Last Updated : January 14, 2009
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1040ES

Form 1040-ES

ESTIMATED TAX FOR INDIVIDUALS

Purpose of the form:
Use this package to figure and pay your estimated tax.
Estimated tax is the method used to pay tax on income that is not subject to withholding. In addition, if you do not elect voluntary withholding, the taxpayer should make the estimated tax payments on unemployment compensation and the taxable part of his social security benefits.
The estimated tax worksheet will help the taxpayer to figure the correct amount to pay. If the taxpayer is paying by check or money order, use the estimated tax payment vouchers below the worksheet to ensure that the estimated tax payment are credited correctly to his account.

Who must make Estimated Tax Payments :
In most cases, a person must make estimated tax payments if he or she expects to owe at least $1000 in tax for 2007 and he or she expects the withholding and credits to be less than the smaller of :

  • (1) 90% of the tax shown on the 2006 tax return, or

  • (2) The tax shown on the 2005 tax return

Special rules apply for farmers, fisherman , certain household employers, and certain higher income taxpayers.

    Farmers and Fisherman: If at least 2/3 of the taxpayer's gross income for 2006 or 2007 is from farming or fishing, substitute 66 2/3% for 90% in (1) under General Rule, mentioned earlier.



    Household Employers: When estimating the tax on his 2007 tax return, include the tax payer household employment taxes (the amount before subtracting advance EIC payments made to his employees) if either of the following applies,

    (1) The taxpayer will have the federal income tax withheld from wages, pensions, annuities, gambling winnings, or other income.

    (2)The taxpayer would be required to make estimated tax payments to avoid a penalty even if the taxpayer did not include household employment taxes when figuring his estimated tax.

Estimated Tax worksheet:

Line 1:


Enter on line 1 inner box 1 the Adjusted Gross Income which is expected in 2007.

Enter on line 1 inner box 2 the social security benefits expected in 2007.

Enter on line 1 inner box 3 the non taxable interest expected to be received in 2007.

The program calculates the taxable social security based on the expected social security entered on line 1 inner box 2 and enters the result on line 1 inner box 4.

The program adds the amount on line 1 inner box 1 and line 1 inner box 4 and enters the result on line 1 outer.

Line 2:


Enter on line 2 inner box 1 the earned income that the taxpayer expects in 2007 if he is claimed as dependent by other person.

Enter on line 2 inner box 2 the no. of persons whose age is 65 or older .

Enter On line 2 inner box 3 the no. of persons if the persons claimed are blind.

The program calculates the standard deduction based on details entered on line 2 inner box 2 and box 3.

Enter on line 2 inner box 4 the itemized deduction expected by the taxpayer for 2007.

Enter on line 2 inner box 5 the medical , dental interest , casualty expenses to be claimed in 2007.

The program calculates the amount for line 2 outer as net earned income for 2007.

Line 3:

The program subtracts line 2 from line 1 and enters the result on this line.

Line 4:

Enter on line 4 inner the expected no of exemptions that the taxpayer would like to claim in 2007 .

The program calculates the exemption amount by multiplying $3400 by the number of exemptions entered on line 4 inner.

Line 5:

The program subtracts line 4 from line 3 and enters the result on this line.

Line 6:

Enter the filling status that you would like to use to file the return for 2007 on line 6 inner.

Based on the 2007 tax rate schedules the program calculates the expected tax that would arise based on income calculated on line 5.

Line 7:

Enter on line 7 the alterative minimum tax that you expect to pay for 2007 based on calculation on the form 6251.

Line 8:

The program adds lines 6 and line 7 and enters the result on this line.

Line 9:

Refer to the instructions for the 2006 form 1040, line 47 through 55 of form 1040A line 29 through 33 to include any of the credits that are likely to be claimed on your 2007 return.

Enter the total of your 2007 likely expected credits that you would claim on your 2007 return on this line.

Line 10:

The program subtracts line 9 from line 8 and enters the result on this line.

Line 11:

Enter on line 11 inner the self employment income that you are expected to earn for 2007.

The program calculates the self employment tax based on 2007 rates and enters the result on line 11 outer.

Line 12:

Refer to the instructions for 2006 FORM 1040 to determine if the taxpayer expects to owe for 2007, any of the taxes that would have been entered on line 60 ,61 and 62 and any write in adjustments on line 63 of form 2006 form 1040.

