File your Taxes for Free!
  • Get your maximum refund*
  • 100% accurate calculations guaranteed*

TurboTax Federal Free Edition - File Taxes Online

Don't let filing your taxes get you down! We'll help make it as easy as possible. With e-file and direct deposit, there's no faster way to get your refund!

Approved TurboTax Affiliate Site. TurboTax and TurboTax Online, among others, are registered trademarks and/or service marks of Intuit Inc. in the United States and other countries. Other parties' trademarks or service marks are the property of the respective owners.


© 2012 - 2018 All rights reserved.

This is an Approved TurboTax Affiliate site. TurboTax and TurboTax Online, among other are registered trademarks and/or service marks of Intuit, Inc. in the United States and other countries. Other parties' trademarks or service marks are the property of the respective owners.
When discussing "Free e-file", note that state e-file is an additional fee. E-file fees do not apply to New York state returns. Prices are subject to change without notice. E-file and get your refund faster
*If you pay an IRS or state penalty or interest because of a TurboTax calculations error, we'll pay you the penalty and interest.
*Maximum Refund Guarantee - or Your Money Back: If you get a larger refund or smaller tax due from another tax preparation method, we'll refund the applicable TurboTax federal and/or state purchase price paid. TurboTax Federal Free Edition customers are entitled to payment of $14.99 and a refund of your state purchase price paid. Claims must be submitted within sixty (60) days of your TurboTax filing date and no later than 6/15/14. E-file, Audit Defense, Professional Review, Refund Transfer and technical support fees are excluded. This guarantee cannot be combined with the TurboTax Satisfaction (Easy) Guarantee. *We're so confident your return will be done right, we guarantee it. Accurate calculations guaranteed. If you pay an IRS or state penalty or interest because of a TurboTax calculations error, we'll pay you the penalty and interest.
https://turbotax.intuit.com/corp/guarantees.jsp

Federal Income Tax Return

H & R Block Online TaxesMilitary Onesource Free Turbo TaxElectronic File 1040ezWhere Can I File My 2009 Taxes Online For FreeFile Free State Income TaxHow To File A Amended Tax ReturnTax Forms OnlineEz Form 2010File TaxH & R Block Advantage Free FileIrs Gov 1040ezFree Federal & State E-fileForm 1040ez More:label_form_201040ez More:taxesAmended Tax Return 2011Amend 2009 Tax Return1090 EzTaxes For College StudentsHow Do I Refile My TaxesGo 2011 Taxes 20131040ez For 2010 Tax Year2012 Amended Tax FormH&r Block Tax FormHow To File State TaxStudent Income TaxHow To File A 1040 EzH&r Block Free Tax File 2012File State Income Tax OnlyFree E File State Taxes OnlyTurbotax 2008College Student TaxesFree State Tax HelpFree State Tax FileingTaxcut SoftwareFree Turbo Tax For Low IncomeIndiana State Tax Forms 2011Can I File My State Taxes For FreeFiling Amended Tax Return 2013Tax 1040ezHow To Amend A Tax Return 2012Eztax

Federal Income Tax Return

Federal income tax return Publication 596 - Introductory Material Table of Contents Future Developments What is the EIC? Can I Claim the EIC? Do I Need This Publication? Do I Have To Have A Child To Qualify For The EIC? How Do I Figure the Amount of EIC? How Can I Quickly Locate Specific information? Is There Help Online? What's New for 2013 Reminders Future Developments For the latest information about developments related to Publication 596, such as legislation enacted after it was published, go to www. Federal income tax return irs. Federal income tax return gov/pub596. Federal income tax return What is the EIC? The earned income credit (EIC) is a tax credit for certain people who work and have earned income under $51,567. Federal income tax return A tax credit usually means more money in your pocket. Federal income tax return It reduces the amount of tax you owe. Federal income tax return The EIC may also give you a refund. Federal income tax return Can I Claim the EIC? To claim the EIC, you must meet certain rules. Federal income tax return These rules are summarized in Table 1. Federal income tax return Table 1. Federal income tax return Earned Income Credit in a Nutshell First, you must meet all the rules in this column. Federal income tax return Second, you must meet all the rules in one of these columns, whichever applies. Federal income tax return Third, you must meet the rule in this column. Federal income tax return Chapter 1. Federal income tax return  Rules for Everyone Chapter 2. Federal income tax return  Rules If You Have a Qualifying Child Chapter 3. Federal income tax return  Rules If You Do Not Have a Qualifying Child Chapter 4. Federal income tax return  Figuring and Claiming the EIC 1. Federal income tax return Your adjusted gross income (AGI) must be less than:  • $46,227 ($51,567 for married filing jointly) if you have three or more qualifying children,  • $43,038 ($48,378 for married filing jointly) if you have two qualifying children,  • $37,870 ($43,210 for married filing jointly) if you have one qualifying child, or   • $14,340 ($19,680 for married filing jointly) if you do not have a qualifying child. Federal income tax return 2. Federal income tax return You must have a valid social security number. Federal income tax return   3. Federal income tax return Your filing status cannot be Married filing separately. Federal income tax return   4. Federal income tax return You must be a U. Federal income tax return S. Federal income tax return citizen or resident alien all year. Federal income tax return   5. Federal income tax return You cannot file Form 2555 or Form 2555-EZ (relating to foreign earned income). Federal income tax return   6. Federal income tax return Your investment income must be $3,300 or less. Federal income tax return    7. Federal income tax return You must have earned income. Federal income tax return 8. Federal income tax return Your child must meet the relationship, age, residency, and joint return tests. Federal income tax return   9. Federal income tax return Your qualifying child cannot be used by more than one person to claim the EIC. Federal income tax return   10. Federal income tax return You cannot be a qualifying child of another person. Federal income tax return 11. Federal income tax return You must be at least age 25 but under age 65. Federal income tax return    12. Federal income tax return You cannot be the dependent of another person. Federal income tax return   13. Federal income tax return You cannot be a qualifying child of another person. Federal income tax return   14. Federal income tax return You must have lived in the United States more than half of the year. Federal income tax return 15. Federal income tax return Your earned income must be less than:  • $46,227 ($51,567 for married filing jointly) if you have three or more qualifying children,  • $43,038 ($48,378 for married filing jointly) if you have two qualifying children,  • $37,870 ($43,210 for married filing jointly) if you have one qualifying child, or  • $14,340 ($19,680 for married filing jointly) if you do not have a qualifying child. Federal income tax return Do I Need This Publication? Certain people who file Form 1040 must use Worksheet 1 in this publication, instead of Step 2 in their Form 1040 instructions, when they are checking whether they can take the EIC. Federal income tax return You are one of those people if any of the following statements are true for 2013. Federal income tax return You are filing Schedule E (Form 1040). Federal income tax return You are reporting income from the rental of personal property not used in a trade or business. Federal income tax return You are reporting income on Form 1040, line 21, from Form 8814 (relating to election to report child's interest and dividends). Federal income tax return You are reporting an amount on Form 1040, line 13, that includes an amount from Form 4797. Federal income tax return If none of the statements above apply to you, your tax form instructions have all the information you need to find out if you can claim the EIC and to figure the amount of your EIC. Federal income tax return You do not need this publication. Federal income tax return But you can read it to find out whether you can take the EIC and to learn more about the EIC. Federal income tax return Do I Have To Have A Child To Qualify For The EIC? No, you can qualify for the EIC without a qualifying child if you are at least age 25 but under age 65 and your earned income is less than $14,340 ($19,680 if married filing jointly). Federal income tax return See chapter 3. Federal income tax return How Do I Figure the Amount of EIC? If you can claim the EIC, you can either have the IRS figure the amount of your credit, or you can figure it yourself. Federal income tax return To figure it yourself, you can complete a worksheet in the instructions for the form you file. Federal income tax return To find out how to have the IRS figure it for you, see chapter 4. Federal income tax return How Can I Quickly Locate Specific information? You can use the index to look up specific information. Federal income tax return In most cases, index entries will point you to headings, tables, or a worksheet. Federal income tax return Is There Help Online? Yes. Federal income tax return You can use the EITC Assistant at www. Federal income tax return irs. Federal income tax return gov/eitc to find out if you may be eligible for the credit. Federal income tax return The EITC Assistant is available in English and Spanish. Federal income tax return What's New for 2013 Earned income amount is more. Federal income tax return The maximum amount of income you can earn and still get the credit has increased. Federal income tax return You may be able to take the credit if: You have three or more qualifying children and you earned less than $46,227 ($51,567 if married filing jointly), You have two qualifying children and you earned less than $43,038 ($48,378 if married filing jointly), You have one qualifying child and you earned less than $37,870 ($43,210 if married filing jointly), or You do not have a qualifying child and you earned less than $14,340 ($19,680 if married filing jointly). Federal income tax return Your adjusted gross income also must be less than the amount in the above list that applies to you. Federal income tax return For details, see Rules 1 and 15. Federal income tax return Investment income amount is more. Federal income tax return The maximum amount of investment income you can have and still get the credit has increased to $3,300. Federal income tax return See Rule 6—Your Investment Income Must Be $3,300 or Less . Federal income tax return Reminders Increased EIC on certain joint returns. Federal income tax return . Federal income tax return  A married person filing a joint return may get more EIC than someone with the same income but a different filing status. Federal income tax return As a result, the EIC table has different columns for married persons filing jointly than for everyone else. Federal income tax return When you look up your EIC in the EIC Table, be sure to use the correct column for your filing status and the number of children you have. Federal income tax return Earned income credit has no effect on certain welfare benefits. Federal income tax return  Any refund you receive because of the EIC cannot be counted as income when determining whether you or anyone else is eligible for benefits or assistance, or how much you or anyone else can receive, under any federal program or under any state or local program financed in whole or in part with federal funds. Federal income tax return These programs include the following. Federal income tax return Temporary Assistance for Needy Families (TANF). Federal income tax return Medicaid. Federal income tax return Supplemental security income (SSI). Federal income tax return Supplemental Nutrition Assistance Program (food stamps). Federal income tax return Low-income housing. Federal income tax return In addition, when determining eligibility, the refund cannot be counted as a resource for at least 12 months after you receive it. Federal income tax return Check with your local benefit coordinator to find out if your refund will affect your benefits. Federal income tax return Do not overlook your state credit. Federal income tax return  If you can claim the EIC on your federal income tax return, you may be able to take a similar credit on your state or local income tax return. Federal income tax return For a list of states that offer a state EIC, go to www. Federal income tax return irs. Federal income tax return gov/eitc. Federal income tax return EIC questioned by IRS. Federal income tax return  The IRS may ask you to provide documents to prove you are entitled to claim the EIC. Federal income tax return We will tell you what documents to send us. Federal income tax return These may include: birth certificates, school records, etc. Federal income tax return The process of establishing your eligibility will delay your refund. Federal income tax return Spanish version of Publication 596. Federal income tax return  You can order Publicación 596SP, Crédito por Ingreso del Trabajo, from the IRS. Federal income tax return It is a Spanish translation of Publication 596. Federal income tax return See How To Get Tax Help to find out how to order this and other IRS forms and publications. Federal income tax return Photographs of missing children. Federal income tax return  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Federal income tax return Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Federal income tax return You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. Federal income tax return Comments and suggestions. Federal income tax return  We welcome your comments about this publication and your suggestions for future editions. Federal income tax return You can write to us at the following address:  Internal Revenue Service Individual Forms and Publications Branch 1111 Constitution Ave. Federal income tax return NW, IR-6526 Washington, DC 20224 We respond to many letters by telephone. Federal income tax return Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Federal income tax return You can send your comments from www. Federal income tax return irs. Federal income tax return gov/formspubs/. Federal income tax return Click on “More Information” and then on “Comment on Tax Forms and Publications. Federal income tax return ” Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. Federal income tax return Ordering forms and publications. Federal income tax return  Visit www. Federal income tax return irs. Federal income tax return gov/formspubs/ to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. Federal income tax return  Internal Revenue Service 1201 N. Federal income tax return Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. Federal income tax return  If you have a tax question, check the information available on IRS. Federal income tax return gov or call 1-800-829-1040. Federal income tax return We cannot answer tax questions sent to either of the above addresses. Federal income tax return Prev  Up  Next   Home   More Online Publications
Print - Click this link to Print this page

Tax Benefits for Education: Information Center

Tax credits, deductions and savings plans can help taxpayers with their expenses for higher education.

