Publication 505 (2/2007), Tax Withholding and Estimated Tax

This is archived information that pertains only to the 2006 Tax Year. If you
are looking for information for the current tax year, go to the Tax Prep Help Area.

A

Address change, Change of address.

Adjustments to income:

Estimated tax, Adjustments to income.
Withholding allowances, Adjustments to income (worksheet line 4).
Worksheet instructions, Deductions and Adjustments Worksheet, Net deductions and adjustments (worksheet line 7).

Age 65 or older:

Exemption from withholding, Students.

AGI :

Expected AGI, Expected AGI—Line 1

AGI:

Annualized AGI, Annualized AGI.
Deductions and Adjustments Worksheet, AGI.
Expected AGI, Expected AGI.

Aliens (see Nonresident aliens)

Amended returns, Form Received After Filing, Amended returns.

Annualized income installment method, Example 2—Annualized Income Installment Method

Annualized income installment method:

Blank worksheet, estimated tax,
Estimated tax, Annualized Income Installment Method
Form 2210, Annualized Income Installment Method (Schedule AI)
Underpayment penalty, Annualized Income Installment Method (Schedule AI)

Annuities, Pensions and Annuities, Choosing Not To Have Income Tax Withheld

Assistance (see Tax help)

B

Backup withholding, Backup Withholding, Penalties.

Backup withholding:

Credit against income tax, Backup withholding.

Bankruptcy

Withholding allowance decrease, Changing Your Withholding

Blind persons:

Exemption from withholding, Students.

C

Capital gains and losses:

Annualized estimated tax, Tax on net capital gain.
Estimated tax on net capital gain, Tax on net capital gain.
Qualified dividends, Tax on qualified dividends.

Casualty and theft losses, Itemized deductions (worksheet line 1).

Waiver of penalty, Waiver of Penalty

Change of address, Change of address.

Change of name, Name changed.

Changing withholding, Changing Your Withholding, Changing your withholding for 2008.

Charitable contributions, Itemized deductions (worksheet line 1).

Child and dependent care credit:

Personal Allowances Worksheet, Child and dependent care credit (worksheet line F).

Child tax credit:

Personal Allowances Worksheet, Child tax credit (worksheet line G).

Claim of right, Itemized deductions (worksheet line 1).

Collection of tax

Estimated tax (see Estimated tax)
Withholding (see Withholding)

Comments on publication, Comments and suggestions.

Commodity credit loans, Federal Payments

Community property states, Community property states.

Compensation:

Independent contractors, backup withholding, Payments subject to backup withholding.
Supplemental wages, Supplemental Wages
Tips, Tips
Wages and salaries, Salaries and Wages, Penalties

Credit cards, Pay by Credit Card

Crediting of overpayment, Credit an Overpayment

Credits:

2006 withholding and estimated taxes, Credit for Withholding and Estimated Tax for 2006
Annualized taxes and credits, Annualized taxes and credits.
Deductions and Adjustments Worksheet, Tax credits (worksheet line 5)., Figuring line 5 entry.
Estimated tax against income tax, Estimated Tax
Excess withholding on social security or railroad retirement taxes, Excess Social Security or Railroad Retirement Tax Withholding
Exemption from withholding, Itemizing deductions or claiming exemptions or credits.
Expected taxes and credits, Expected Taxes and Credits—Lines 6-13c, Expected taxes and credits.
Withholding allowances, Tax credits (worksheet line 5).
Withholding tax, credit for, Withholding

Criminal penalties:

Willfully false or fraudulent Form W-4, Penalties

Crop insurance payments, Federal Payments

Cumulative wage method of withholding, Cumulative wage method.

D

Deductions:

Home mortgage interest, Itemized deductions (worksheet line 1).
Withholding allowance decrease, Changing Your Withholding
Worksheet instructions, Deductions and Adjustments Worksheet, Net deductions and adjustments (worksheet line 7).

Deferred compensation, nonqualified, Periodic Payments

Dependents:

Exemptions, Dependents.
Withholding allowance decrease, Changing Your Withholding

Disabled persons:

Impairment-related work expenses, Itemized deductions (worksheet line 1).

