Figure 2-D, Regular Installment Method—Illustrated Example 1 (Anne and Larry Jones). Summary: This is an example of the estimated tax worksheet using the regular installment method. The completed line items are:

“1. Adjusted gross income you expect in 2008 (see instructions below)” field contains 81,756

“2. If you plan to itemize deductions, enter the estimated total of your itemized deductions. Caution: If line 1 above is over $159,950 ($79,975 if married filing separately), your deduction may be reduced. See Pub. 505 for details. If you do not plan to itemize deductions, enter your standard deduction from page 1” field contains 11,525

“3. Subtract line 2 from line 1” field contains 70,231

“4. Exemptions. Multiply $3,500 by the number of personal exemptions. Caution: See Pub. 505 to figure the amount to enter if line 1 above is over: $239,950 if married filing jointly or qualifying widow(er); $199,950 if head of household; $159,950 if single; or $119,975 if married filing separately” field contains 7,000

“5. Subtract line 4 from line 3” field contains 63,231

“6. Tax. Figure your tax on the amount on line 5 by using the 2008 Tax Rate Schedules on page 5. Caution: If you have qualified dividends or a net capital gain, or expect to claim the foreign earned income exclusion or housing exclusion, see Pub. 505 to figure the tax” field contains 8,682

“8. Add lines 6 and 7. Add to this amount any other taxes you expect to include in the total on Form 1040, line 44, or Form 1040A, line 28” field contains 8,682

“10. Subtract line 9 from line 8. If zero or less, enter 0” field contains 8,682

“11. Self-employment tax (see instructions below). Estimate of 2008 net earnings from self-employment $(field contains 37,032); if $102,000 or less, multiply the amount by 15.3%; if more than $102,000, multiply the amount by 2.9%, add $12,648 to the result, and enter the total. Caution: If you also have wages subject to social security tax, see Pub. 505 to figure the amount to enter” field contains 37,032 and 5,666

“13a. Add lines 10 through 12” field contains 14,348

“13c. Total 2008 estimated tax. Subtract line 13b from line 13a. If zero or less, enter 0” field contains 14,348

“14a. Multiply line 13c by 90% (66 2/3% for farmers and fishermen)” field contains 12,913

“14b. Enter the tax shown on your 2007 tax return (110% of that amount if you are not a farmer or fisherman and the shown on that return is more than $150,000 or, if married filing separately for 2007, more than $75,000)” field contains 14,496

“14c. Required annual payment to avoid a penalty. Enter the smaller of line 14a or 14b. Caution: Generally, if you do not prepay (through income tax withholding and estimated tax payments) at least the amount on line 14c, you may owe a penalty for not paying enough estimated tax. To avoid a penalty, make sure your estimate on line 13c is as accurate as possible. Even if you pay the required annual payment, you may still owe tax when you file your return. If you prefer, you can pay the amount shown on line 13c. For details, see Pub. 505.” field contains 12,913

“15. Income tax withheld and estimated to be withheld during 2008 (including income tax withholding on pensions, annuities, certain deferred income, etcetera” field contains 3,384

“16a. Subtract line 15 from line 14c.” field contains 9,529

“Is the result zero or less? Checkbox Yes. Stop here. You are not required to make estimated tax payments. Checkbox No. Go to line 16b.”field has No checked

“16b. Subtract line 15 from line 13c.”field contains 10,964

“Is the result less than $1,000? Checkbox Yes. Stop here. You are not required to make estimated tax payments. Checkbox No. Go to line 17 to figure your required payment.”field has No checked

“17. If the first payment you are required to make is due April 15, 2008, enter 1/4 of line 16 (minus any 2007 overpayment that you are applying to this installment) here, and on your estimated tax payment voucher(s) if you are paying by check or money order. (Note: Household employers, see instructions below.)” field contains 2,382