This section summarizes important changes that take effect in 2005 and that could affect your estimated tax payments for 2005. More information on these and other changes can be found in Publication 553.

Definition of dependent. A dependent is either a qualifying child or a qualifying relative. Qualifying child. In general, a qualifying child must meet all of the following conditions.

Qualifying relative. In general, a qualifying relative must meet all of the following conditions.

The following rules also apply in determining if a person is your dependent.

Certain tax benefits, such as qualifying widow(er) filing status and medical and dental expenses, can still be claimed based on a person who is not your dependent if the only reason that person is not your dependent is because he or she is a qualifying relative who has gross income of $3,200 or more or because of items (1) or (2) above.

Head of household. In general, you can use head of household filing status only if, as of December 31, 2005, you were unmarried or legally separated (according to your state law) under a decree of divorce or separate maintenance and you paid over half the cost of keeping up a home:

You cannot use head of household filing status for a person who is your dependent only because:

The rules under prior law allowing certain married persons living apart from their spouses for the last 6 months of the year to use head of household filing status also apply for 2005.

Earned income credit (EIC). You may be able to take the EIC if:

Donations of motor vehicles, boats, and airplanes. In general, if you donate a motor vehicle, boat, or airplane that is valued at more than $500 and the charitable organization sells the item donated, your deduction on Schedule A will be limited to the gross proceeds from the sale.

Retirement savings plans.  The following paragraphs highlight changes that affect individual retirement arrangements (IRAs) and pension plans. For more information, see Publication 590, Individual Retirement Arrangements (IRAs). Traditional or Roth IRA contribution limits. The contribution limit to a traditional or Roth IRA for 2005 is increased to $4,000 ($4,500 if you are 50 or older). Traditional IRA income limits. If you have a traditional IRA and are covered by a retirement plan at work, the amount of income you can have and not be affected by the deduction phaseout increases. The amounts vary depending on filing status. Salary reduction contributions under a SIMPLE. For 2005, salary reduction contributions that your employer can make on your behalf under a SIMPLE plan are increased to $10,000 (up from $9,000 in 2004). For more information about salary reduction contributions, see How Much Can Be Contributed on Your Behalf? in Publication 590, chapter 3. Additional salary reduction contributions to SIMPLE IRAs. For 2005, additional salary reduction contributions can be made to your SIMPLE IRA if you meet certain requirements. For more information, see How Much Can Be Contributed on Your Behalf? in Publication 590, chapter 3.

Standard mileage rates.  For tax years beginning in 2005, the standard mileage rate for the cost of operating your car increases to:

Credit for child and dependent care expenses. Generally, a qualifying person for purposes of the credit for child and dependent care expenses is your qualifying child (defined above) who is under age 13, or your dependent or spouse who is physically or mentally incapable of caring for himself or herself and who lived with you for more than half of 2005. However, for a qualifying child or dependent, the special rule for children of divorced or separated parents does not apply, and the child is treated as a qualifying person only for the custodial parent. You no longer need to pay over half the cost of keeping up a home for the qualifying person.

Deduction for domestic production activities. You may be able to deduct up to 3% of your qualified production activities income from the following activities.

The deduction does not apply to income derived from: the sale of food and beverages you prepare at a retail establishment; property you leased, licensed, or rented for use by any related person; or the transmission or distribution of electricity, natural gas, or potable water. This deduction is allowed for alternative minimum tax purposes, but is not allowed in determining net earnings from self-employment.

Sales tax deduction. You can elect to deduct state and local general sales taxes instead of state and local income taxes as an itemized deduction on Form 1040, Schedule A. See the instructions for Schedule A (Form 1040) for more information.

Estimated tax safe harbor for higher income individuals. If your adjusted gross income for 2004 was more than $150,000 ($75,000 if married filing a separate return), your withholding and estimated tax payments must be at least the smaller of 90% of your tax liability for 2005 or 110% of the tax shown on your 2004 return (provided your 2004 return covered all 12 months) to avoid an estimated tax penalty.

Who must pay estimated tax. You must pay estimated tax unless the total tax shown on your return minus the amount you paid through withholding (including excess social security and railroad retirement tax withholding) will be less than $1,000.