Disaster:

Waiver of penalty, Waiver of Penalty

Dividends:

Backup withholding, Payments subject to backup withholding.
Qualified dividends, estimated tax, Tax on qualified dividends.
Underreported, Underreported interest or dividends.

Divorced taxpayers:

Estimated tax credit, Divorced Taxpayers
Withholding, Changing Your Withholding, Single.

Domestic help:

Definition, Household workers.
Estimated tax, regular installment method, Household employers.
Withholding, Household workers.

E

Electronic funds withdrawal, Pay by Electronic Funds Withdrawal

Eligible rollover distributions, Eligible Rollover Distributions

Employee business expenses:

Accountable plans, Accountable plan.
Excess reimbursements or allowances, Accountable plan.
Nonaccountable plans, Nonaccountable plan.
Reimbursements, Expense allowances.

Employer Identification Numbers (EINs), Taxpayer identification number.

Employers, Rules Your Employer Must Follow

Employers:

Excess withholding on social security and railroad retirement taxes, Two or more employers., Employer's error.
Repaying withheld tax, Repaying withheld tax.
Tips, Tips

Errors:

Excess withholding of social security or railroad retirement taxes by employer, Employer's error.

Estate beneficiaries:

Underpayment penalty, Trust payments of estimated tax.

Estate tax:

Income in respect of a decedent, Itemized deductions (worksheet line 1).

Estates:

Estimated tax, Estates and Trusts

Estimated tax worksheets:

2007 annualized estimated tax worksheet,
2007 estimated tax worksheet, Second, Third, and Fourth Periods
Amended estimated tax, Regular Installment Method
Capital gains, ,
Exemption amount reduction, ,
Itemized deductions phaseout, ,
Qualified dividends, Tax on qualified dividends.,
Railroad retirement benefits,
Self-employment tax,
Self-employment tax, illustrated,
Social security benefits,

Estimated tax:

Adjustments to income, Adjustments to income.

Aliens, Aliens, Nonresident aliens.

Amended tax, Regular Installment Method

Annualized AGI, Annualized AGI.

Annualized income installment method, Annualized Income Installment Method, Example 2—Annualized Income Installment Method

Annualized income installment method:

Blank worksheet,

Annualized taxable income, Annualized taxable income.

Annualized taxes and credits, Annualized taxes and credits.

Change in amount, Change in estimated tax.

Change of address, Change of address.

Change of name, Name changed.

Credit against income tax, Estimated Tax

Credit card, payment by, Pay by Credit Card

Crediting of overpayment, Credit an Overpayment

Divorced taxpayers, Divorced Taxpayers

Domestic help, Household employers.

Electronic funds withdrawal, Pay by Electronic Funds Withdrawal

Estates and trusts, Estates and Trusts

Exemptions, Exemptions—line 4.

Expected AGI, Expected AGI—Line 1, Expected AGI.

Expected taxable income, Expected Taxable Income— Lines 2-5, Expected taxable income.

Expected taxes and credits, Expected Taxes and Credits—Lines 6-13c, Expected taxes and credits.

Farmers and fishermen, Farmers and Fishermen, Farmers and fishermen. , Farmers and Fishermen, Farmers and fishermen.

Fiscal year taxpayers, Fiscal year taxpayers.

Form 1040-ES, How To Figure Estimated Tax

Higher income individuals, Higher income taxpayers.

How to figure, How To Figure Estimated Tax, How To Figure Each Payment

How to pay, How To Pay Estimated Tax

Illustrated examples, Illustrated Examples

Instructions for Worksheet 2-7, annualized estimated tax, Instructions for the 2007 Annualized Estimated Tax Worksheet (Worksheet 2-8)

Itemized deductions, Itemized deductions—Line 2.

Married taxpayers, Married Taxpayers

Net capital gain, Tax on net capital gain., Tax on net capital gain.

No standard deduction, No standard deduction.

Nonresident aliens, Line 7., Nonresident aliens.

Overpayment, Credit an Overpayment

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

Payments not required, Estimated Tax Payments Not Required

Qualified dividends, Tax on qualified dividends.

Railroad retirement benefits, Expected AGI—Line 1

Regular installment method, Regular Installment Method, Example 1—Regular Installment Method

Required annual payment, Required Annual Payment— Line 14c, Estimated tax.

