IRS Tax Forms  
Publication 520 2001 Tax Year

Estimated Tax

The grantor of a scholarship or fellowship does not withhold tax unless the grant represents payment for services. Grants representing payment for services are wages for withholding purposes. The grantor must report them on a Form W-2.

You may have to pay estimated tax if the grantor of a scholarship or fellowship does not withhold tax or withholds insufficient tax on the taxable part of your scholarship or fellowship grant.

Your estimated tax is the total of your expected tax for the year minus your expected withholding and credits.

Use Form 1040-ES, Estimated Tax for Individuals, to figure and pay estimated tax.

Who should make estimated tax payments? Generally, you must make estimated tax payments if you expect to owe at least $1,000 in tax after subtracting your withholding and credits, and you expect your withholding and credits to be less than the smaller of:

  1. 90% of the total tax for the year, or
  2. 100% of the total tax shown on your preceding year's tax return. You must have filed a return for the preceding tax year that covers all 12 months.

When to pay estimated tax. For estimated tax purposes, the year is divided into four payment periods. The payment due dates are April 15, June 15, September 15, and January 15. 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 four installments. If any of the due dates fall on a Saturday, Sunday, or legal holiday, the due date is the following business day.

Penalty. If you do not pay enough of your estimated tax in each payment period, you may have to pay a penalty. You will not have to pay a penalty if you had no tax liability last year and you were a U.S. citizen or resident for the whole year. For this rule to apply, your prior tax year must have been a tax year of 12 months.

For more information, see chapter 4 of Publication 505.

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