Payment of estimated tax by electronic funds withdrawal. You may be able to pay your estimated tax by authorizing an automatic withdrawal from your checking or savings account. For more information, see Payment by Electronic Funds Withdrawal under How To Pay Estimated Tax, later.

Employment taxes on household employees. You must include any expected employment (social security, Medicare, and federal unemployment) taxes for household employees when figuring your estimated tax.

Qualified dividends. The maximum tax rate for qualified dividends is 15% (generally, 5% for people whose other income is taxed at the 10% or 15% rate). Use Worksheet 2.5 to figure your estimated tax for 2005 if you expect to receive qualified dividends during the year.

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 through withholding or estimated tax payments, you may be charged 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 chapter 4.

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

If you had a tax liability for 2004, you may have to pay estimated tax for 2005.

General Rule

You must pay estimated tax for 2005 if both of the following apply.

1. You expect to owe at least $1,000 in tax for 2005, after subtracting your withholding and credits, and

2. You expect your withholding and credits to be less than the smaller of:

   1. 90% of the tax to be shown on your 2005 tax return, or

   2. 100% of the tax shown on your 2004 tax return. Your 2004 tax return must cover all 12 months.

If all your income will be subject to income tax withholding, you probably do not need to pay estimated tax.

Example 2.1.

To figure whether she should pay estimated tax for 2005, Jane, who files as head of household, uses the following information.

Expected AGI for 2005	$61,125
AGI for 2004	$58,950
Tax shown on 2004 return	$10,500
Tax expected to be shown on 2005 return	$11,500
Tax expected to be withheld in 2005	$10,400

Jane uses Figure B (on the next page). Jane's answer to the chart's first question is YES, she expects to owe at least $1,000 for 2005 after subtracting her withholding from her expected tax ($11,500 - $10,400 = $1,100). Her answer to the chart's second question is also YES, she expects her income tax withholding ($10,400) to be at least 90% of the tax to be shown on her 2005 return ($11,500 × 90% = $10,350). Jane does not need to pay estimated tax.

Example 2.2.

The facts are the same as in Example 2.1, except that Jane expects only $8,500 tax to be withheld in 2005. Because that is less than $10,350, her answer to the chart's second question is NO.

Jane's answer to the chart's third question is also NO, she does not expect her income tax withholding ($8,500) to be at least 100% of the tax shown on her 2004 return ($10,500). Jane must pay estimated tax for 2005.

Example 2.3.

The facts are the same as in Example 2.2, except that the tax shown on Jane's 2004 return was $8,000. Because she expects to have more than $8,000 withheld in 2005, her answer to the chart's third question is YES. Jane does not need to pay estimated tax for 2005.

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

When figuring your 2005 estimated tax, it may be helpful to use your income, deductions, and credits for 2004 as a starting point. Use your 2004 federal tax return as a guide. You can use Form 1040-ES to figure your estimated tax.

You must make adjustments both for changes in your own situation and for recent changes in the tax law. For 2005, there are several changes in the law. Some of these changes are discussed under What's New for 2005 at the beginning of this chapter. For information about these and other changes in the law, get Publication 553, Highlights of 2004 Tax Changes, or visit the IRS web site at www.irs.gov.

Form 1040-ES includes a worksheet to help you figure your estimated tax. Keep the worksheet for your records. A similar worksheet appears later in this chapter.

Expected Adjusted Gross Income

Your expected adjusted gross income for 2005 (line 1 of the 2005 Estimated Tax Worksheet) is your expected total income minus your expected adjustments to income.

The 2005 Estimated Tax Worksheet is part of Form 1040-ES.

Total income.   Include in your total income all the income you expect to receive during the year, even income that is subject to withholding. However, do not include income that is tax exempt.

  Total income includes all income and loss for 2005 that, if you had received it in 2004, would have been included on your 2004 tax return in the total on line 22 of Form 1040, line 15 of Form 1040A, or line 4 of Form 1040EZ. When figuring your net earnings from self-employment, include only 92.35% of your total net profit from self-employment. Your net profit from self-employment is found on line 31 of Schedule C or line 3 of Schedule C-EZ.

Social security and railroad retirement benefits. If you expect to receive social security or tier 1 railroad retirement benefits during the year, use Worksheet 2.1 to figure the amount of expected taxable benefits you should include on line 1 of the 2005 Estimated Tax Worksheet.