Required estimated tax payment, Required estimated tax payment., Required estimated tax payment.

Self-employment income, Expected AGI—Line 1, Self-employment income.

Separate returns, Separate Returns

Sick pay, Estimated tax.

Social security benefits, Expected AGI—Line 1

Standard deduction, Standard deduction—line 2., Line 7.

Total estimated tax payments, Total Estimated Tax Payments Needed—Line 16a

Types of taxes included, Introduction

Underpayment penalty, Underpayment penalty., Underpayment Penalty for 2006

When to pay, When To Pay Estimated Tax

When to start payments, When To Start

Who does not have to pay, Who Does Not Have To Pay Estimated Tax

Who must pay, Who Must Pay Estimated Tax

Excess social security or railroad retirement tax withholding, What's New for 2006, Excess Social Security or Railroad Retirement Tax Withholding, How to claim refund of excess tier 2 RRTA.

Excess social security or railroad retirement tax withholding:

Nonrailroad employees worksheet, Worksheet for Nonrailroad Employees
Railroad employees worksheets, Worksheets for Railroad Employees

Exemption from withholding, Exemption From Withholding, An exemption is good for only one year.

Exemption from withholding:

Age 65 or older, Students.
Blind persons, Students.
Claiming, Claiming exemption from withholding.
Good for only one year, An exemption is good for only one year.
Itemized deductions, Itemizing deductions or claiming exemptions or credits.
Students, Students.

Exemptions:

Dependents, Dependents.
Expected taxable income, Exemptions—line 4.,
Personal Allowances Worksheet, Personal Allowances Worksheet, Exemptions (worksheet lines A, C, and D).
Reduction of, Personal Allowances Worksheet, Expected Taxable Income— Lines 2-5, Line 10.
Self, Self.
Spouse, Spouse.
Withholding allowances, Withholding Allowances (Line 5 of Form W-4)
Worksheets, ,

Expenses:, Itemized deductions (worksheet line 1).

Allowances, Expense allowances.
Standard mileage rates, What's New for 2007, What's New for 2006

F

Farmers:

Estimated tax, Special Rules, Farmers and fishermen. , Farmers and Fishermen, Farmers and fishermen.
Fiscal years, Fiscal year farmers and fishermen.
Gross income, Gross income from farming.
Joint returns, Joint returns.
Required annual payment, Farmers and fishermen.
Underpayment penalty, Farmers and fishermen., Farmers and Fishermen
Waiver of underpayment penalty, Farmers and fishermen.
Withholding for farmworkers, Farmworkers.

Figures (see Tables and figures)

Fiscal years:

Estimated tax, Fiscal year taxpayers.
Farmers and fishermen, Fiscal year farmers and fishermen.
Withholding tax credit, Fiscal Years (FY)

Fishermen:

Backup withholding, fishing boat operators' payments, Payments subject to backup withholding.
Estimated tax, Special Rules, Farmers and fishermen. , Farmers and Fishermen, Farmers and fishermen.
Fiscal years, Fiscal year farmers and fishermen.
Gross income, Gross income from fishing.
Joint returns, Joint returns.
Required annual payment, Farmers and fishermen.
Underpayment penalty, Farmers and fishermen., Farmers and Fishermen
Waiver of underpayment penalty, Farmers and fishermen.

Form 1040-ES, Introduction, How To Figure Estimated Tax, How To Pay Estimated Tax

Form 1040-ES (NR), Aliens

Form 1040X, Form Received After Filing

Form 1041-ES, Estates and Trusts

Form 1099 series, Backup Withholding, The 1099 Series

Form 2210, Form 2210., Completing Schedule AI., Figuring the penalty.

Form 2210-F, Form 2210-F.

Form 8822, Change of address.

Form W-2, Form W-2

Form W-2c, Form Not Correct

Form W-2G, Form W-2G., Form W-2G

Form W-4 (see Form W-4 worksheets)

Illustrated example, Illustrated Example—Form W-4

Form W-4 worksheets:

2006 Form W-4 and worksheets, Illustrated Example—Form W-4
Completing of, Completing Form W-4 and Worksheets
Deductions and Adjustments Worksheet, Deductions and Adjustments Worksheet.
Deductions and adjustments worksheet instructions, Deductions and Adjustments Worksheet
Number of allowances claimed, Only one job (worksheet line B)., Illustrated Example—Form W-4
Personal Allowances Worksheet, Personal Allowances Worksheet, Personal Allowances Worksheet.
Two-Earner/Two-Job Worksheet, Two-Earners/Multiple Jobs Worksheet, Two-Earners/Multiple Jobs Worksheet.
Withholding allowances, Form W-4 worksheets.