  • A tax credit reduces the amount of income tax you may have to pay.
  • A deduction reduces the amount of your income that is subject to tax, thus generally reducing the amount of tax you may have to pay.
  • Certain savings plans allow the accumulated interest to grow tax-free until money is taken out (known as a distribution), or allow the distribution to be tax-free, or both.
  • An exclusion from income means that you won't have to pay income tax on the benefit you're receiving, but you also won't be able to use that same tax-free benefit for a deduction or credit. 
  • Education credits are claimed on Form 8863, Education Credits. For details, see IRS Publication 970, Tax Benefits of Education.
 You can use the IRS’s Interactive Tax Assistant tool to help determine if you’re eligible for educational credits or deductions, including the American opportunity credit, the lifetime learning credit and the tuition and fees deduction.

Credits


American Opportunity Credit

Under the American Recovery and Reinvestment Act (ARRA), more parents and students qualify for a tax credit, the American opportunity credit, to pay for college expenses.

The American opportunity credit originally modified the existing Hope credit for tax years 2009 and 2010. The American opportunity credit was later extended through 2017, making the benefit available to a broader range of taxpayers, including many with higher incomes and those who owe no tax. It also adds required course materials to the list of qualifying expenses and allows the credit to be claimed for four post-secondary education years instead of two. Many of those eligible qualify for the maximum annual credit of $2,500 per student.

The full credit is available to individuals whose modified adjusted gross income is $80,000 or less, or $160,000 or less for married couples filing a joint return. The credit is phased out for taxpayers with incomes above these levels. These income limits are higher than under the the prior Hope and existing lifetime learning credit.

If you have questions about the American opportunity credit, these questions and answers might help. For more information, see American opportunity credit.

Lifetime Learning Credit

The lifetime learning credit helps parents and students pay for post-secondary education.

For the tax year, you may be able to claim a lifetime learning credit of up to $2,000 for qualified education expenses paid for all students enrolled in eligible educational institutions. There is no limit on the number of years the lifetime learning credit can be claimed for each student. However, a taxpayer cannot claim both the American opportunity credit and lifetime learning credits for the same student in one year. Thus, the lifetime learning credit may be particularly helpful to graduate students, students who are only taking one course and those who are not pursuing a degree.

Generally, you can claim the lifetime learning credit if all three of the following requirements are met:

  • You pay qualified education expenses of higher education.
  • You pay the education expenses for an eligible student.
  • The eligible student is either yourself, your spouse or a dependent for whom you claim an exemption on your tax return.

If you’re eligible to claim the lifetime learning credit and are also eligible to claim the American opportunity credit for the same student in the same year, you can choose to claim either credit, but not both.

If you pay qualified education expenses for more than one student in the same year, you can choose to take credits on a per-student, per-year basis. This means that, for example, you can claim the American opportunity credit for one student and the lifetime learning credit for another student in the same year.


Deductions


Tuition and Fees Deduction

You may be able to deduct qualified education expenses paid during the year for yourself, your spouse or your dependent. You cannot claim this deduction if your filing status is married filing separately or if another person can claim an exemption for you as a dependent on his or her tax return. The qualified expenses must be for higher education.

The tuition and fees deduction can reduce the amount of your income subject to tax by up to $4,000. This deduction, reported on Form 8917, Tuition and Fees Deduction, is taken as an adjustment to income. This means you can claim this deduction even if you do not itemize deductions on Schedule A (Form 1040). This deduction may be beneficial to you if, for example, you cannot take the lifetime learning credit because your income is too high.

You may be able to take one of the education credits for your education expenses instead of a tuition and fees deduction. You can choose the one that will give you the lower tax.

Generally, you can claim the tuition and fees deduction if all three of the following requirements are met:

  • You pay qualified education expenses of higher education.
  • You pay the education expenses for an eligible student.
  • The eligible student is yourself, your spouse, or your dependent for whom you claim an exemption on your tax return.

You cannot claim the tuition and fees deduction if any of the following apply:

  • Your filing status is married filing separately.

  • Another person can claim an exemption for you as a dependent on his or her tax return. You cannot take the deduction even if the other person does not actually claim that exemption.

  • Your modified adjusted gross income (MAGI) is more than $80,000 ($160,000 if filing a joint return).

  • You were a nonresident alien for any part of the year and did not elect to be treated as a resident alien for tax purposes. More information on nonresident aliens can be found in Publication 519, U.S. Tax Guide for Aliens.

  • You or anyone else claims an education credit for expenses of the student for whom the qualified education expenses were paid.

Student-activity fees and expenses for course-related books, supplies and equipment are included in qualified education expenses only if the fees and expenses must be paid to the institution as a condition of enrollment or attendance.

Student Loan Interest Deduction

Generally, personal interest you pay, other than certain mortgage interest, is not deductible on your tax return. However, if your modified adjusted gross income (MAGI) is less than $75,000 ($150,000 if filing a joint return), there is a special deduction allowed for paying interest on a student loan (also known as an education loan) used for higher education. Student loan interest is interest you paid during the year on a qualified student loan. It includes both required and voluntary interest payments.

For most taxpayers, MAGI is the adjusted gross income as figured on their federal income tax return before subtracting any deduction for student loan interest. This deduction can reduce the amount of your income subject to tax by up to $2,500.

The student loan interest deduction is taken as an adjustment to income. This means you can claim this deduction even if you do not itemize deductions on Form 1040's Schedule A.

Qualified Student Loan

This is a loan you took out solely to pay qualified education expenses (defined later) that were:

  • For you, your spouse, or a person who was your dependent when you took out the loan.
  • Paid or incurred within a reasonable period of time before or after you took out the loan.
  • For education provided during an academic period for an eligible student.

Loans from the following sources are not qualified student loans:

  • A related person.
  • A qualified employer plan.

Qualified Education Expenses

For purposes of the student loan interest deduction, these expenses are the total costs of attending an eligible educational institution, including graduate school. They include amounts paid for the following items:

  • Tuition and fees.
  • Room and board.
  • Books, supplies and equipment.
  • Other necessary expenses (such as transportation).

The cost of room and board qualifies only to the extent that it is not more than the greater of:

  • The allowance for room and board, as determined by the eligible educational institution, that was included in the cost of attendance (for federal financial aid purposes) for a particular academic period and living arrangement of the student, or
  • The actual amount charged if the student is residing in housing owned or operated by the eligible educational institution.

Business Deduction for Work-Related Education


If you are an employee and can itemize your deductions, you may be able to claim a deduction for the expenses you pay for your work-related education. Your deduction will be the amount by which your qualifying work-related education expenses plus other job and certain miscellaneous expenses is greater than 2% of your adjusted gross income. An itemized deduction may reduce the amount of your income subject to tax.

If you are self-employed, you deduct your expenses for qualifying work-related education directly from your self-employment income. This may reduce the amount of your income subject to both income tax and self-employment tax.

Your work-related education expenses may also qualify you for other tax benefits, such as the tuition and fees deduction and the lifetime learning credit. You may qualify for these other benefits even if you do not meet the requirements listed above.

To claim a business deduction for work-related education, you must:

  • Be working.
  • Itemize your deductions on Schedule A (Form 1040 or 1040NR) if you are an employee.
  • File Schedule C (Form 1040), Schedule C-EZ (Form 1040), or Schedule F (Form 1040) if you are self-employed.
  • Have expenses for education that meet the requirements discussed under Qualifying Work-Related Education, below.

Qualifying Work-Related Education

You can deduct the costs of qualifying work-related education as business expenses. This is education that meets at least one of the following two tests:

  • The education is required by your employer or the law to keep your present salary, status or job. The required education must serve a bona fide business purpose of your employer.
  • The education maintains or improves skills needed in your present work.

However, even if the education meets one or both of the above tests, it is not qualifying work-related education if it:

  • Is needed to meet the minimum educational requirements of your present trade or business or
  • Is part of a program of study that will qualify you for a new trade or business.

You can deduct the costs of qualifying work-related education as a business expense even if the education could lead to a degree.

Education Required by Employer or by Law

Education you need to meet the minimum educational requirements for your present trade or business is not qualifying work-related education. Once you have met the minimum educational requirements for your job, your employer or the law may require you to get more education. This additional education is qualifying work-related education if all three of the following requirements are met.

  • It is required for you to keep your present salary, status or job.
  • The requirement serves a business purpose of your employer.
  • The education is not part of a program that will qualify you for a new trade or business.

When you get more education than your employer or the law requires, the additional education can be qualifying work-related education only if it maintains or improves skills required in your present work.

Education to Maintain or Improve Skills

If your education is not required by your employer or the law, it can be qualifying work-related education only if it maintains or improves skills needed in your present work. This could include refresher courses, courses on current developments and academic or vocational courses.


Savings Plans


529 Plans

States sponsor 529 plans — qualified tuition programs authorized under section 529 of the Internal Revenue Code — that allow taxpayers to either prepay or contribute to an account for paying a student's qualified higher education expenses. Similarly, colleges and groups of colleges sponsor 529 plans that allow them to prepay a student's qualified education expenses. These 529 plans have, in recent years, become a popular way for parents and other family members to save for a child’s college education. Though contributions to 529 plans are not deductible, there is also no income limit for contributors.

529 plan distributions are tax-free as long as they are used to pay qualified higher education expenses for a designated beneficiary. Qualified expenses include tuition, required fees, books and supplies. For someone who is at least a half-time student, room and board also qualify.

For 2009 and 2010, an ARRA change to tax-free college savings plans and prepaid tuition programs added to this list expenses for computer technology and equipment or Internet access and related services to be used by the student while enrolled at an eligible educational institution. Software designed for sports, games or hobbies does not qualify, unless it is predominantly educational in nature. In general, expenses for computer technology are not qualified expenses for the American opportunity credit, lifetime learning credit or tuition and fees deduction.

Coverdell Education Savings Account

This account was created as an incentive to help parents and students save for education expenses. Unlike a 529 plan, a Coverdell ESA can be used to pay a student’s eligible k-12 expenses, as well as post-secondary expenses. On the other hand, income limits apply to contributors, and  the total contributions for the beneficiary of this account cannot be more than $2,000 in any year, no matter how many accounts have been established. A beneficiary is someone who is under age 18 or is a special needs beneficiary.

Contributions to a Coverdell ESA are not deductible, but amounts deposited in the account grow tax free until distributed. The beneficiary will not owe tax on the distributions if they are less than a beneficiary’s qualified education expenses at an eligible institution. This benefit applies to qualified higher education expenses as well as to qualified elementary and secondary education expenses.

Here are some things to remember about distributions from Coverdell accounts:

  • Distributions are tax-free as long as they are used for qualified education expenses, such as tuition and fees, required books, supplies and equipment and qualified expenses for room and board.

  • There is no tax on distributions if they are for enrollment or attendance at an eligible educational institution. This includes any public, private or religious school that provides elementary or secondary education as determined under state law. Virtually all accredited public, nonprofit and proprietary (privately owned profit-making) post-secondary institutions are eligible.

  • Education tax credits can be claimed in the same year the beneficiary takes a tax-free distribution from a Coverdell ESA, as long as the same expenses are not used for both benefits.

