Payroll Taxes and Tax Compliance 13-5 Estimated Taxes. (Obj. 3) George Lewis works part-time and operates a business as a sole proprietorship on the side. For 2018, he estimates that his AGI (before consideration of the deduction for the employer's (6) share of the self-employment tax) will be $44.650. Included in this amount is wages of $19.250, net profits from his business of $25,000, and $400 of interest income. George is single and has no dependents. He estimates that his itemized deductions for the year will be $9.500, and that his employer will withhold $3,200 in federal income taxes. George's 2017 tax liability was $6,930. Using this information, complete the Estimated Tax Worksheet below to compute the amount George will be required to make in quarterly estimated payments if he wants to avoid any underpayment penalty for 2018. 2018 Estimated Tax Workssheet Adusted groas income you epect in 2018 inctions Deductions you plan to temze deductions anter the estimated total of your ted deductons Thane include qualitying home mongage e ha e cotrbuons and oce txes up to $10.000 and medical ecenses in acess of 7.5% of your income you don't pian to hemize deductions anter yr standand deduction b you quality for the deductnion under section 1994, et the emated amourt of the deductiln you are allowed on your qualifed business income rom a qualfed trade or bueines eAdd ines 2a and 2b 3 Keeo for Your Rcons Subtract e 2 from line 1 4 Tax. Figure your tax on the amount on ine 3 by uaing the 2018 Tax Rate Schedudes Caution you wil have qualifed didends or a net captal gin or expect to enlude or deducr foreign eamed income or housing see Workshes 2-5 and 2-6 in P 506 to fgure the tar Abemative minimum tax from Ferm 6251 or included on Form 1040A, ne 2 Add ines 4 and 5 Add so hs amourt any other taxes vou espect to include in the 30al on Form 1040, line 44 6 Credits (see inatructons) Do not include any income tax withhoiding on this ine Subtract ine 7 from ine 6 f zero or less ener-0 9Sa-ampleyment tax isee instructions) 10 Other taxes (soe instructiona 11a Add ines 8 through 10 b Eamed inoome eredit, addtonal child tax credit, fuel tax credt net pramium tax enedt refundable American opportunity credit, and refundable credit from Form 8885 Total 2018 estimated tax. Subract ine 11b from Ine 11a zaro or less, enter -0 7 8 9 10 |11a 11b 1te Is2e 126 12a Multiply ine 11p by 90% (00% for famers and fahemen b Required annual payment based on prior year's tax (ee inatructions) eRequired annual payment to avoid a penalty. Enter the amaler of ine 12a or 12b Caution Generaly, if you do not prepay through income tar wiholding and estimaned tax payments) at least the amount on ine 12e, you may owe a penaty for not paying enough esmated tax To avoid a penaty, make sure your estimate on ine 1tc is as accurate an possible Even if you pay the requied annual payment, you may sl oue tax when you e your retum if you prefer, you can pay the amount shown on ane 1te For details see chapter 2 of Pub s0 Income tax wthheld and estimated to be withheld during 2018 (ncluding income tax withholding on pansions, annuties, certain defomad income, n | 120 13 |14a 14a Subtract ine 13 from ine 120 is the resut zero or less? Yes. Stop here You are not required to maka estimated tax payments No. