If the taxpayer would be eligible to use the tax tables on the basis of annualized tax table income, the amount which would have been required to be paid for purposes of this subparagraph may be determined by applying the tax tables to annualized tax table income. the amount resulting under (3).
In the case of a taxpayer whose taxable year consists of 52 or 53 weeks in accordance with section 441(f), the rules prescribed by § 1.441-2(c) shall be applicable in determining, for purposes of subparagraph (1) of this paragraph, whether a taxable year was a year of 12 months and, for purposes of subparagraphs (2) and (3) of this paragraph, the number of calendar months in a taxable year preceding the date prescribed for payment of an installment of estimated tax. For the rules to be applied in determining taxable income for any period described in subparagraphs (2) and (3) of this paragraph in the case of a taxpayer who employs accounting periods (e.g., thirteen 4-week periods or four 13-week periods) none of which terminates with the end of the applicable period described in subparagraph (2) or (3) of this paragraph, see paragraph (a)(5) of § 1.6655-2 .
A change in rate may be either a change in the rate of tax, such as a change in the rate of the tax imposed by section 1 or section 1401, or a change in a percentage affecting the computation of the credit, such as a change in the rate of withholding under chapter 3 of the Code or a change in the percentage of a qualified investment which is specified in section 46 for use in determining the amount of the investment credit allowed by section 38.
(1) Net earnings from self-employment | $5,000 |
(2) $6,600 minus annualized wages ($6,600-3,000 ($2,000 * 12 ÷ 8)) | 3,600 |
(3) Lesser of (1) or (2) | 3,600 |
The tax on C's adjusted self-employment income would be $230.40 ($3,600 * 6.4 percent). Since the total amount of estimated tax paid on or before September 15, 1967, exceeds $1,121.12, that is, 80 percent of $1,401.40 ($1,171 + 230.40), the exception described in paragraph (a)(2) of this section applies and no addition to tax will be imposed.
(1) Net earnings from self-employment | $5,000 |
(2) $6,600 minus wages ($6,600-2,000) | 4,600 |
(3) Lesser of (1) or (2) | 4,600 |
The tax on D's actual self-employment income would be $294.40 ($4,600 * 6.4 percent). Since the total amount of estimated tax paid by September 15, 1967, exceeds $792.36, that is, 90 percent of $880.40 ($586 + 294.40), the exception described in paragraph (a)(3) of this section applies and no addition to tax will be imposed.
(1) Income tax: | |
Taxable income for the period ending Aug. 31, 1967 (without deduction for personal exemptions) on an annual basis ($8,700 * 12 ÷ 8) | $13,050.00 |
Deduction for two personal exemptions | 1,200.00 |
11,850.00 | |
Tax on $11,850 (on the basis of a joint return) | 2,227.00 |
(2) Self-employment tax: | |
Net earnings from self-employment | 6,000.00 |
Adjusted self-employment income ($6,600-4,050 annualized wages ($2,700 * 12 ÷ 8)) | 2,550.00 |
Tax on adjusted self-employment income ($2,550 * 6.4 percent) | 163.20 |
(3) Total tax ($2,227.00 + 163.20) | 2,390.20 |
(4) 3/4 of 80 percent of $2,390.20 | 1,434.12 |
Amount paid by Sept. 15, 1967 | 1,350.00 |
An addition to the tax will thus be imposed for the underpayment of $1,550 ($2,000-450) on the September 15 installment.
Adjusted gross income for period ending Aug. 31, 1967 | $9,200.00 |
Adjusted gross income annualized ($9,200 * 12 ÷ 8) | 13,800.00 |
Taxable income annualized ($13,800 minus $1,200 for two personal exemptions and $1,000 for the standard deduction) | 11,600.00 |
Tax on $11,600 (on basis of joint return) | 2,172.00 |
Self-employment tax on adjusted self-employment income ($2,550 * 6.4 percent) | 163.20 |
Total tax ($2,172.00 + 163.20 | 2,335.20 |
3/4 of 80 percent of $2,335.20 | 1,401.12 |
Amount paid by Sept. 15, 1967 | 1,350.00 |
Taxable income for the period ending Aug. 31, 1956 (without deduction for personal exemptions) on an annual basis ($9,400 * 12 ÷ 8) | $14,100.00 |
Deduction for personal exemptions | 2,400.00 |
Taxable income on an annual basis | 11,700.00 |
Tax (on the basis of a joint return) | 2,642.00 |
Dividends received for 8-month period | 2,050.00 |
Less: Amount excluded from gross income under section 116 | 50.00 |
Dividends included in gross income | 2,000.00 |
Dividend income annualized ($2,000 * 12 ÷ 8) | 3,000.00 |
Dividends received credit under section 34 (4 percent of $3,000) | 120.00 |
Tax less dividends received credit | 2,522.00 |
Retirement income (as defined in section 37(c)) includes: | |
Dividend income (to extent included in gross income) | 2,000.00 |
Rental income | 900.00 |
Total retirement income | 2,900.00 |
Limit on amount of retirement income under section 37(d) | 1,200.00 |
Retirement income credit under section 37 (20 percent of $1,200) | 240.00 |
Tax less credits under section 34 and section 37 | 2,282.00 |
Amount determined under the exception described in paragraph (a)(2) of this section (3/4 of 70 percent of $2,282) | 1,198.05 |
Adjusted gross income for the period ending Aug. 31, 1977, on an annual basis ($4,000 * 12 ÷ 8) | $6,000.00 | |
Itemized deductions for the period ending Aug. 31, 1977, on an annual basis ($300 * 12 ÷ 8) | 450.00 | |
Unused zero bracket amount computation required under sec. 63(e)(1)(D): | ||
Zero bracket amount | $2,200.00 | |
Annualized itemized deductions | 450.00 | |
Unused zero bracket amount | 1,750.00 | |
Annualized adjusted gross income | 6,000.00 | |
Plus: unused zero bracket amount | 1,750.00 | |
Annualized tax table income | 7,750.00 | |
Tax from tables | 757.00 | |
Amount specified in paragraph (a)(2) of this section (3/4 * 80 pct. * $757) | $454.20 |
The exception described in paragraph (a)(2) applies, and no addition to tax will be imposed.
Adjusted gross income for the period ending Aug. 31, 1977, on an annual basis ($16,000 * 12 ÷ 8) | $24,000 | |
Itemized deductions for the period ending Aug. 31, 1977, on an annual basis ($2,000 * 12 ÷ 8) | 3,000 | |
Annualized itemized deductions | $3,000 | |
Minus zero bracket amount | 2,200 | |
Excess itemized deductions | 800 | |
Annualized adjusted gross income | 24,000 | |
Minus excess itemized deductions | 800 | |
Annualized tax table income | 23,200 | |
Minus: Personal exemption | 750 | |
Annualized taxable income | 22,450 | |
Tax under sec. 1(c) on annualized taxable income | 5,325 | |
Minus: general tax credit | 180 | |
Total | 5,145 | |
Amount specified in paragraph (a)(2) of this section (3/4 * 80 pct. * $5,145) | 3,087 |
The exception described in paragraph (a)(2) does not apply.
In determining a partner's taxable income and, for taxable years beginning after December 31, 1966, net earnings from self-employment, for the months in his taxable year which precede the month in which the installment date falls, the partner shall take into account items set forth in sections 702 and 1402(a) for any partnership taxable year ending with or within his taxable year to the extent that such items are attributable to months in such partnership taxable year which precede the month in which the installment date falls. For special rules used in computing a partner's net earnings from self-employment in the case of the termination of his taxable year as a result of death, see section 1402(f) and § 1.1402(f)-1 . In addition, a partner shall include in his taxable income and, for taxable years beginning after December 31, 1966, net earnings from self-employment, for the months in his taxable year which precede the month in which the installment date falls guaranteed payments from the partnership to the extent that such guaranteed payments are includible in his taxable income for such months. See section 706(a), section 707(c), paragraph (c) of § 1.707-1 and section 1402(a).
shall be that portion of the tax which bears the same ratio to the whole of the tax as the amount of the tax for which the taxpayer would have been liable bears to the sum of the taxes for which the taxpayer and his spouse would have been liable had each spouse filed a separate return for the preceding taxable year. For rules with respect to the allocation of joint payments of estimated tax, see § 1.6654-2(e)(5) .
Taxable income of H for 1955 | $18,000 |
Tax on $18,000 (on basis of separate return) | 6,200 |
Taxable income of W for 1955 | 2,000 |
Tax on $2,000 (on basis of separate return) | 400 |
Aggregate tax of H and W (on basis of separate returns) | 6,600 |
Portion of 1955 tax shown on joint return attributable to H (6200/6600 * 5280) | 4,960 |
Taxable income of H and W for 1955 based on additional personal exemption for 1956 | $19,400 |
Tax on 1955 income based on joint return rate for 1956 | 5,076 |
Portion of 1955 tax attributable to H (computed as in example (1) but allowing benefit of additional exemption to H) | 5900/6300 |
Portion of tax attributable to H based on tax rates and personal exemptions for 1956 but otherwise on facts on 1955 return ($5900/6300 * $5,076) | $4,754 |
Taxable income of H for 1972 | $18,000 |
Chapter 1 tax (other than section 56 tax) on $18,000 (on basis of separate return) | 5,170 |
Self-employment income of H for 1972 | 9,000 |
Chapter 2 tax on $9,000 | $675 |
Total of such taxes | $5,845 |
Taxable income of W for 1972 | 2,000 |
Chapter 1 tax (other than section 56 tax) on $2,000 (on basis of separate return) | 310 |
Aggregate tax on H and W (on basis of separate returns) | $6,155 |
Portion of 1972 tax shown on joint return attributable to H (5845/6155 * $5,055) | $4,800.40 |
Example. H and W filed separate income tax returns for the calendar year 1954 showing tax liabilities of $2,640 and $350, respectively. In 1956 they married and participated in the filing of a joint return for that year. In the filing of a joint return for that year. Thus, for the purpose of determining the applicability of the exceptions described in paragraph (a)(1) and (4) of this section to an underpayment of estimated tax for the year 1955, the tax shown on the return for the preceding taxable year is $2,990 ($2,640 plus $350).
Secs. 6015 , 6154, 6654, 6655, and 7805, Internal Revenue Code of 1954 (96 Stat. 2395 and 2396, 68A Stat. 917; 26 U.S.C. 6015 , 6154 , 6654 , 6655 , and 7805 ))
Example.
26 C.F.R. §1.6654-2