  • If the distribution exceeds qualified education expenses, a portion will be taxable to the beneficiary and will usually be subject to an additional 10% tax. Exceptions to the additional 10% tax include the death or disability of the beneficiary or if the beneficiary receives a qualified scholarship.

For more information, see Tax Tip 2008-59, Coverdell Education Savings Accounts.


Scholarships and Fellowships


A scholarship is generally an amount paid or allowed to, or for the benefit of, a student at an educational institution to aid in the pursuit of studies. The student may be either an undergraduate or a graduate. A fellowship is generally an amount paid for the benefit of an individual to aid in the pursuit of study or research. Generally, whether the amount is tax free or taxable depends on the expense paid with the amount and whether you are a degree candidate.

A scholarship or fellowship is tax free only if you meet the following conditions:

  • You are a candidate for a degree at an eligible educational institution.
  • You use the scholarship or fellowship to pay qualified education expenses.

Qualified Education Expenses

For purposes of tax-free scholarships and fellowships, these are expenses for:

  • Tuition and fees required to enroll at or attend an eligible educational institution.
  • Course-related expenses, such as fees, books, supplies, and equipment that are required for the courses at the eligible educational institution. These items must be required of all students in your course of instruction.

However, in order for these to be qualified education expenses, the terms of the scholarship or fellowship cannot require that it be used for other purposes, such as room and board, or specify that it cannot be used for tuition or course-related expenses. 

Expenses that Don’t Qualify

Qualified education expenses do not include the cost of:

  • Room and board.
  • Travel.
  • Research.
  • Clerical help.
  • Equipment and other expenses that are not required for enrollment in or attendance at an eligible educational institution.

This is true even if the fee must be paid to the institution as a condition of enrollment or attendance. Scholarship or fellowship amounts used to pay these costs are taxable.

For more information, see Pub. 970.


Exclusions from Income


You may exclude certain educational assistance benefits from your income. That means that you won’t have to pay any tax on them. However, it also means that you can’t use any of the tax-free education expenses as the basis for any other deduction or credit, including the lifetime learning credit.

Employer-Provided Educational Assistance


If you receive educational assistance benefits from your employer under an educational assistance program, you can exclude up to $5,250 of those benefits each year. This means your employer should not include the benefits with your wages, tips, and other compensation shown in box 1 of your Form W-2.

Educational Assistance Program

To qualify as an educational assistance program, the plan must be written and must meet certain other requirements. Your employer can tell you whether there is a qualified program where you work.

Educational Assistance Benefits

Tax-free educational assistance benefits include payments for tuition, fees and similar expenses, books, supplies, and equipment. The payments may be for either undergraduate- or graduate-level courses. The payments do not have to be for work-related courses. Educational assistance benefits do not include payments for the following items.

  • Meals, lodging, or transportation.
  • Tools or supplies (other than textbooks) that you can keep after completing the course of instruction.
  • Courses involving sports, games, or hobbies unless they:
    • Have a reasonable relationship to the business of your employer, or
    • Are required as part of a degree program.

Benefits over $5,250

If your employer pays more than $5,250 for educational benefits for you during the year, you must generally pay tax on the amount over $5,250. Your employer should include in your wages (Form W-2, box 1) the amount that you must include in income.

Working Condition Fringe Benefit 

However, if the benefits over $5,250 also qualify as a working condition fringe benefit, your employer does not have to include them in your wages. A working condition fringe benefit is a benefit which, had you paid for it, you could deduct as an employee business expense. For more information on working condition fringe benefits, see Working Condition Benefits in chapter 2 of Publication 15-B, Employer's Tax Guide to Fringe Benefits.


Related Items:

 