Worksheet 2.1

1.	Enter your expected social security and railroad retirement benefits
2.	Enter one-half of line 1
3.	Enter your expected total income. Do not include any social security and railroad retirement benefits, nontaxable interest income, nontaxable IRA distributions, or nontaxable pension distributions
4.	Enter your expected nontaxable interest income
5.	Add lines 2, 3, and 4
6.	Enter your expected adjustments to income except any student loan interest deduction and any tuition and fees deduction
7.	Subtract line 6 from line 5
8.	Enter $25,000 ($32,000 if you expect to file married filing a joint return; $0 if you expect to file married filing a separate return and expect to live with your spouse at any time during the year)
9.	Subtract line 8 from line 7. If zero or less, stop here. Do not include any social security or railroad retirement benefits on line 1 of your 2005 Estimated Tax Worksheet
10.	Enter $9,000 ($12,000 if you expect to file married filing a joint return; $0 if you expect to file married filing a separate return and expect to live with your spouse at any time during the year)
11.	Subtract line 10 from line 9. If zero or less, enter –0–
12.	Enter the smaller of line 9 or line 10
13.	Enter one-half of line 12
14.	Enter the smaller of line 2 or line 13
15.	Multiply line 11 by 85% (.85). If line 11 is zero, enter –0–.
16.	Add lines 14 and 15
17.	Multiply line 1 by 85% (.85)
18.	Enter the smaller of line 16 or line 17. This is the amount of your expected taxable social security and railroad retirement benefits. Include this amount in the total on line 1 of your 2005 Estimated Tax Worksheet

Adjustments to income.   Be sure to subtract from your expected total income all of the adjustments you expect to take on your 2005 tax return. If you are using your 2004 return as a guide and filed Form 1040, your adjustments for 2004 were on lines 23–34. If you filed Form 1040A, your 2004 adjustments were on lines 16–19.

Self-employed. If you expect to have income from self-employment, use Worksheet 2.2 to figure your expected self-employment tax and your deduction for one-half of your self-employment tax. Include the amount on line 10 in your expected adjustments to income. If you file a joint return and both you and your spouse have net earnings from self-employment, you must each complete a separate worksheet.

Worksheet 2.2

1.	Enter your expected income and profits subject to self-employment tax
2.	Multiply line 1 by .9235
3.	Multiply line 2 by .029
4.	Social security tax maximum income	$90,000
5.	Enter your expected wages (if subject to social security tax)
6.	Subtract line 5 from line 4
	Note. If line 6 is zero or less, enter –0– on line 8 and skip to line 9.
7.	Enter the smaller of line 2 or line 6
8.	Multiply line 7 by .124
9.	Add line 3 and line 8. Enter the result here and on line 11 of your 2005 Estimated Tax Worksheet
10.	Multiply line 9 by .50. This is your expected deduction for one-half of your self-employment tax.

Expected Taxable Income

Reduce your expected adjusted gross income for 2005 (line 1 of the 2005 Estimated Tax Worksheet), by either your expected itemized deductions or your standard deduction and by your exemptions (lines 2 through 5 of the 2005 Estimated Tax Worksheet).

Itemized deductions.   If you expect to claim itemized deductions on your 2005 tax return, subtract them from your expected adjusted gross income.

  Itemized deductions are the deductions that can be claimed on Schedule A of Form 1040.

Reduction of itemized deductions. For 2005, your total itemized deductions may be reduced if your adjusted gross income (AGI) is more than $145,950 ($72,975 if married filing separately). If you expect your AGI to be more than that amount, use the following worksheet to figure the amount to enter on line 2 of the 2005 Estimated Tax Worksheet.

Worksheet 2.3

1.	Enter the estimated total of your itemized deductions
2.	Enter the amount included in line 1 for medical and dental expenses, investment interest, casualty or theft losses, and gambling losses
3.	Subtract line 2 from line 1
	Note. If line 3 is zero, stop here and enter line 1 of this worksheet on line 2 of the 2005 Estimated Tax Worksheet .
4.	Multiply line 3 by .80
5.	Enter line 1 of the 2005 Estimated Tax Worksheet
6.	Enter $145,950 ($72,975 if married filing separately)
7.	Subtract line 6 from line 5
8.	Multiply line 7 by .03
9.	Enter the smaller of line 4 or line 8
10.	Subtract line 9 from line 1. Enter the result here and on line 2 of the 2005 Estimated Tax Worksheet

Standard deduction.   If you expect to claim the standard deduction on your 2005 tax return, subtract it from your expected adjusted gross income. Use the 2005 Standard Deduction Tables at the end of this chapter to find your standard deduction.