Form W-4, Employee's Allowance Withholding Certificate, Determining Amount of Tax Withheld Using Form W-4, An exemption is good for only one year.

Form W-4:

Illustrated example, ,

Form W-4P, Periodic Payments

Form W-4S, Form W-4S.

Form W-4V, Unemployment Compensation

Form W-7, Taxpayer identification number.

Form W-9, Withholding rules.

Fraud:

Form W-4 statements, Penalties

Free tax services, How To Get Tax Help

Fringe benefits, Taxable Fringe Benefits, More information.

G

Gambling:

Form W-2G, Form W-2G
Losses, Itemized deductions (worksheet line 1)., Form W-2G
Winnings, Form W-2G

Gross income, Gross income.

Gross income:

Farming, Gross income from farming.
Fishing, Gross income from fishing.

H

Head of household:

Personal Allowances Worksheet, Head of household filing status (worksheet line E).
Withholding allowance, Head of household filing status (worksheet line E).

Help (see Tax help)

Higher income individuals:

Required annual payment, Higher income taxpayers.
Underpayment penalty, Higher income taxpayers.

Household workers (see Domestic help)

I

Independent contractors:

Backup withholding, Payments subject to backup withholding.

Individual retirement arrangements (IRAs):, Pensions and Annuities

(see also Pensions)
Income limits, What's New for 2006
SIMPLE IRA salary reduction contributions, What's New for 2006

Interest income:

Backup withholding, Payments subject to backup withholding.
Underreported, Underreported interest or dividends.

Itemized deductions:

Deductions and Adjustments Worksheet, Itemized deductions (worksheet line 1).
Estimated tax, expected taxable income, Itemized deductions—Line 2.
Exemption from withholding, Itemizing deductions or claiming exemptions or credits.
Gambling losses, Form W-2G
Phaseout of, AGI., Expected Taxable Income— Lines 2-5
Reduction, AGI., Expected Taxable Income— Lines 2-5
Worksheets, , ,

J

Joint returns:

Excess withholding on social security and railroad retirement taxes, Excess Social Security or Railroad Retirement Tax Withholding
Farmers and fishermen, Joint returns.
Underpayment penalty, 2005 separate returns and 2006 joint return., 2005 joint return and 2006 separate returns.

M

Marital status:

Form W-4 worksheet, Marital Status (Line 3 of Form W-4)
Withholding rate, Marital Status (Line 3 of Form W-4)

Married taxpayers:, Excess Social Security or Railroad Retirement Tax Withholding

(see also Joint returns)
Estimated tax, Married Taxpayers
Marital status, Married.
Withholding allowances, Married individuals.

Medical and dental expenses, Itemized deductions (worksheet line 1).

Military retirement pay, Military retirees., Periodic Payments

Missing children, photographs of, Reminders

More information (see Tax help)

N

Name change, Name changed.

Noncitizens:

Estimated tax, Aliens
Withholding, Single., Employees who are not citizens or residents.

Nonqualified deferred compensation, Periodic Payments

Nonresident aliens:

Estimated tax, Aliens, Nonresident aliens.
Individual taxpayer identification numbers (ITINs), Taxpayer identification number.

O

Overpayment:

Crediting to estimated tax, Credit an Overpayment

P

Part-year method of withholding, Part-Year Method

Patronage dividends:

Backup withholding, Payments subject to backup withholding.

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

Penalties:

Backup withholding, Penalties.
Underpayment of estimated tax, Underpayment Penalty for 2006
Waiver of, Waiver of Penalty
Willfully false or fraudulent Form W-4, Penalties
Withholding allowances, Penalties

Pensions, Pensions and Annuities, Choosing Not To Have Income Tax Withheld

Pensions:, What's New for 2006

(see also Individual retirement arrangements (IRAs))
(see also Retirement plans)
New job, Employee also receiving pension income.
Rollovers, Eligible Rollover Distributions
Wages and salaries withholding rules compared, Withholding rules.