Page Last Reviewed or Updated: 24-Jan-2014

The Federal Income Tax Return

Federal income tax return 2. Federal income tax return   Estimated Tax for 2014 Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Who Does Not Have To Pay Estimated Tax Who Must Pay Estimated TaxGeneral Rule Married Taxpayers Special Rules Aliens Estates and Trusts How To Figure Estimated Tax2014 Estimated Tax Worksheet When To Pay Estimated TaxWhen To Start Farmers and Fishermen How To Figure Each PaymentRegular Installment Method Annualized Income Installment Method Estimated Tax Payments Not Required How To Pay Estimated TaxCredit an Overpayment Pay Online Pay by Phone Pay by Check or Money Order Using the Estimated Tax Payment Voucher Introduction Estimated tax is the method used to pay tax on income that is not subject to withholding. Federal income tax return This includes income from self-employment, interest, dividends, alimony, rent, gains from the sale of assets, prizes, and awards. Federal income tax return You also may have to pay estimated tax if the amount of income tax being withheld from your salary, pension, or other income is not enough. Federal income tax return Estimated tax is used to pay both income tax and self-employment tax, as well as other taxes and amounts reported on your tax return. Federal income tax return If you do not pay enough tax, either through withholding or estimated tax, or a combination of both, you may have to pay a penalty. Federal income tax return If you do not pay enough by the due date of each payment period (see When To Pay Estimated Tax , later), you may be charged a penalty even if you are due a refund when you file your tax return. Federal income tax return For information on when the penalty applies, see chapter 4. Federal income tax return It would be helpful for you to have a copy of your 2013 tax return and an estimate of your 2014 income nearby while reading this chapter. Federal income tax return Topics - This chapter discusses: Who must pay estimated tax, How to figure estimated tax (including illustrated examples), When to pay estimated tax, How to figure each payment, and How to pay estimated tax. Federal income tax return Useful Items - You may want to see: Form (and Instructions) 1040-ES Estimated Tax for Individuals See chapter 5 for information about how to get this publication and form. Federal income tax return Worksheets. Federal income tax return   You may need to use several of the blank worksheets included in this chapter. Federal income tax return See Worksheets for Chapter 2, later, to locate what you need. Federal income tax return Who Does Not Have To Pay Estimated Tax If you receive salaries and wages, you may be able to avoid paying estimated tax by asking your employer to take more tax out of your earnings. Federal income tax return To do this, file a new Form W-4 with your employer. Federal income tax return See chapter 1. Federal income tax return Estimated tax not required. Federal income tax return   You do not have to pay estimated tax for 2014 if you meet all three of the following conditions. Federal income tax return You had no tax liability for 2013. Federal income tax return You were a U. Federal income tax return S. Federal income tax return citizen or resident alien for the whole year. Federal income tax return Your 2013 tax year covered a 12-month period. Federal income tax return   You had no tax liability for 2013 if your total tax (defined later under Total tax for 2013—line 14b ) was zero or you did not have to file an income tax return. Federal income tax return Please click here for the text description of the image. Federal income tax return Figure 2-A: Do You Have To Pay Estimated Tax? Who Must Pay Estimated Tax If you owed additional tax for 2013, you may have to pay estimated tax for 2014. Federal income tax return You can use the following general rule as a guide during the year to see if you will have enough withholding, or should increase your withholding or make estimated tax payments. Federal income tax return General Rule In most cases, you must pay estimated tax for 2014 if both of the following apply. Federal income tax return You expect to owe at least $1,000 in tax for 2014, after subtracting your withholding and refundable credits. Federal income tax return You expect your withholding and refundable credits to be less than the smaller of: 90% of the tax to be shown on your 2014 tax return, or 100% of the tax shown on your 2013 tax return. Federal income tax return Your 2013 tax return must cover all 12 months. Federal income tax return Note. Federal income tax return The percentages in (2a) or (2b) above may be different if you are a farmer, fisherman, or higher income taxpayer. Federal income tax return See Special Rules , later. Federal income tax return If the result from using the general rule above suggests that you will not have enough withholding, complete the 2014 Estimated Tax Worksheet for a more accurate calculation. Federal income tax return Figure 2-A takes you through the general rule. Federal income tax return You may find this helpful in determining if you must pay estimated tax. Federal income tax return If all your income will be subject to income tax withholding, you probably do not need to pay estimated tax. Federal income tax return Example 1. Federal income tax return Jane Smart uses Figure 2-A and the following information to figure whether she should pay estimated tax for 2014. Federal income tax return She files as head of household claiming her dependent son, takes the standard deduction, and expects no refundable credits for 2014. Federal income tax return Expected adjusted gross income (AGI) for 2014 $82,800 AGI for 2013 $73,700 Total tax on 2013 return (Form 1040,  line 61) $  8,746 Total 2014 estimated tax (line 13c of the 2014 Estimated Tax Worksheet) $11,015 Tax expected to be withheld in 2014 $10,000 Jane's answer to Figure 2-A, box 1, is YES; she expects to owe at least $1,000 for 2014 after subtracting her withholding from her expected total tax ($11,015 − $10,000 = $1,015). Federal income tax return Her answer to box 2a is YES; she expects her income tax withholding ($10,000) to be at least 90% of the tax to be shown on her 2014 return ($11,015 × 90% = $9,913. Federal income tax return 50). Federal income tax return Jane does not need to pay estimated tax. Federal income tax return Example 2. Federal income tax return The facts are the same as in Example 1, except that Jane expects only $8,700 tax to be withheld in 2014. Federal income tax return Because that is less than $9,913. Federal income tax return 50, her answer to box 2a is NO. Federal income tax return Jane's answer to box 2b is also NO; she does not expect her income tax withholding ($8,700) to be at least 100% of the total tax shown on her 2013 return ($8,746). Federal income tax return Jane must increase her withholding or pay estimated tax for 2014. Federal income tax return Example 3. Federal income tax return The facts are the same as in Example 2, except that the total tax shown on Jane's 2013 return was $8,600. Federal income tax return Because she expects to have more than $8,600 withheld in 2014 ($8,700), her answer to box 2b is YES. Federal income tax return Jane does not need to pay estimated tax for 2014. Federal income tax return Married Taxpayers If you qualify to make joint estimated tax payments, apply the rules discussed here to your joint estimated income. Federal income tax return You and your spouse can make joint estimated tax payments even if you are not living together. Federal income tax return However, you and your spouse cannot make joint estimated tax payments if: You are legally separated under a decree of divorce or separate maintenance, You and your spouse have different tax years, Either spouse is a nonresident alien (unless that spouse elected to be treated as a resident alien for tax purposes). Federal income tax return See Choosing Resident Alien Status in Publication 519, or Individuals of the same sex and opposite sex who are in registered domestic partnerships, civil unions, or other similar formal relationships that are not marriages under state law cannot make joint estimated tax payments. Federal income tax return These individuals can take credit only for the estimated tax payments that he or she made. Federal income tax return If you and your spouse cannot make joint estimated tax payments, apply these rules to your separate estimated income. Federal income tax return Making joint or separate estimated tax payments will not affect your choice of filing a joint tax return or separate returns for 2014. Federal income tax return 2013 separate returns and 2014 joint return. Federal income tax return   If you plan to file a joint return with your spouse for 2014, but you filed separate returns for 2013, your 2013 tax is the total of the tax shown on your separate returns. Federal income tax return You filed a separate return if you filed as single, head of household, or married filing separately. Federal income tax return 2013 joint return and 2014 separate returns. Federal income tax return   If you plan to file a separate return for 2014, but you filed a joint return for 2013, your 2013 tax is your share of the tax on the joint return. Federal income tax return You file a separate return if you file as single, head of household, or married filing separately. Federal income tax return   To figure your share of the tax on a joint return, first figure the tax both you and your spouse would have paid had you filed separate returns for 2013 using the same filing status for 2014. Federal income tax return Then multiply the tax on the joint return by the following fraction. Federal income tax return      The tax you would have paid had you filed a separate return   The total tax you and your spouse would have paid had you filed separate returns Example. Federal income tax return Joe and Heather filed a joint return for 2013 showing taxable income of $48,500 and a tax of $6,386. Federal income tax return Of the $48,500 taxable income, $40,100 was Joe's and the rest was Heather's. Federal income tax return For 2014, they plan to file married filing separately. Federal income tax return Joe figures his share of the tax on the 2013 joint return as follows: Tax on $40,100 based on separate return $5,960 Tax on $8,400 based on separate return 843 Total $6,803 Joe's percentage of total ($5,960 ÷ $6,803) 87. Federal income tax return 6% Joe's share of tax on joint return  ($6,386 × 87. Federal income tax return 6%) $5,594 Special Rules There are special rules for farmers, fishermen, and certain higher income taxpayers. Federal income tax return Farmers and Fishermen If at least two-thirds of your gross income for 2013 or 2014 is from farming or fishing, substitute 662/3% for 90% in (2a) under General Rule , earlier. Federal income tax return Gross income. Federal income tax return   Your gross income is all income you receive in the form of money, goods, property, and services that is not exempt from tax. Federal income tax return To determine whether two-thirds of your gross income for 2013 was from farming or fishing, use as your gross income the total of the income (not loss) amounts. Federal income tax return Joint returns. Federal income tax return   On a joint return, you must add your spouse's gross income to your gross income to determine if at least two-thirds of your total gross income is from farming or fishing. Federal income tax return Gross income from farming. Federal income tax return   This is income from cultivating the soil or raising agricultural commodities. Federal income tax return It includes the following amounts. Federal income tax return Income from operating a stock, dairy, poultry, bee, fruit, or truck farm. Federal income tax return Income from a plantation, ranch, nursery, range, orchard, or oyster bed. Federal income tax return Crop shares for the use of your land. Federal income tax return Gains from sales of draft, breeding, dairy, or sporting livestock. Federal income tax return   For 2013, gross income from farming is the total of the following amounts. Federal income tax return Schedule F (Form 1040), Profit or Loss From Farming, line 9. Federal income tax return Form 4835, Farm Rental Income and Expenses, line 7. Federal income tax return Your share of the gross farming income from a partnership, S corporation, estate or trust, from: Schedule K-1 (Form 1065), Schedule K-1 (Form 1120S), or Schedule K-1 (Form 1041). Federal income tax return Your gains from sales of draft, breeding, dairy, or sporting livestock shown on Form 4797, Sales of Business Property. Federal income tax return   Wages you receive as a farm employee and wages you receive from a farm corporation are not gross income from farming. Federal income tax return Gross income from fishing. Federal income tax return   This is income from catching, taking, harvesting, cultivating, or farming any kind of fish, shellfish (for example, clams and mussels), crustaceans (for example, lobsters, crabs, and shrimp), sponges, seaweeds, or other aquatic forms of animal and vegetable life. Federal income tax return   Gross income from fishing includes the following amounts. Federal income tax return Schedule C (Form 1040), Profit or Loss From Business. Federal income tax return Income for services as an officer or crew member of a vessel while the vessel is engaged in fishing. Federal income tax return Your share of the gross fishing income from a partnership, S corporation, estate or trust, from: Schedule K-1 (Form 1065), Schedule K-1 (Form 1120S), or Schedule K-1 (Form 1041). Federal income tax return Certain taxable interest and punitive damage awards received in connection with the Exxon Valdez litigation. Federal income tax return Income for services normally performed in connection with fishing. Federal income tax return Services normally performed in connection with fishing include: Shore service as an officer or crew member of a vessel engaged in fishing, and Services that are necessary for the immediate preservation of the catch, such as cleaning, icing, and packing the catch. Federal income tax return Higher Income Taxpayers If your AGI for 2013 was more than $150,000 ($75,000 if your filing status for 2014 is married filing a separate return), substitute 110% for 100% in (2b) under General Rule , earlier. Federal income tax return For 2013, AGI is the amount shown on Form 1040, line 37; Form 1040A, line 21; and Form 1040EZ, line 4. Federal income tax return Note. Federal income tax return This rule does not apply to farmers and fishermen. Federal income tax return Aliens Resident and nonresident aliens also may have to pay estimated tax. Federal income tax return Resident aliens should follow the rules in this publication, unless noted otherwise. Federal income tax return Nonresident aliens should get Form 1040-ES (NR), U. Federal income tax return S. Federal income tax return Estimated Tax for Nonresident Alien Individuals. Federal income tax return You are an alien if you are not a citizen or national of the United States. Federal income tax return You are a resident alien if you either have a green card or meet the substantial presence test. Federal income tax return For more information about withholding, the substantial presence test, and Form 1040-ES (NR), see Publication 519. Federal income tax return Estates and Trusts Estates and trusts also must pay estimated tax. Federal income tax return However, estates (and certain grantor trusts that receive the residue of the decedent's estate under the decedent's will) are exempt from paying estimated tax for the first 2 years after the decedent's death. Federal income tax return Estates and trusts must use Form 1041-ES, Estimated Income Tax for Estates and Trusts, to figure and pay estimated tax. Federal income tax return How To Figure Estimated Tax To figure your estimated tax, you must figure your expected AGI, taxable income, taxes, deductions, and credits for the year. Federal income tax return When figuring your 2014 estimated tax, it may be helpful to use your income, deductions, and credits for 2013 as a starting point. Federal income tax return Use your 2013 federal tax return as a guide. Federal income tax return You can use Form 1040-ES to figure your estimated tax. Federal income tax return Nonresident aliens use