No standard deduction.   The standard deduction for some individuals is zero. Your standard deduction will be zero if you:

• File a separate return and your spouse itemizes deductions,

• Are a nonresident alien, or

• Make a return for a period of less than 12 months because you change your accounting period.

Exemptions.   After you have subtracted either your expected itemized deductions or your standard deduction from your expected adjusted gross income, reduce the amount remaining by $3,200 for each exemption you expect to take on your 2005 tax return (lines 4 and 5 of the 2005 Estimated Tax Worksheet). If another person (such as your parent) can claim an exemption for you on his or her tax return, you cannot claim your own personal exemption. This is true even if the other person will not claim your exemption or the exemption will be reduced or eliminated under the phaseout rule.

Phaseout.    For 2005, your deduction for personal exemptions is phased out if your adjusted gross income (AGI) falls within the following brackets.

Table 2.1

Single	$145,950	–	$268,450
Married filing jointly or qualifying widow(er)	$218,950	–	$341,450
Married filing separately	$109,475	–	$170,725
Head of household	$182,450	–	$304,950

  If the amount on line 1 of your 2005 Estimated Tax Worksheet is more than the highest amount in the bracket for your filing status, enter “-0-” on line 4 of your 2005 Estimated Tax Worksheet. If your AGI will fall within the bracket, use the following worksheet to figure the amount to enter on line 4 of your 2005 Estimated Tax Worksheet.

Worksheet 2.4

1.	Multiply $3,200 by the number of exemptions you plan to claim
2.	Enter the amount from line 1 of your 2005 Estimated Tax Worksheet
3.	Enter:
	$145,950 if single
	$218,950 if married filing jointly or qualifying widow(er)
	$109,475 if married filing separately
	$182,450 if head of household
4.	Subtract line 3 from line 2
5.	Divide line 4 by $2,500 ($1,250 if married filing separately). If the result is not a whole number, increase it to the next whole number
6.	Multiply line 5 by .02. Enter the result as a decimal, but not more than 1
7.	Multiply line 1 by the decimal on line 6
8.	Subtract line 7 from line 1. Enter the result here and on line 4 of your 2005 Estimated Tax Worksheet

Expected Taxes and Credits

After you have figured your expected taxable income, follow the steps below to figure your expected taxes, credits, and total tax for 2005. Most people will have entries for only a few of these steps. However, you should check every step to be sure that you do not overlook anything. The 2005 Estimated Tax Worksheet is part of the instructions for Form 1040-ES. References in the worksheet to instructions are to those instructions.

2003 Estimated Tax Worksheet

Step 1.   Figure your expected income tax (line 6 of the 2005 Estimated Tax Worksheet). Use the 2005 Tax Rate Schedules at the end of this chapter or in the instructions to Form 1040-ES to figure your expected income tax. You must use a special method to figure tax on the income of a child under age 14 who has more than $1,600 of investment income. See Tax on Investment Income of Child Under 14 in Publication 929, Tax Rules for Children and Dependents.

Tax on net capital gain.   The regular income tax rates for individuals do not apply to a net capital gain. Instead, your net capital gain is taxed at a lower maximum rate.

  The term “net capital gain” means the amount by which your net long-term capital gain for the year is more than your net short-term capital loss.

Qualified dividends.   The maximum tax rate for qualified dividends is 15% (generally, 5% for people whose other income is taxed at the 10% or 15% rate).

If you expect to have a net capital gain or qualified dividends, use Worksheet 2.5 to figure your tax.