Personal Allowances Worksheet, Personal Allowances Worksheet, Total personal allowances (worksheet line H).

Personal allowances:

Reduction of, Personal Allowances Worksheet

Personal exemptions (see Exemptions)

Publication 919, Publication 919

Publications (see Tax help)

Q

Qualified dividends, Tax on qualified dividends.

R

Railroad retirement benefits:

Choosing to withhold, Federal Payments
Estimated tax, Expected AGI—Line 1

Railroad retirement tax:

Excess withholding, What's New for 2006, Excess Social Security or Railroad Retirement Tax Withholding, Worksheets for Railroad Employees

Worksheets,

Refund claims, How to claim refund of excess tier 2 RRTA.

Regular installment method, estimated tax, Regular Installment Method, Example 1—Regular Installment Method

Reimbursements, Expense allowances.

Reimbursements:

Excess, Accountable plan.

Rents, profits, or other gains:

Backup withholding, Payments subject to backup withholding.

Reporting:

Fringe benefits, How your employer reports your benefits.
Gambling winnings, Information to give payer.
Tips to employer, Reporting tips to your employer.

Required annual payment, Required Annual Payment— Line 14c, Example.

Required estimated tax payment, Required estimated tax payment., Required estimated tax payment.

Retirement plans

IRAs (see Individual retirement arrangements (IRAs))
Pension plans (see Pensions)

Retirement plans:

Rollovers, Eligible Rollover Distributions
State or local deferred compensation plan payments, Periodic Payments

Rollovers, Eligible Rollover Distributions

Royalties:

Backup withholding, Payments subject to backup withholding.

S

Salaries (see Compensation)

Salary reduction contributions:

SIMPLE IRAs, What's New for 2006

Saturday, Sunday, holiday rule, Saturday, Sunday, holiday rule.

Self-employment tax, Expected AGI—Line 1, Self-employment income.

Separate returns:

Estimated tax credit, Separate Returns
Underpayment penalty, 2005 separate returns and 2006 joint return., 2005 joint return and 2006 separate returns.
Withholding tax credit, Separate Returns

Sick pay, Sick Pay, Estimated tax.

SIMPLE IRAs, What's New for 2006

Single marital status, Single.

Social security benefits:

Choosing to withhold, Federal Payments
Estimated tax, Expected AGI—Line 1

Social security taxes:

Excess withholding, What's New for 2006, Excess Social Security or Railroad Retirement Tax Withholding

Worksheet, Worksheet for Nonrailroad Employees

FICA tax, withholding obligation, Reminders

Taxpayer identification numbers (TINs), Taxpayer identification number.

Spouse:, Marital Status (Line 3 of Form W-4)

(see also Married taxpayers)
Exemption, Spouse.
Marital status, Marital Status (Line 3 of Form W-4)
Personal Allowances Worksheet, Spouse.

Standard deduction, Standard deduction—line 2., Line 7.

Standard mileage rates, What's New for 2007, What's New for 2006

State and local income taxes and property taxes, Itemized deductions (worksheet line 1).

State or local deferred compensation plan payments, Periodic Payments

Students, Students.

Suggestions for publication, Comments and suggestions.

Supplemental wages, Supplemental Wages

T

Tables and figures:

2007 estimated tax worksheet (Figure 2-B),
Annualized income installment method worksheet, estimated tax (Figure 2-C),
Annualized income installment method, Form 2210 (Figure 4-C), ,
Annualized income installment method, illustrated example estimated tax (Figure 2-E),
Annualized income installment method, underpayment penalty (Figure 4-C), ,
Calendar to determine days payment late (Table 4-1),
Credits for Form W-4 deductions and adjustments worksheet (Table 1-1), Two-Earners/Multiple Jobs Worksheet
Dependents, standard deduction worksheet (Table 2-5), 2007 Standard Deduction Tables
Do you have to pay estimated tax? (Figure 2-A),
Due dates, estimated tax (Table 2-2),
Exemption from withholding on Form W-4 (Figure 1-B),
Form 2210, short method illustrated (Figure 4-A), ,
Form W-4, illustrated example (Figure 1-A), ,
Railroad retirement, maximum withholding (Table 3-1),
Regular installment method, illustrated example estimated tax (Figure 2-D Anne and Larry Jones,
Regular installment method, illustrated example Form 2210 (Figure 4-B), ,
Regular installment method, illustrated example underpayment penalty (Figure 4-B), ,
Social security, maximum withholding (Table 3-1),
Standard deduction worksheet for dependents (Table 2-5), 2007 Standard Deduction Tables
Total days, chart (Table 4-2), Figuring the penalty.
Underpayment penalty, calendar to determine number of days payment is late (Table 4-1),
Worksheets, where to find (Table 2-2), Worksheets for Chapter 2