Form 1040-ES (NR) to figure estimated tax. Federal income tax return You must make adjustments both for changes in your own situation and for recent changes in the tax law. Federal income tax return Some of these changes are discussed under What's New for 2014 , earlier. Federal income tax return For information about these and other changes in the law, visit the IRS website at IRS. Federal income tax return gov. Federal income tax return The instructions for Form 1040-ES include a worksheet to help you figure your estimated tax. Federal income tax return Keep the worksheet for your records. Federal income tax return 2014 Estimated Tax Worksheet Use Worksheet 2-1 to help guide you through the information about completing the 2014 Estimated Tax Worksheet. Federal income tax return You can also find a copy of the worksheet in the Instructions for Form 1040-ES. Federal income tax return Expected AGI—Line 1 Your expected AGI for 2014 (line 1) is your expected total income minus your expected adjustments to income. Federal income tax return Total income. Federal income tax return   Include in your total income all the income you expect to receive during the year, even income that is subject to withholding. Federal income tax return However, do not include income that is tax exempt. Federal income tax return   Total income includes all income and loss for 2014 that, if you had received it in 2013, would have been included on your 2013 tax return in the total on line 22 of Form 1040, line 15 of Form 1040A, or line 4 of Form 1040EZ. Federal income tax return Social security and railroad retirement benefits. Federal income tax return If you expect to receive social security or tier 1 railroad retirement benefits during 2014, use Worksheet 2-2 to figure the amount of expected taxable benefits you should include on line 1. Federal income tax return Adjustments to income. Federal income tax return   Be sure to subtract from your expected total income all of the adjustments you expect to take on your 2014 tax return. Federal income tax return Self-employed. Federal income tax return If you expect to have income from self-employment, use Worksheet 2-3 to figure your expected self-employment tax and your allowable deduction for self-employment tax. Federal income tax return Include the amount from Worksheet 2-3 in your expected adjustments to income. Federal income tax return If you file a joint return and both you and your spouse have net earnings from self-employment, each of you must complete a separate worksheet. Federal income tax return Expected Taxable Income— Lines 2–5 Reduce your expected AGI for 2014 (line 1) by either your expected itemized deductions or your standard deduction and by your exemptions (lines 2 through 5). Federal income tax return Itemized deductions—line 2. Federal income tax return   If you expect to claim itemized deductions on your 2014 tax return, enter the estimated amount on line 2. Federal income tax return   Itemized deductions are the deductions that can be claimed on Schedule A (Form 1040). Federal income tax return    For 2014, your total itemized deductions may be reduced if your AGI is more than the amount shown next for your filing status. Federal income tax return Single $254,200 Married filing jointly or qualifying widow(er) $305,050 Married filing separately $152,525 Head of household $279,650   If you expect your AGI to be more than this amount, use Worksheet 2-5 to figure the amount to enter on line 2. Federal income tax return Standard deduction—line 2. Federal income tax return   If you expect to claim the standard deduction on your 2014 tax return, enter the amount on line 2. Federal income tax return Use Worksheet 2-4 to figure your standard deduction. Federal income tax return No standard deduction. Federal income tax return   The standard deduction for some individuals is zero. Federal income tax return Your standard deduction will be zero if you: File a separate return and your spouse itemizes deductions, Are a dual-status alien, or File a return for a period of less than 12 months because you change your accounting period. Federal income tax return Exemptions—line 4. Federal income tax return   After you have subtracted either your expected itemized deductions or your standard deduction from your expected AGI, reduce the amount remaining by $3,950 for each exemption you expect to take on your 2014 tax return. Federal income tax return If another person (such as your parent) can claim an exemption for you on his or her tax return, you cannot claim your own personal exemption. Federal income tax return This is true even if the other person will not claim your exemption or the exemption will be reduced or eliminated under the phaseout rule. Federal income tax return    For 2014, your deduction for personal exemption is reduced if your AGI is more than the amount shown next for your filing status. Federal income tax return Single $254,200 Married filing jointly or qualifying widow(er) $305,050 Married filing separately $152,525 Head of household $279,650   If you expect your AGI to be more than this amount, use Worksheet 2-6 to figure the amount to enter on line 4. Federal income tax return Expected Taxes and Credits— Lines 6–13c After you have figured your expected taxable income (line 5), follow the steps next to figure your expected taxes, credits, and total tax for 2014. Federal income tax return Most people will have entries for only a few of these steps. Federal income tax return However, you should check every step to be sure you do not overlook anything. Federal income tax return Step 1. Federal income tax return   Figure your expected income tax (line 6). Federal income tax return Generally, you will use the 2014 Tax Rate Schedules, later, to figure your expected income tax. Federal income tax return   However, see below for situations where you must use a different method to compute your estimated tax. Federal income tax return Tax on child's investment income. Federal income tax return   You must use a special method to figure tax on the income of the following children who have more than $2,000 of investment income. Federal income tax return Children under age 18 at the end of 2014. Federal income tax return The following children if their earned income is not more than half their support. Federal income tax return Children age 18 at the end of 2014. Federal income tax return Children who are full-time students over age 18 and under age 24 at the end of 2014. Federal income tax return See Publication 929, Tax Rules for Children and Dependents. Federal income tax return Although the ages and dollar amounts in the publication may be different in the 2014 revision, this reference will give you basic information for figuring the tax. Federal income tax return Tax on net capital gain. Federal income tax return   The regular income tax rates for individuals do not apply to a net capital gain. Federal income tax return Instead, your net capital gain is taxed at a lower maximum rate. Federal income tax return   The term “net capital gain” means the amount by which your net long-term capital gain for the year is more than your net short-term capital loss. Federal income tax return Tax on capital gain and qualified dividends. Federal income tax return If the amount on line 1 includes a net capital gain or qualified dividends, use Worksheet 2-7 to figure your tax. Federal income tax return Note. Federal income tax return For 2014, your capital gains and dividends rate will depend on your income. Federal income tax return Tax if excluding foreign earned income or excluding or deducting foreign housing. Federal income tax return If you expect to claim the foreign earned income exclusion or the housing exclusion or deduction on Form 2555 or Form 2555-EZ, use Worksheet 2-8 to figure your estimated tax. Federal income tax return Step 2. Federal income tax return   Total your expected taxes (line 8). Federal income tax return Include on line 8 the sum of the following. Federal income tax return Your tax on line 6. Federal income tax return Your expected alternative minimum tax (AMT) from Form 6251, or included on Form 1040A. Federal income tax return Your expected additional taxes from Form 8814, Parents' Election To Report Child's Interest and Dividends, and Form 4972, Tax on Lump-Sum Distributions. Federal income tax return Any recapture of education credits. Federal income tax return Step 3. Federal income tax return   Subtract your expected credits (line 9). Federal income tax return If you are using your 2013 return as a guide and filed Form 1040, your total credits for 2013 were shown on line 54. Federal income tax return If you filed Form 1040A, your total credits for 2013 were on line 34. Federal income tax return   If your credits on line 9 are more than your taxes on line 8, enter “-0-” on line 10 and go to Step 4. Federal income tax return Step 4. Federal income tax return   Add your expected self-employment tax (line 11). Federal income tax return You already should have figured your self-employment tax (see Self-employed under Expected AGI—Line 1, earlier). Federal income tax return Step 5. Federal income tax return   Add your expected other taxes (line 12). Federal income tax return   Other taxes include the following. Federal income tax return Additional tax on early distributions from: An IRA or other qualified retirement plan, A tax-sheltered annuity, or A modified endowment contract entered into after June 20, 1988. Federal income tax return Household employment taxes if: You will have federal income tax withheld from wages, pensions, annuities, gambling winnings, or other income, or You would be required to make estimated tax payments even if you did not include household employment taxes when figuring your estimated tax. Federal income tax return Amounts written on Form 1040 on the line for “other taxes” (line 60 on the 2013 Form 1040). Federal income tax return But, do not include recapture of a federal mortgage subsidy; tax on excess golden parachute payments; look-back interest due under section 167(g) or 460(b) of the Internal Revenue Code; excise tax on insider stock compensation from an expatriated corporation; uncollected social security and Medicare tax or RRTA tax on tips or group-term life insurance; or additional tax on advance payments of health coverage tax credit when not eligible. Federal income tax return Repayment of the first-time homebuyer credit. Federal income tax return See Form 5405. Federal income tax return Additional Medicare Tax. Federal income tax return A 0. Federal income tax return 9% Additional Medicare Tax applies to your combined Medicare wages and self-employment income and/or your RRTA compensation that exceeds the amount listed in the following chart, based on your filing status. Federal income tax return Filing Status Threshold Amount Married filing jointly $250,000 Married filing separately $125,000 Single $200,000 Head of household $200,000 Qualifying Widow(er) $200,000 Medicare wages and self-employment income are combined to determine if your income exceeds the threshold. Federal income tax return A self-employment loss should not be considered for purposes of this tax. Federal income tax return RRTA compensation should be separately compared to the threshold. Federal income tax return Your employer is responsible for withholding the 0. Federal income tax return 9% Additional Medicare Tax on Medicare wages or RRTA compensation it pays to you in excess of $200,000 in 2014. Federal income tax return You should consider this withholding, if applicable, in determining whether you need to make an estimated payment. Federal income tax return For more information on Additional Medicare Tax, go to IRS. Federal income tax return gov and enter “Additional Medicare Tax” in the search box. Federal income tax return Net Investment Income Tax (NIIT). Federal income tax return The NIIT is 3. Federal income tax return 8% of the lesser of your net investment income or the excess of your modified adjusted gross income over the amount listed in the following chart, based on your filing status. Federal income tax return Filing Status Threshold Amount Married filing jointly $250,000 Married filing separately $125,000 Single $200,000 Head of household $200,000 Qualifying Widow(er) $250,000 For more information on Net Investment Income Tax, go to IRS. Federal income tax return gov and enter “Net Investment Income Tax” in the search box. Federal income tax return Step 6. Federal income tax return   Subtract your refundable credit (line 13b). Federal income tax return   To figure your expected fuel tax credit, do not include fuel tax for the first three quarters of the year that you expect to have refunded to you. Federal income tax return   The result of steps 1 through 6 is your total estimated tax for 2014 (line 13c). Federal income tax return Required Annual Payment— Line 14c On lines 14a through 14c, figure the total amount you must pay for 2014, through withholding and estimated tax payments, to avoid paying a penalty. Federal income tax return General rule. Federal income tax return   The total amount you must pay is the smaller of: 90% of your total expected tax for 2014, or 100% of the total tax shown on your 2013 return. Federal income tax return Your 2013 tax return must cover all 12 months. Federal income tax return Special rules. Federal income tax return   There are special rules for higher income taxpayers and for farmers and fishermen. Federal income tax return Higher income taxpayers. Federal income tax return   If your AGI for 2013 was more than $150,000 ($75,000 if your filing status for 2014 is married filing separately), substitute 110% for 100% in (2) above. Federal income tax return This rule does not apply to farmers and fishermen. Federal income tax return For 2013, AGI is the amount shown on Form 1040, line 37; Form 1040A, line 21; and Form 1040EZ, line 4. Federal income tax return Example. Federal income tax return   Jeremy Martin's total tax on his 2013 return was $42,581, and his expected tax for 2014 is $71,253. Federal income tax return His 2013 AGI was $180,000. Federal income tax return Because Jeremy had more than $150,000 of AGI in 2013, he figures his required annual payment as follows. Federal income tax return He determines that 90% of his expected tax for 2014 is $64,128 (. Federal income tax return 90 × $71,253). Federal income tax return Next, he determines that 110% of the tax shown on his 2013 return is $46,839 (1. Federal income tax return 10 x $42,581). Federal income tax return Finally, he determines that his required annual payment is $46,839, the smaller of the two. Federal income tax return Farmers and fishermen. Federal income tax return   If at least two-thirds of your gross income for 2013 or 2014 is from farming or fishing, your required annual payment is the smaller of: 662/3% (. Federal income tax return 6667) of your total tax for 2014, or 100% of the total tax shown on your 2013 return. Federal income tax return (Your 2013 tax return must cover all 12 months. Federal income tax return )   For definitions of “gross income from farming” and “gross income from fishing,” see Farmers and Fishermen , under Special Rules discussed earlier. Federal income tax return Total tax for 2013—line 14b. Federal income tax return   Your 2013 total tax, if you filed Form 1040, is the amount on line 61 reduced by the following. Federal income tax return Unreported social security and Medicare tax or RRTA tax from Forms 4137 or 8919 (line 57). Federal income tax return The following amounts from Form 5329 included on line 58. Federal income tax return Any tax on excess contributions to IRAs, Archer MSAs, Coverdell education savings accounts, and health savings accounts. Federal income tax return Any tax on excess accumulations in qualified retirement plans. Federal income tax return The following write-ins on line 60. Federal income tax return Excise tax on excess golden parachute payments (identified as “EPP”). Federal income tax return Excise tax on insider stock compensation from an expatriated corporation (identified as “ISC”). Federal income tax return Look-back interest due under section 167(g) (identified as “From Form 8866”). Federal income tax return Look-back interest due under section 460(b) (identified as “From Form 8697”). Federal income tax return Recapture of federal mortgage subsidy (identified as “FMSR”). Federal income tax return Additional tax on advance payments of health coverage tax credit when not eligible (identified as “HCTC”). Federal income tax return Uncollected social security and Medicare tax or RRTA tax on tips or group-term life insurance (identified as “UT”). Federal income tax return Any refundable credit amounts. Federal income tax return   If you filed Form 1040A, your 2013 total tax is the amount on line 35 reduced by any refundable credits. Federal income tax return   If you filed Form 1040EZ, your 2013 total tax is the amount on line 10 reduced by the amount on line 8a. Federal income tax return Total Estimated Tax Payments Needed—Line 16a Use lines 15 and 16a to figure the total estimated tax you may be required to pay for 2014. Federal income tax return Subtract your expected withholding from your required annual payment (line 14c). Federal income tax return You usually must pay this difference in four equal installments. Federal income tax return See When To Pay Estimated Tax and How To Figure Each Payment . Federal income tax return You do not have to pay estimated tax if: Line 14c minus line 15 is zero or less, or Line 13c minus line 15 is less than $1,000. Federal income tax return Withholding—line 15. Federal income tax return   Your expected withholding for 2014 (line 15) includes the income tax you expect to be withheld from all sources (wages, pensions and annuities, etc. Federal income tax return ). Federal income tax return It includes excess social security, and tier 1 railroad retirement tax you expect to be withheld from your wages and compensation. Federal income tax return For this purpose, you will have excess social security or tier 1 railroad retirement tax withholding for 2014 only if your wages and compensation from two or more employers are more than $117,000. Federal income tax return See Excess Social Security or Railroad Retirement Tax Withholding in chapter 3. Federal income tax return   It also includes Additional Medicare Tax you expect to be withheld from your wages or compensation. Federal income tax return Your employer is responsible for withholding the 0. Federal income tax return 9% Additional Medicare Tax on Medicare wages or RRTA compensation it pays to you in excess of $200,000. Federal income tax return When To Pay Estimated Tax For estimated tax purposes, the year is divided into four payment periods. Federal income tax return Each period has a specific payment due date. Federal income tax return If you do not pay enough tax by the due date of each of the payment periods, you may be charged a penalty even if you are due a refund when you file your income tax return. Federal income tax return If a payment is mailed, the date of the U. Federal income tax return S. Federal income tax return postmark is considered the date of payment. Federal income tax return The payment periods and due dates for estimated tax payments are shown next. Federal income tax return For exceptions to the dates listed, see Saturday, Sunday, holiday rule below. Federal income tax return For the period: Due date: Jan. Federal income tax return 11 – March 31 April 15 April 1 – May 31 June 16 June 1 – August 31 September 15 Sept. Federal income tax return 1 – Dec. Federal income tax return 31 January 15  next year2 1If your tax year does not begin on January 1,  see Fiscal year taxpayers . Federal income tax return 2See January payment . Federal income tax return Saturday, Sunday, holiday rule. Federal income tax return   If the due date for an estimated tax payment falls on a Saturday, Sunday, or legal holiday, the payment will be on time if you make it on the next day that is not a Saturday, Sunday, or a holiday. Federal income tax return January payment. Federal income tax return   If you file your 2014 Form 1040 or Form 1040A by February 2, 2015, and pay the rest of the tax you owe, you do not need to make the payment due on January 15, 2015. Federal income tax return Example. Federal income tax return Janet Adams does not pay any estimated tax for 2014. Federal income tax return She files her 2014 income tax return and pays the balance due shown on her return on January 26, 2015. Federal income tax return Janet's estimated tax for the fourth payment period is considered to have been paid on time. Federal income tax return However, she may owe a penalty for not making the first three estimated tax payments, if required. Federal income tax return Any penalty for not making those payments will be figured up to January 26, 2015. Federal income tax return Fiscal year taxpayers. Federal income tax return   If your tax year does not start on January 1, your payment due dates are: The 15th day of the 4th month of your fiscal year, The 15th day of the 6th month of your fiscal year, The 15th day of the 9th month of your fiscal year, and The 15th day of the 1st month after the end of your fiscal year. Federal income tax return   You do not have to make the last payment listed above if you file your income tax return by the last day of the first month after the end of your fiscal year and pay all the tax you owe with your return. Federal income tax return When To Start You do not have to make estimated tax payments until you have income on which you will owe income tax. Federal income tax return 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. Federal income tax return You have several options when paying estimated taxes. Federal income tax return You can: apply an overpayment from the previous tax year, pay all your estimated tax by the due date of your first payment, or pay it in installments. Federal income tax return If you choose to pay in installments, make your first payment by the due date for the first payment period. Federal income tax return Make your remaining installment payments by the due dates for the later periods. Federal income tax return To avoid any estimated tax penalties, all installments must be paid by their due date and for the required amount. Federal income tax return No income subject to estimated tax during first period. Federal income tax return   If you do not have income subject to estimated tax until a later payment period, you must make your first payment by the due date for that period. Federal income tax return You can pay your entire estimated tax by the due date for that period or you can pay it in installments by the due date for that period and the due dates for the remaining periods. Federal income tax return Table 2-1 shows the dates for making installment payments. Federal income tax return    Table 2-1. Federal income tax return Due Dates for Estimated Tax Installment Payments If you first have income on which you must pay estimated tax: Make a payment  by:* Make later  installments  by:* Before April 1 April 15 June 16     Sept. Federal income tax return 15     Jan. Federal income tax return 15 next year April 1–May 31 June 16 Sept. Federal income tax return 15     Jan. Federal income tax return 15 next year June 1–Aug. Federal income tax return 31 Sept. Federal income tax return 15 Jan. Federal income tax return 15 next year After Aug. Federal income tax return 31 Jan. Federal income tax return 15 next year (None) *See January payment and Saturday, Sunday, holiday rule . Federal income tax return How much to pay to avoid penalty. Federal income tax return   To determine how much you should pay by each payment due date, see How To Figure Each Payment , later. Federal income tax return Farmers and Fishermen If at least two-thirds of your gross income for 2013 or 2014 is from farming or fishing, you have only one payment due date for your 2014 estimated tax, January 15, 2015. Federal income tax return The due dates for the first three payment periods, discussed under When To Pay Estimated Tax , earlier, do not apply to you. Federal income tax return If you file your 2014 Form 1040 by March 2, 2015, and pay all the tax you owe at that time, you do not need to make an estimated tax payment. Federal income tax return Fiscal year farmers and fishermen. Federal income tax return   If you are a farmer or fisherman, but your tax year does not start on January 1, you can either: Pay all your estimated tax by the 15th day after the end of your tax year, or File your return and pay all the tax you owe by the 1st day of the 3rd month after the end of your tax year. Federal income tax return How To Figure Each Payment After you have figured your total estimated tax, figure how much you must pay by the due date of each payment period. Federal income tax return You should pay enough by each due date to avoid a penalty for that period. Federal income tax return If you do not pay enough during any payment period, you may be charged a penalty even if you are due a refund when you file your tax return. Federal income tax return The penalty is discussed in chapter 4. Federal income tax return Regular Installment Method If your first estimated tax payment is due April 15, 2014, you can figure your required payment for each period by dividing your annual estimated tax due (line 16a of the 2014 Estimated Tax Worksheet (Worksheet 2-1)) by 4. Federal income tax return Enter this amount on line 17. Federal income tax return However, use this method only if your income is basically the same throughout the year. Federal income tax return Change in estimated tax. Federal income tax return   After you make an estimated tax payment, changes in your income, adjustments, deductions, credits, or exemptions may make it necessary for you to refigure your estimated tax. Federal income tax return Pay the unpaid balance of your amended estimated tax by the next payment due date after the change or in installments by that date and the due dates for the remaining payment periods. Federal income tax return If you do not receive your income evenly throughout the year, your required estimated tax payments may not be the same for each period. Federal income tax return See Annualized Income Installment Method . Federal income tax return Amended estimated tax. Federal income tax return If you refigure your estimated tax during the year, or if your first estimated tax payment is due after April 15, 2014, figure your required payment for each remaining payment period using Worksheet 2-14. Federal income tax return Example. Federal income tax return Early in 2014, Mira Roberts figures that her estimated tax due is $1,800. Federal income tax return She makes estimated tax payments on April 15 and June 16 of $450 each ($1,800 ÷ 4). Federal income tax return On July 10, she sells investment property at a gain. Federal income tax return Her refigured estimated tax is $4,100. Federal income tax return Her required estimated tax payment for the third payment period is $2,175, as shown in her filled-in Worksheet 2-14. Federal income tax return If Mira's estimated tax does not change again, her required estimated tax payment for the fourth payment period will be $1,025. Federal income tax return Worksheet 2-14. Federal income tax return Amended Estimated Tax Worksheet—Illustrated               1. Federal income tax return Amended total estimated tax due 1. Federal income tax return $4,100 2. Federal income tax return Multiply line 1 by:           50% (. Federal income tax return 50) if next payment is due June 16, 2014           75% (. Federal income tax return 75) if next payment is due September 15,  2014           100% (1. Federal income tax return 00) if next payment is due January 15,  2015 2. Federal income tax return 3,075     3. Federal income tax return Estimated tax payments for all previous periods 3. Federal income tax return 900     4. Federal income tax return Next required payment: Subtract line 3 from line 2 and enter the result (but not less than zero) here and on your payment voucher for your next required payment 4. Federal income tax return $2,175       Note. Federal income tax return If the payment on line 4 is due January 15, 2015, stop here. Federal income tax return Otherwise, go to line 5. Federal income tax return         5. Federal income tax return Add lines 3 and 4 5. Federal income tax return 3,075 6. Federal income tax return Subtract line 5 from line 1 and enter the result (but not less than zero) 6. Federal income tax return 1,025 7. Federal income tax return Each following required payment: If the payment on line 4 is due June 16, 2014, enter one-half of the amount on line 6 here and on the payment vouchers for your payments due September 15, 2014, and January 15, 2015. Federal income tax return If the amount on line 4 is due September 15, 2014, enter the amount from line 6 here and on the payment voucher for your payment due January 15, 2015 7. Federal income tax return $1,025 Worksheet 2-14. Federal income tax return Amended Estimated Tax Worksheet—Blank               1. Federal income tax return Amended total estimated tax due 1. Federal income tax return   2. Federal income tax return Multiply line 1 by:           50% (. Federal income tax return 50) if next payment is due June 16, 2014           75% (. Federal income tax return 75) if next payment is due September 15,  2014           100% (1. Federal income tax return 00) if next payment is due January 15,  2015 2. Federal income tax return       3. Federal income tax return Estimated tax payments for all previous periods 3. Federal income tax return       4. Federal income tax return Next required payment: Subtract line 3 from line 2 and enter the result (but not less than zero) here and on your payment voucher for your next required payment 4. Federal income tax return         Note. Federal income tax return If the payment on line 4 is due January 15, 2015, stop here. Federal income tax return Otherwise, go to line 5. Federal income tax return         5. Federal income tax return Add lines 3 and 4 5. Federal income tax return   6. Federal income tax return Subtract line 5 from line 1 and enter the result (but not less than zero) 6. Federal income tax return   7. Federal income tax return Each following required payment: If the payment on line 4 is due June 16, 2014, enter one-half of the amount on line 6 here and on the payment vouchers for your payments due September 15, 2014, and January 15, 2015. Federal income tax return If the amount on line 4 is due September 15, 2014, enter the amount from line 6 here and on the payment voucher for your payment due January 15, 2015 7. Federal income tax return   Underpayment penalty. Federal income tax return   The penalty is figured separately for each payment period. Federal income tax return If you figure your payments using the regular installment method and later refigure your payments because of an increase in income, you may be charged a penalty for underpayment of estimated tax for the period(s) before you changed your payments. Federal income tax return To see how you may be able to avoid or reduce this penalty, see Annualized Income Installment Method (Schedule AI) in chapter 4. Federal income tax return Annualized Income Installment Method If you do not receive your income evenly throughout the year (for example, your income from a repair shop you operate is much larger in the summer than it is during the rest of the year), your required estimated tax payment for one or more periods may be less than the amount figured using the regular installment method. Federal income tax return The annualized income installment method annualizes your tax at the end of each period based on a reasonable estimate of your income, deductions, and other items relating to events that occurred from the beginning of the tax year through the end of the period. Federal income tax return To see whether you can pay less for any period, complete the 2014 Annualized Estimated Tax Worksheet (Worksheet 2-9). Federal income tax return You first must complete the 2014 Estimated Tax Worksheet (Worksheet 2-1) through line 16b. Federal income tax return Use the result you figure on line 32 of Worksheet 2-9 to make your estimated tax payments and complete your payment vouchers. Federal income tax return Note. Federal income tax return If you use the annualized income installment method to figure your estimated tax payments, you must file Form 2210 with your 2014 tax return. Federal income tax return See Annualized Income Installment Method (Schedule AI) in chapter 4 for more information. Federal income tax return Instructions for the 2014 Annualized Estimated Tax Worksheet (Worksheet 2-9) Use Worksheet 2-9 to help you follow these instructions. Federal income tax return The purpose of this worksheet is to determine your estimated tax liability as your income accumulates throughout the year, rather than dividing your entire year's estimated tax liability by four as if your income was earned equally throughout the year. Federal income tax return The top of the worksheet shows the dates for each payment period. Federal income tax return The periods build; that is, each period includes all previous periods. Federal income tax return After the end of each payment period, complete the corresponding worksheet column to figure the payment due for that period. Federal income tax return Line 1. Federal income tax return   Enter your AGI for the period. Federal income tax return This is your gross income for the period, including your share of partnership or S corporation income or loss, minus your adjustments to income for that period. Federal income tax return See Expected AGI—Line 1 , earlier. Federal income tax return Self-employment income. Federal income tax return   If you had self-employment income, first complete Section B of this worksheet. Federal income tax return Use the amounts on line 43 when figuring your expected AGI to enter in each column of Section A, line 1. Federal income tax return Line 4. Federal income tax return   Be sure to consider all deduction limits figured on Schedule A (Form 1040), such as reducing your medical expenses by 10% (7. Federal income tax return 5% if either you or your spouse was born before January 2, 1950) or reducing certain miscellaneous deductions by 2% of your AGI. Federal income tax return Figure your deduction limits using your expected AGI in the corresponding column of line 1 (2014 Annualized Estimated Tax Worksheet (Worksheet 2-9)). Federal income tax return Line 6. Federal income tax return   Multiply line 4 by line 5 and enter the result on line 6 unless line 3 is more than $305,050 if married filing jointly or qualifying widow(er), $279,650 if head of household, $254,200 if single, or $152,525 if married filing separately. Federal income tax return In that case, use Worksheet 2-10 to figure the amount to enter on line 6. Federal income tax return Complete Worksheet 2–10 for each period, as necessary. Federal income tax return Line 7. Federal income tax return   If you will not itemize your deductions, use Worksheet 2-4 to figure your standard deduction. Federal income tax return Line 10. Federal income tax return   Multiply $3,950 by your total expected exemptions and enter the result on line 10 unless line 3 is more than $305,050 if married filing jointly or qualifying widow(er), $279,650 if head of household, $254,200 if single, or $152,525 if married filing separately. Federal income tax return   In that case, use Worksheet 2-11 to figure the amount to enter on line 10. Federal income tax return Line 12. Federal income tax return   Generally, you will use the Tax Rate Schedules to figure the tax on your annualized income. Federal income tax return However, see below for situations where you must use a different method to compute your estimated tax. Federal income tax return Tax on child's investment income. Federal income tax return   You must use a special method to figure tax on the income of the following children who have more than $2,000 of investment income. Federal income tax return Children under age 18 at the end of 2014. Federal income tax return The following children if their earned income is not more than half their support. Federal income tax return Children age 18 at the end of 2014. Federal income tax return Children who are full-time students over age 18 and under age 24 at the end of 2014. Federal income tax return See Publication 929. Federal income tax return Tax on net capital gain. Federal income tax return   The regular income tax rates for individuals do not apply to a net capital gain. Federal income tax return Instead, your net capital gain is taxed at a lower maximum rate. Federal income tax return   The term “net capital gain” means the amount by which your net long-term capital gain for the year is more than your net short-term capital loss. Federal income tax return Tax on qualified dividends and capital gains. Federal income tax return   For 2014, your capital gain and dividends rate will depend on your income. Federal income tax return Tax on capital gain or qualified dividends. Federal income tax return If the amount on line 1 includes a net capital gain or qualified dividends, use Worksheet 2-12 to figure the amount to enter on line 12. Federal income tax return Tax if excluding foreign earned income or excluding or deducting foreign housing. Federal income tax return If you expect to claim the foreign earned income exclusion or the housing exclusion or deduction on Form 2555 or Form 2555-EZ, use Worksheet 2-13 to figure the amount to enter on line 12. Federal income tax return Line 13. Federal income tax return   If you file Form 1040, add the tax from Forms 8814, 4972, and 6251 for the period. Federal income tax return If you file Form 1040A, add the amount from the Alternative Minimum Tax Worksheet found in the instructions. Federal income tax return Also include any recapture of an education credit for each period. Federal income tax return You may owe this tax if you claimed an education credit in an earlier year and you received either tax-free educational assistance or a refund of qualifying expenses for the same student after filing your 2013 return. Federal income tax return   Use the 2013 forms or worksheets to see if you will owe any of the taxes discussed above. Federal income tax return Figure the tax based on your income and deductions during the period shown in the column headings. Federal income tax return Multiply this amount by the annualization amounts shown for each column on line 2 of the 2014 Annualized Estimated Tax Worksheet (Worksheet 2-9). Federal income tax return Enter the result on line 13 of this worksheet. Federal income tax return Line 15. Federal income tax return   Include all the nonrefundable credits you expect to claim because of events that will occur during the period. Federal income tax return Note. Federal income tax return When figuring your credits for each period, annualize any item of income or deduction to figure each credit. Federal income tax return For example, if you need to use your AGI to figure a credit, use line 3 of Worksheet 2-9 to figure the credit for each column. Federal income tax return Line 18. Federal income tax return   Add your expected other taxes. Federal income tax return   Other taxes include the following. Federal income tax return Additional tax on early distributions from: An IRA or other qualified retirement plan, A tax-sheltered annuity, or A modified endowment contract entered into after June 20, 1988. Federal income tax return Household employment taxes if: You will have federal income tax withheld from wages, pensions, annuities, gambling winnings, or other income, or You would be required to make estimated tax payments even if you did not include household employment taxes when figuring your estimated tax. Federal income tax return Amounts on Form 1040 written on the line for “other taxes” (line 60 on the 2013 Form 1040). Federal income tax return But do not include recapture of a federal mortgage subsidy; tax on excess golden parachute payments; look-back interest due under section 167(g) or 460(b) of the Internal Revenue Code; excise tax on insider stock compensation from an expatriated corporation; uncollected social security, Medicare, or RRTA tax on tips or group-term life insurance; or additional tax on advance payments of health coverage tax credit when not eligible. Federal income tax return Repayment of the first-time homebuyer credit if the home will cease to be your main home in 2014. Federal income tax return See Form 5405 for exceptions. Federal income tax return Additional Medicare Tax. Federal income tax return A 0. Federal income tax return 9% Additional Medicare Tax applies to your combined Medicare wages and self-employment income and/or your RRTA compensation that exceeds the amount listed in the following chart, based on your filing status. Federal income tax return Filing Status Threshold Amount Married filing jointly $250,000 Married filing separately $125,000 Single $200,000 Head of household $200,000 Qualifying Widow(er) $200,000 Medicare wages and self-employment income are combined to determine if your income exceeds the threshold. Federal income tax return A self-employment loss should not be considered for purposes of this tax. Federal income tax return RRTA compensation should be separately compared to the threshold. Federal income tax return Your employer is responsible for withholding the 0. Federal income tax return 9% Additional Medicare Tax on Medicare wages or RRTA compensation it pays you in excess of $200,000 in 2014. Federal income tax return You should consider this withholding, if applicable, in determining whether you need to make an estimated payment. Federal income tax return For more information on Additional Medicare Tax, go to IRS. Federal income tax return gov and enter “Additional Medicare Tax” in the search box. Federal income tax return Net Investment Income Tax (NIIT). Federal income tax return The NIIT is 3. Federal income tax return 8% of the lesser of your net investment income or the excess of your modified adjusted gross income over a specified threshold amount. Federal income tax return Threshold amounts: Filing Status Threshold Amount Married filing jointly $250,000 Married filing separately $125,000 Single $200,000 Head of household $200,000 Qualifying Widow(er) $250,000 For more information on Net Investment Income Tax, go to IRS. Federal income tax return gov and enter “Net Investment Income Tax” in the search box. Federal income tax return Line 20. Federal income tax return   Include all the refundable credits (other than withholding credits) you can claim because of events that occurred during the period. Federal income tax return Note. Federal income tax return When figuring your refundable credits for each period, annualize any item of income or deduction used to figure each credit. Federal income tax return Line 29. Federal income tax return   If line 28 is smaller than line 25 and you are not certain of the estimate of your 2014 tax, you can avoid a penalty by entering the amount from line 25 on line 29. Federal income tax return Line 31. Federal income tax return   For each period, include estimated tax payments made and any excess social security and railroad retirement tax. Federal income tax return   Also include estimated federal income tax withholding. Federal income tax return One-fourth of your estimated withholding is considered withheld on the due date of each payment period. Federal income tax return To figure the amount to include on line 31 for each period, multiply your total expected withholding for 2014 by: 25% (. Federal income tax return 25) for the first period, 50% (. Federal income tax return 50) for the second period, 75% (. Federal income tax return 75) for the third period, and 100% (1. Federal income tax return 00) for the fourth period. Federal income tax return   However, you may choose to include your withholding according to the actual dates on which the amounts will be withheld. Federal income tax return For each period, include withholding made from the beginning of the period up to and including the payment due date. Federal income tax return You can make this choice separately for the taxes withheld from your wages and all other withholding. Federal income tax return For an explanation of what to include in withholding, see Total Estimated Tax Payments Needed—Line 16a , earlier. Federal income tax return Nonresident aliens. Federal income tax return   If you will file Form 1040NR and you do not receive wages as an employee subject to U. Federal income tax return S. Federal income tax return income tax withholding, the instructions for the worksheet are modified as follows. Federal income tax return Skip column (a). Federal income tax return On line 1, enter your income for the period that is effectively connected with a U. Federal income tax return S. Federal income tax return trade or business. Federal income tax return On line 21, increase your entry by the amount determined by multiplying your income for the period that is not effectively connected with a U. Federal income tax return S. Federal income tax return trade or business by the following. Federal income tax return 72% for column (b). Federal income tax return 45% for column (c). Federal income tax return 30% for column (d). Federal income tax return However, if you can use a treaty rate lower than 30%, use the percentages determined by multiplying your treaty rate by 2. Federal income tax return 4, 1. Federal income tax return 5, and 1, respectively. Federal income tax return On line 26, enter one-half of the amount from line 16c of the Form 1040-ES (NR) 2014 Estimated Tax Worksheet in column (b), and one-fourth in columns (c) and (d) of Worksheet 2-9. Federal income tax return On lines 24 and 27, skip column (b). Federal income tax return On line 31, if you do not use the actual withholding method, include one-half of your total expected withholding in column (b) and one-fourth in columns (c) and (d). Federal income tax return See Publication 519 for more information. Federal income tax return Estimated Tax Payments Not Required You do not have to pay estimated tax if your withholding in each payment period is at least as much as: One-fourth of your required annual payment, or Your required annualized income installment for that period. Federal income tax return You also do not have to pay estimated tax if you will pay enough through withholding to keep the amount you will owe with your return under $1,000. Federal income tax return How To Pay Estimated Tax There are several ways to pay estimated tax. Federal income tax return Credit an overpayment on your 2013 return to your 2014 estimated tax. Federal income tax return Pay by direct transfer from your bank account, or pay by credit or debit card using a pay-by-phone system or the Internet. Federal income tax return Send in your payment (check or money order) with a payment voucher from Form 1040-ES. Federal income tax return Credit an Overpayment If you show an overpayment of tax after completing your Form 1040 or Form 1040A for 2013, you can apply part or all of it to your estimated tax for 2014. Federal income tax return On Form 1040, or Form 1040A, enter the amount you want credited to your estimated tax rather than refunded. Federal income tax return Take the amount you have credited into account when figuring your estimated tax payments. Federal income tax return If you timely file your 2013 return, treat the credit as a payment made on April 15, 2014. Federal income tax return If you are a beneficiary of an estate or trust, and the trustee elects to credit 2014 trust payments of estimated tax to you, you can treat the amount credited as paid by you on January 15, 2015. Federal income tax return If you choose to have an overpayment of tax credited to your estimated tax, you cannot have any of that amount refunded to you until you file your tax return for the following year. Federal income tax return You also cannot use that overpayment in any other way. Federal income tax return Example. Federal income tax return When Kathleen finished filling out her 2013 tax return, she saw that she had overpaid her taxes by $750. Federal income tax return Kathleen knew she would owe additional tax in 2014. Federal income tax return She credited $600 of the overpayment to her 2014 estimated tax and had the remaining $150 refunded to her. Federal income tax return In September, she amended her 2013 return by filing Form 1040X, Amended U. Federal income tax return S. Federal income tax return Individual Income Tax Return. Federal income tax return It turned out that she owed $250 more in tax than she had thought. Federal income tax return This reduced her 2013 overpayment from $750 to $500. Federal income tax return Because the $750 had already been applied to her 2014 estimated tax or refunded to her, the IRS billed