as the rate of interest for underpayments of tax. However, the penalty is not compounded daily, whereas the interest is.

Special requirements and exceptions are provided for farmers, fishermen, and nonresident aliens.

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Table of Contents for Chapter 4: Tax withholding and estimated tax

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What’s New for 2018

Reminders

Introduction

Useful Items

Tax Withholding for 2018

Salaries and Wages

Determining Amount of Tax Withheld Using Form W-4

New Job

Changing Your Withholding

Checking Your Withholding

Completing Form W-4 and Worksheets

Getting the Right Amount of Tax Withheld

Publication 505

Rules Your Employer Must Follow

Exemption From Withholding

Supplemental Wages

Penalties

Tips

Taxable Fringe Benefits

Sick Pay

Pensions and Annuities

Gambling Winnings

Unemployment Compensation

Federal Payments

Backup Withholding

Estimated Tax for 2018

Who Does Not Have To Pay Estimated Tax

Who Must Pay Estimated Tax

How To Figure Estimated Tax

When To Pay Estimated Tax

When To Start

How To Figure Each Payment

Estimated Tax Payments Not Required

How To Pay Estimated Tax

Credit an Overpayment

Pay Online

Pay by Phone

Pay by Mobile Device

Pay With Cash

Pay by Check or Money Order Using the Estimated Tax Payment Voucher

Credit for Withholding and Estimated Tax for 2017

Withholding

Form W-2

Form W-2G

The 1099 Series

Form Not Correct

Form Received After Filing

Separate Returns

Fiscal Years

Estimated Tax

Separate Returns

Divorced Taxpayers

Underpayment Penalty for 2017

Table of Contents for
Chapter 4: Tax withholding and estimated tax