Tax help, How To Get Tax Help

Taxpayer Advocate, Contacting your Taxpayer Advocate.

Taxpayer identification numbers (TINs), Taxpayer identification number.

Tips, Tips, More information.

Total income, Total income.

Trust beneficiaries:

Underpayment penalty, Trust payments of estimated tax.

TTY/TDD information, How To Get Tax Help

Two jobs:

Withholding allowances, Multiple jobs.

Two-Earner/Two-Job Worksheet, Two-Earners/Multiple Jobs Worksheet, Illustrated Example—Form W-4

U

Underpayment penalty, Underpayment Penalty for 2006, Farmers and fishermen.

Underpayment penalty:

Actual withholding method, Actual withholding method.
Amended estimated tax, Underpayment penalty.
Amended returns, Amended returns.
Annualized income installment method, Annualized Income Installment Method (Schedule AI)
Beneficiaries of estates and trusts, Trust payments of estimated tax.
Exceptions, Exceptions
Farmers and fishermen, Farmers and fishermen., Farmers and Fishermen, Farmers and fishermen.
Figuring, IRS can figure the penalty for you., Short Method for Figuring the Penalty (Part III), Regular Method for Figuring the Penalty (Part IV), Figuring Your Penalty (Part IV, Section B)
Higher income individuals, Higher income taxpayers.
Joint returns, 2005 separate returns and 2006 joint return., 2005 joint return and 2006 separate returns.
Late payments, calendar to determine number of days (Table 4-1),
Lowering or eliminating, Lowering or eliminating the penalty.
Minimum required each period, Minimum required each period.
No penalty, No penalty.
No tax liability last year exception, No Tax Liability Last Year
Paid through withholding, Paid through withholding., Actual withholding method.
Penalty figured for each period, Penalty figured for each period.
Penalty thresholds, General Rule
Regular installment method, Regular Installment Method
Required annual payment, Figuring Your Required Annual Payment (Part I)
Schedule AI, Annualized Income Installment Method (Schedule AI)
Separate returns, 2005 separate returns and 2006 joint return., 2005 joint return and 2006 separate returns.
Waiver, Waiver of Penalty
When charged, When penalty is charged.

Unemployment compensation, Unemployment Compensation, Form 1099-G.

W

Wages and salaries (see Compensation)

Waiver of penalty, Waiver of Penalty

What's New for 1006

Additional exemption for housing Katrina individuals., What's New for 2006

What's New for 2006

Expired tax benefits, What's New for 2006

What's New for 2006:

Alternative motor vehicles, What's New for 2006
AMT exemption amount increased, What's New for 2006
Clean renewable energy bond credit, What's New for 2006
Clean-fuel vehicles, What's New for 2006
Earned income credit, What's New for 2007, What's New for 2006
Estimated tax penalty rates, What's New for 2006
Excess social security or railroad retirement tax withholding, What's New for 2006
Itemized deductions, What's New for 2006
Nonconventional source fuel credit, What's New for 2006
Personal exemptions, What's New for 2006
Residential energy credits, What's New for 2006
Retirement savings plans, What's New for 2006
Standard mileage rates, What's New for 2006
Underpayment penalty, What's New for 2006

What's New for 2007

AMT exemption amount, What's New for 2007
Certain credits no longer allowed against alternative minimum tax (AMT), What's New for 2007
Expired tax benefits, What's New for 2007
IRA contribution limits, What's New for 2007

What's New for 2007: