The next step is to subtract the total amount for personal exemptions that you will be entitled to claim. After that, you find your tax in the Tax Rate Schedule, and then add any alternative minimum tax you may be liable for. Then you total those taxes together and add any expected tax from Form 4972 and Form 8814, as well as any anticipated recapture of education credits.
From this total tax amount, you next subtract any credits that you would be expecting to claim on your tax return. Next, you would add your estimated self-employment tax, and any other expected taxes. From this sum, you then subtract your estimated earned income credit, additional child tax credit, as well as any credits from Form 4136 or Form 8885. The result is your total estimated tax. Next, multiply your total estimated tax by 90%, or 66.66% for farmers and fishermen, and compare this amount to your prior year tax from your tax return. Whichever number is smaller is the amount you would be required to pay for the year in order to avoid a penalty. The next step is to compare this required annual payment amount to the amount you expect to be withheld from your income. If the difference is at least $1,000, you are required to make estimated payments.
The requirements for estimated tax payments are imposed on U.S. citizens and resident aliens; residents of Puerto Rico, Guam, the U.S. Virgin Islands, the Northern Mariana Islands, and American Samoa; as well as nonresident aliens. If you were a U.S. citizen or resident alien for all of the prior year, and did not have a tax liability for the year, you do not need to worry about estimated taxes. Having no tax liability means that you had zero total tax or were not required to file a tax return.
The due dates for the estimated payments due for 2007 taxes are April 16, 2007; June 15, 2007; September 17, 2007; and January 15, 2008.
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