her for the additional $250 she owed, plus penalties and interest. Federal income tax return Kathleen could not use any of the $600 she had credited to her 2014 estimated tax to pay this bill. Federal income tax return Pay Online Paying online is convenient and secure and helps make sure we get your payments on time. Federal income tax return You can make your estimated tax payments online when you e-file or at any time during the year. Federal income tax return You can pay using either of the following electronic payment methods. Federal income tax return Direct transfer from your bank account. Federal income tax return Credit or debit card. Federal income tax return To pay your taxes online or for more information, go to www. Federal income tax return irs. Federal income tax return gov/e-pay. Federal income tax return Pay by Phone Paying by phone is another safe and secure method of paying electronically. Federal income tax return Use one of the following methods. Federal income tax return Direct transfer from your bank account. Federal income tax return Credit or debit card. Federal income tax return To pay by direct transfer from your bank account, call EFTPS Customer Service at 1-800-555-4477 (English), 1-800-244-4829 (Espanol), or TTY/TDD 1-800-733-4829. Federal income tax return To pay using a credit or debit card, you can call one of the following service providers. Federal income tax return There is a convenience fee charged by these providers that varies by provider, card type, and payment amount. Federal income tax return WorldPay 1-888-9-PAY-TAXTM (1-888-972-9829) www. Federal income tax return payUSAtax. Federal income tax return com Official Payments Corporation 1-888-UPAY-TAXTM (1-888-872-9829) www. Federal income tax return officialpayments. Federal income tax return com Link2GOV Corporation 1-888-PAY-1040TM (1-888-729-1040) www. Federal income tax return PAY1040. Federal income tax return com For the latest details on how to pay by phone, go to www. Federal income tax return irs. Federal income tax return gov/e-pay. Federal income tax return Pay by Check or Money Order Using the Estimated Tax Payment Voucher Each payment of estimated tax by check or money order must be accompanied by a payment voucher from Form 1040-ES. Federal income tax return If you use your own envelopes (and not the window envelope that comes with the 1040-ES package), make sure you mail your payment vouchers to the address shown in the Form 1040-ES instructions for the place where you live. Federal income tax return Do not use the address shown in the Form 1040 or Form 1040A instructions. Federal income tax return If you did not pay estimated tax last year, get a copy of Form 1040-ES from the IRS (see chapter 5). Federal income tax return Follow the instructions to make sure you use the vouchers correctly. Federal income tax return Joint estimated tax payments. Federal income tax return    If you file a joint return and are making joint estimated tax payments, enter the names and social security numbers on the payment voucher in the same order as they will appear on the joint return. Federal income tax return Change of address. Federal income tax return    You must notify the IRS if you are making estimated tax payments and you changed your address during the year. Federal income tax return Complete Form 8822, Change of Address, and mail it to the address shown in the instructions for that form. Federal income tax return Worksheets for Chapter 2 Use the following worksheets and tables to figure your correct estimated tax. Federal income tax return IF you need. Federal income tax return . Federal income tax return . Federal income tax return THEN use. Federal income tax return . Federal income tax return . Federal income tax return 2014 Tax Rate Schedules   the 2014 Estimated Tax Worksheet Worksheet 2-1 to estimate your taxable social security and railroad retirement benefits—line 1 of ES Worksheet (or Annualized ES Worksheet (Worksheet 2-9)) Worksheet 2-2 to estimate your self-employment (SE) tax and your deduction for SE tax—lines 1 and 11 of ES Worksheet (lines 1 and 17 of Annualized ES Worksheet (Worksheet 2-9)) Worksheet 2-3 to estimate your standard deduction—line 2 of ES Worksheet (line 7 of Annualized ES Worksheet (Worksheet 2-9)) Worksheet 2-4 to reduce your itemized deductions because your estimated AGI is more than $152,525—line 2 of ES Worksheet Worksheet 2-5 to reduce your exemption amount because your estimated AGI is more than $152,525—line 4 of ES Worksheet Worksheet 2-6 to estimate your income tax if line 1 of your ES Worksheet includes a net capital gain or qualified dividends—line 6 of ES Worksheet Worksheet 2-7 to estimate your income tax if you expect to claim a foreign earned income exclusion or foreign housing exclusion or deduction on Form 2555 or Form 2555-EZ—line 6 of ES Worksheet Worksheet 2-8 the 2014 Annualized Estimated Tax Worksheet (Annualized ES Worksheet) Worksheet 2-9 to reduce your itemized deductions because your estimated annualized AGI is more than $152,525—line 6 of Annualized ES Worksheet Worksheet 2-10 to reduce your exemption amount because your estimated annualized AGI is more than $152,525—line 10 of Annualized ES Worksheet Worksheet 2-11 to estimate your income tax if line 1 of your Annualized ES Worksheet includes a net capital gain or qualified dividends—line 12 of Annualized ES Worksheet Worksheet 2-12 to estimate your income tax if you expect to claim a foreign earned income exclusion or foreign housing exclusion or deduction on Form 2555 or Form 2555-EZ—line 12 of Annualized ES Worksheet Worksheet 2-13 to refigure (amend) your estimated tax during the year Worksheet 2-14 2014 Tax Rate Schedules Do not use these Tax Rate Schedules to figure your 2013 taxes. Federal income tax return Use them only to figure your 2014 estimated taxes. Federal income tax return Schedule X—Use if your 2014 filing status is  Single Schedule Z—Use if your 2014 filing status is Head of household If line 5 is: The tax is:     If line 5 is: The tax is:     Over— But not  over—         of the  amount  over— Over— But not  over—         of the  amount  over— $0 $9,075     10. Federal income tax return 0%   $0 $0 $12,950     10. Federal income tax return 0%   $0 9,075 36,900 $907. Federal income tax return 50 + 15. Federal income tax return 0%   9,075 12,950 49,400 $1,295. Federal income tax return 00 + 15. Federal income tax return 0%   12,950 36,900 89,350 5,081. Federal income tax return 25 + 25. Federal income tax return 0%   36,900 49,400 127,550 6,762. Federal income tax return 50 + 25. Federal income tax return 0%   49,400 89,350 186,350 18,193. Federal income tax return 75 + 28. Federal income tax return 0%   89,350 127,550 206,600 26,300. Federal income tax return 00 + 28. Federal income tax return 0%   127,550 186,350 405,100 45,353. Federal income tax return 75 + 33. Federal income tax return 0%   186,350 206,600 405,100 48,434. Federal income tax return 00 + 33. Federal income tax return 0%   206,600 405,100 406,750 117,541. Federal income tax return 25 + 35. Federal income tax return 0%   405,100 405,100 432,200 113,939. Federal income tax return 00 + 35. Federal income tax return 0%   405,100 406,750 - - - - - - 118,118. Federal income tax return 75 + 39. Federal income tax return 6%   406,750 432,200 - - - - - - 123,424. Federal income tax return 00 + 39. Federal income tax return 6%   432,200 Schedule Y-1—Use if your 2014 filing status is Married filing jointly or Qualifying widow(er) Schedule Y-2—Use if your 2014 filing status is  Married filing separately If line 5 is: The tax is:     If line 5 is: The tax is:     Over— But not  over—         of the  amount  over— Over— But not  over—         of the  amount  over— $0 $18,150     10. Federal income tax return 0%   $0 $0 $9,075     10. Federal income tax return 0%   $0 18,150 73,800 $1,815. Federal income tax return 00 + 15. Federal income tax return 0%   18,150 9,075 36,900 $907. Federal income tax return 50 + 15. Federal income tax return 0%   9,075 73,800 148,850 10,162. Federal income tax return 50 + 25. Federal income tax return 0%   73,800 36,900 74,425 5,081. Federal income tax return 25 + 25. Federal income tax return 0%   36,900 148,850 226,850 28,925. Federal income tax return 00 + 28. Federal income tax return 0%   148,850 74,425 113,425 14,462. Federal income tax return 50 + 28. Federal income tax return 0%   74,425 226,850 405,100 50,765. Federal income tax return 00 + 33. Federal income tax return 0%   226,850 113,425 202,550 25,382. Federal income tax return 50 + 33. Federal income tax return 0%   113,425 405,100 457,600 109,587. Federal income tax return 50 + 35. Federal income tax return 0%   405,100 202,550 228,800 54,793. Federal income tax return 75 + 35. Federal income tax return 0%   202,550 457,600 - - - - - - 127,962. Federal income tax return 50 + 39. Federal income tax return 6%   457,600 228,800 - - - - - - 63,981. Federal income tax return 25 + 39. Federal income tax return 6%   228,800                             Worksheet 2-1. Federal income tax return 2014 Estimated Tax Worksheet When this worksheet refers you to instructions, you can find those instructions in the Instructions for 2014 Form 1040-ES. Federal income tax return 1 Adjusted gross income you expect in 2014 (see instructions) 1     2 If you plan to itemize deductions, enter the estimated total of your itemized deductions. Federal income tax return  Caution: If line 1 is over $152,525, your deduction may be reduced. Federal income tax return See Worksheet 2-5. Federal income tax return If you do not plan to itemize deductions, enter your standard deduction. Federal income tax return 2     3 Subtract line 2 from line 1 3     4 Exemptions. Federal income tax return Multiply $3,950 by the number of personal exemptions. Federal income tax return  Caution: If line 1 is over $152,525, the amount of your personal exemptions may be limited. Federal income tax return See Worksheet 2-6. Federal income tax return 4     5 Subtract line 4 from line 3 5     6 Tax. Federal income tax return Figure your tax on the amount on line 5 by using the 2014 Tax Rate Schedules Caution: If you will have qualified dividends or a net capital gain, or expect to exclude or deduct foreign earned income or housing, see Worksheets 2-7 and 2-8 to figure the tax 6     7 Alternative minimum tax from Form 6251 or included on Form 1040A, line 28 7     8 Add lines 6 and 7. Federal income tax return Add to this amount any other taxes you expect to include in the total on Form 1040, line 44 8     9 Credits (see instructions). Federal income tax return Do not include any income tax withholding on this line 9     10 Subtract line 9 from line 8. Federal income tax return If zero or less, enter -0- 10     11 Self-employment tax (see instructions) 11     12 Other taxes including, if applicable, Additional Medicare Tax and/or NIIT (see instructions) 12     13a Add lines 10 through 12 13a     b Earned income credit, additional child tax credit, fuel tax credit, and refundable American opportunity credit 13b     c Total 2014 estimated tax. Federal income tax return Subtract line 13b from line 13a. Federal income tax return If zero or less, enter -0- ▶ 13c     14a Multiply line 13c by 90% (662/3% for farmers and fishermen) 14a           b Required annual payment based on prior year's tax (see instructions) 14b           c Required annual payment to avoid a penalty. Federal income tax return Enter the smaller of line 14a or 14b ▶ 14c        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. Federal income tax return To avoid a penalty, make sure your estimate on line 13c is as accurate as possible. Federal income tax return Even if you pay the required annual payment, you may still owe tax when you file your return. Federal income tax return If you prefer, you can pay the amount shown on line 13c. Federal income tax return                         15 Income tax withheld and estimated to be withheld during 2014 (including income tax withholding on pensions, annuities, certain deferred income, etc. Federal income tax return ) 15     16a Subtract line 15 from line 14c 16a             Is the result zero or less? □ Yes. Federal income tax return Stop here. Federal income tax return You are not required to make estimated tax payments. Federal income tax return  □ No. Federal income tax return Go to line 16b. Federal income tax return             b Subtract line 15 from line 13c 16b             Is the result less than $1,000? □ Yes. Federal income tax return Stop here. Federal income tax return You are not required to make estimated tax payments. Federal income tax return  □ No. Federal income tax return Go to line 17 to figure your required payment. Federal income tax return                         17 If the first payment you are required to make is due April 15, 2014, enter ¼ of line 16a (minus any 2013 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 17     Worksheet 2-2. Federal income tax return 2014 Estimated Tax Worksheet—Line 1 Estimated Taxable Social Security and Railroad Retirement Benefits Note. Federal income tax return If you are using this worksheet to estimate your taxable social security or railroad retirement benefits for Worksheet 2-9, 2014 Annualized Estimated Tax Worksheet, multiply the expected amount of benefits for each period by the annualization amount shown on Worksheet 2-9, line 2, for the same period before entering it on line 1 below. Federal income tax return     1. Federal income tax return Enter your expected social security and railroad retirement benefits 1. Federal income tax return   2. Federal income tax return Enter one-half of line 1 2. Federal income tax return   3. Federal income tax return Enter your expected total income. Federal income tax return Do not include any social security and railroad retirement benefits, nontaxable interest income, nontaxable IRA distributions, or nontaxable pension distributions 3. Federal income tax return   4. Federal income tax return Enter your expected nontaxable interest income 4. Federal income tax return   5. Federal income tax return Enter (as a positive amount) the total of any expected exclusions or deductions for: U. Federal income tax return S. Federal income tax return savings bond interest used for higher education expenses (Form 8815) Employer-provided adoption benefits (Form 8839) Foreign earned income or housing (Form 2555 or 2555-EZ) Income by bona fide residents of American Samoa (Form 4563) or Puerto Rico 5. Federal income tax return   6. Federal income tax return Add lines 2, 3, 4, and 5 6. Federal income tax return   7. Federal income tax return Enter your expected adjustments to income. Federal income tax return Do not include any student loan interest deduction 7. Federal income tax return   8. Federal income tax return Subtract line 7 from line 6. Federal income tax return If zero or less, stop here. Federal income tax return  Note. Federal income tax return Do not include any social security or railroad retirement benefits in the amount on line 1 of your 2014 Estimated Tax Worksheet (Worksheet 2-1) (or Annualized Estimated Tax Worksheet (Worksheet 2-9)) 8. Federal income tax return   9. Federal income tax return Enter $25,000 ($32,000 if you expect to file married filing jointly; $0 if you expect to file married filing separately and expect to live with your spouse at any time during the year) 9. Federal income tax return   10. Federal income tax return Subtract line 9 from line 8. Federal income tax return If zero or less, stop here. Federal income tax return  Note. Federal income tax return Do not include any social security or railroad retirement benefits in the amount on line 1 of your Worksheet 2-1 (or Annualized Estimated Tax Worksheet (Worksheet 2-9)) 10. Federal income tax return   11. Federal income tax return Enter $9,000 ($12,000 if you expect to file married filing jointly; $0 if you expect to file married filing separately and expect to live with your spouse at any time during the year) 11. Federal income tax return   12. Federal income tax return Subtract line 11 from line 10. Federal income tax return If zero or less, enter -0- 12. Federal income tax return   13. Federal income tax return Enter the smaller of line 10 or line 11 13. Federal income tax return   14. Federal income tax return Enter one-half of line 13 14. Federal income tax return   15