Enter on line 12 the total of expected taxes to be paid , subject to the exceptions with regard to household employment taxes and certain taxes that are included on line 63.

for exceptions refer instruction PDF.

Line 13a:

The program adds line 10 through 12 and enters the result on line 13a.

Line 13b:

Enter on this line the total refundable credits such as EIC or CTC or form 4136 credits that are likely to be claimed for 2007 tax year.

Line 13c:

The program subtracts line 13b from line 13a and enters the result on this line.

Line 14a:

If the checkbox on line 14a for farmers or fisherman is not checked then the program calculates 90% of line 13c and enters the result on this line.

If the checkbox on line 14a for farmers or fisherman is checked then the program calculates 66 2/3 % of line 13c and enters the result on this line.

Line 14b:

The amount on this line comes from 2006 return main form line tax .

The checkbox for 110% is needed to be checked manually by the taxpayer if the taxpayer is not a farmer or fisherman and his AGI for 2006 exceeds $150000 if filing status is other than married filling separately and $75000 for married filling separately filing status.

Line 14c:

The program calculates the smaller of line 14a or line 14b and enters the result on this line.

Line 15:

Enter on this line the income tax likely to be withheld on certain pensions , annuities or other deferred income that is possible to be received in 2007.

Line 16a:

The program subtracts line 15 from line 14c and enters the result on this line.

Based on the calculation for line 16a and value arrived at on line 16a , if the value is zero or less then checkbox YES gets checked or else if the result is greater than zero the checkbox NO gets checked.

Line 16b:

Based on the checkboxes checked on line 16a the calculation on line 16b takes place.

If on line 16a checkbox NO is checked then the program subtracts line 15 from line 13c and enters the result on this line.

Based on the result obtained on line 16b the program checks the YES or NO checkboxes. if line 16b result is less than $1000 then the program checks the checkbox YES else checkbox NO is checked.

Line 17:

If the amount of overpayment on line below line 17 for 2006 is 0 then the program by itself calculates the 1/4th amount of line 16a and enters the result on this line .

If the taxpayer enter the amount paid by him on different dates in the boxes given for due dates then the program subtracts the amount paid from 1/4 the amount arrived at of line16a and enters the result on this line.

This line is reported on 2007 payment voucher 1 for payment of 1st installment towards 2007 return.

FOR allocation of estimated tax of 2007 calculated by the worksheet the tax payer needs to follow the below procedure:

Amount of overpayment:

The amount on this line comes from form 1040 or form 1040A or form 1040EZ line Amount overpaid.

Amount available overpayment:


the checkboxes for all , equal and 1st installment are all manually entry checkboxes . and based on the checkboxes checked on here the calculation on below table takes place. EIther checkbox for all and equal can be checked at a time or checkbox of 1 st installment can be checked. these checkboxes should be checked by the taxpayer for allocation of overpayment of current year towards future year and to decide the net liability of tax for future year.

Amount applied to estimated tax liability:

If the checkbox for all and equal is checked then the program sets the amount of overpayment on this line.

If checkbox for 1stinstalment is checked then the program will set lower of amount due of 1st due date or amount of overpayment .

column a:

The program calculates the amount for this line by dividing the tax to be paid calculated on line 16a by 4 and enters each part for different due dates which the taxpayer is expected to pay based on his expected income to be received for 2007.

column b:

If you entered the amount you paid on column c then enter the date on which it is paid. The date most probably would be lower than the due dates mentioned for each installment.

column c:

enter on this line the amount you would pay for 2007 installment on due date mentioned as a part of payment of tax in advance in order to lower the penalty.

column d:

Based on the checkboxes checked above the table of calculation for allocation of 2006 overpayments the program by itself enters the amount.

If the line for 2006 overpayment is greater than zero and checkbox for all and equal is checked then the program divides the total overpayment by 4 and enters the result for each due date mentioned.

If the line for 2006 overpayment is greater than zero and checkbox for all and 1st installment is checked then the program applies the lower of overpayment and amount due towards 1st due date only and all 0 on all other due dates.

column e:

The program adds column c and column d horizontally and enters the result on line e.

column f:

The program subtracts column e from column f horizontally and enters the result on this line.

PAYMENT VOUCHERS:

Four estimated tax payment vouchers are available.

On these vouchers the program flows the personal information of taxpayer on these vouchers from general info. sheet.

Details of personal information of spouse will flow from general info. sheet if filling status is married filling jointly.

The amount on the voucher comes from the column of balance paid whose due date is same with that of voucher due date.

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