Worksheet 2.5

1.	Enter the amount from line 5 of your 2005 Estimated Tax Worksheet
2.	Enter your expected qualified dividends for 2005*
3.	Enter the net capital gain expected for 2005*
4.	Add lines 2 and 3
5.	Enter your 28% rate gain or loss expected for 2005.
6.	Enter the unrecaptured section 1250 gain expected for 2005
7.	Add lines 5 and 6
8.	Enter the smaller of line 3 or line 7
9.	Subtract line 8 from line 4
10.	Subtract line 9 from line 1. If zero or less, enter zero (0)
11.	Enter the smaller of line 1 or $59,400 ($29,700 if single or married filing separately or $39,800 if head of household).
12.	Enter the smaller of line 10 or line 11
13.	Subtract line 4 from line 1. If zero or less, enter zero (0).
14.	Enter the larger of line 12 or line 13. Note.If line 11 and line 12 are the same, skip lines 15 and 16 and go on to line 17.
15.	Subtract line 12 from line 11.
16.	Multiply line 15 by 5% (.05). Note. If lines 1 and 11 are the same, skip lines 17–23 and go to line 24
17.	Enter the smaller of line 1 or line 9.
18.	Subtract line 15 from line 17. If zero or less, enter zero (0)
19.	Multiply line 18 by 15% (.15). Note.If line 6 is zero or blank, skip lines 20–24 and go to line 25
20.	Enter the smaller of line 3 or line 6.
21.	Add lines 4 and 14
22.	Subtract line 1 from line 21. If zero or less, enter zero (0)
23.	Subtract line 22 from line 20. If zero or less, enter zero (0)
24.	Multiply line 23 by 25% (.25). Note.If line 5 is zero or blank, skip lines 25–27 and go to line 28
25.	Add lines 14, 15, 18, and 23
26.	Subtract line 25 from line 1.
27.	Multiply line 26 by 28% (.28).
28.	Tax on line 14 from the 2005 Tax Rate Schedule
29.	Add lines 16, 19, 24, 27, and 28
30.	Tax on line 1 from the 2005 Tax Rate Schedule
31.	Tax. Enter the smaller of line 29 or line 30 here and on line 6 of the 2005 Estimated Tax Worksheet
*If you expect to deduct investment interest expense, do not include on this line any qualified dividends or net capital gain that you will elect to treat as investment income.

A collectibles gain or loss is any gain or loss from the sale or exchange of a work of art, rug, antique, metal, gem, stamp, coin, or alcoholic beverage or other collectible that is a capital asset and that was held more than one year.

Step 2.   Add your expected taxes (line 8 of the 2005 Estimated Tax Worksheet). Include on line 8 the sum of:

1. Your tax on line 6 of the worksheet,

2. Your expected alternative minimum tax from Form 6251 on line 7 of the worksheet,

3. Your expected additional taxes from Form 8814, Parents' Election To Report Child's Interest and Dividends, and Form 4972, Tax on Lump-Sum Distributions (line 43 box a and box b of the 2004 Form 1040), and

4. Any recapture of education credits.

Step 3.   Subtract your expected credits (line 9 of the 2005 Estimated Tax Worksheet). If you are using your 2004 return as a guide and filed Form 1040, your total credits for 2004 were shown on line 55. If you filed Form 1040A, your total credits for 2004 were on line 35.

  If your credits on line 9 of the worksheet are more than your taxes on line 8, enter “-0-” on line 10 and go on to Step 4.

Step 4.   Add your expected self-employment tax (line 11 of the 2005 Estimated Tax Worksheet). You should have already figured your self-employment tax (see Expected Adjusted Gross Income earlier in this chapter).

  

Step 5.   Add your expected other taxes (line 12 of the 2005 Estimated Tax Worksheet).

  Other taxes include:

1. Taxes on early distributions from:

   1. An IRA or other qualified plan,

   2. An annuity, or

   3. A modified endowment contract entered into after June 20, 1988,

2. Advance earned income credit payments,

3. Household employment taxes (before subtracting advance EIC payments made to your employee(s)) if:

   1. You will have federal income tax withheld from wages, pensions, annuities, gambling winnings, or other income, or

   2. You would be required to make estimated tax payments even if you did not include household employment taxes when figuring your estimated tax, and

4. Amounts written in on Form 1040, line 62.

  Do not include tax on recapture of a federal mortgage subsidy, tax on golden parachute payments, excise tax on insider stock compensation from an expatriated corporation, social security and Medicare tax on unreported tip income, or uncollected employee social security and Medicare or RRTA tax on tips or group-term life insurance.

  If you filed a 2004 Form 1040A, your only “other taxes” were any advance earned income credit payments on line 37.

Step 6.   Subtract your expected earned income credit, additional child tax credit, Form 4136 fuel tax credit, and Form 8885 health coverage tax credit (line 13b of the 2005 Estimated Tax Worksheet). These are shown on the 2004 Form 1040, lines 65a, 67, and 69.

  To figure your expected fuel tax credit, do not include fuel tax for the first three quarters of the year that you expect to have refunded to you.

  The earned income credit is shown on the 2004 Form 1040A, line 41a. The additional child tax credit is shown on the 2004 Form 1040A, line 42.

  The result of steps 1 through 6 is your total estimated tax for 2005 (line 13c of the 2005 Estimated Tax Worksheet).

For estimated tax purposes, the 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 of the payment periods, you may be charged a penalty even if you are due a refund when you file your income tax return. The following chart gives the payment periods and due dates for estimated tax payments.

After you have figured your estimated tax, figure how much you must pay by the due date of each payment period. You should pay enough by each due date to avoid a penalty for that period. If you do not pay enough during any payment period, you may be charged a penalty even if you are due a refund when you file your tax return. The penalty is discussed in chapter 4.

Regular Installment Method

If your first estimated tax payment is due April 15, 2005, you can figure your required payment for each period by dividing your annual estimated tax due (line 16 of the 2005 Estimated Tax Worksheet) by 4. Use this method only if your income is basically the same throughout the year.

Household employers.   Reduce your required payment for each period by the amount of advance EIC payments paid during the period.

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.

If you do not receive your income evenly throughout the year, your required estimated tax payments may not be the same for each period. See Annualized Income Installment Method, later.

Amended estimated tax. If you refigure your estimated tax during the year, or if your first estimated tax payment is due after April 15, 2005, figure your required payment for each remaining payment period using the following worksheet.

Worksheet 2.6

1.	Amended total estimated tax due
2.	Multiply line 1 by:
		.50 if next payment is due June 15, 2005
		.75 if next payment is due September 15, 2005
		1.00 if next payment is due January 15, 2006
3.	Estimated tax payments for all previous periods
4.	Next required payment: Subtract line 3 from line 2 and enter the result (but not less than zero) here and on your payment voucher for your next required payment
		If the payment on line 4 is due January 15, 2006, stop here. Otherwise, go on to line 5.
5.	Add lines 3 and 4
6.	Subtract line 5 from line 1 and enter the result (but not less than zero)
7.	Each following required payment: If the payment on line 4 is due June 15, 2005, enter one-half of the amount on line 6 here and on the payment vouchers for your payments due September 15, 2005, and January 15, 2006. If the amount on line 4 is due September 15, 2005, enter the full amount on line 6 here and on the payment voucher for your payment due January 15, 2006

Example 2.7.

Early in 2005, Mira figures her estimated tax due is $1,800. She makes estimated tax payments on April 15 and June 15 of $450 each ($1,800 ÷ 4).

On July 10, she sells investment property at a gain. Her refigured estimated tax is $4,100. Her required estimated tax payment for the third payment period is $2,175, figured as follows.

Filled-in Worksheet 2.6 for Mira (Example 2.7)

1.	Amended total estimated tax due		$4,100
2.	Multiply line 1 by:
		.50 if next payment is due June 15, 2005
		.75 if next payment is due September 15, 2005
		1.00 if next payment is due January 15, 2006	3,075
3.	Estimated tax payments for all previous periods		900
4.	Next required payment: Subtract line 3 from line 2 and enter the result (but not less than zero) here and on your payment voucher for your next required payment		$2,175
If the payment on line 4 is due January 15, 2006, stop here. Otherwise, go on to line 5.
5.	Add lines 3 and 4		3,075
6.	Subtract line 5 from line 1 and enter the result (but not less than zero)		1,025
7.	Each following required payment: If the payment on line 4 is due June 15, 2005, enter one-half of the amount on line 6 here and on the payment vouchers for your payments due September 15, 2005, and January 15, 2006. If the amount on line 4 is due September 15, 2005, enter the full amount on line 6 here and on the payment voucher for your payment due January 15, 2006		$1,025

If Mira's estimated tax does not change again, her required estimated tax payment for the fourth payment period will be $1,025.

Underpayment penalty.   If your estimated tax payment for a previous period is less than one-fourth of your amended estimated tax, you may be charged a penalty for underpayment of estimated tax for that period when you file your tax return. See chapter 4 for more information.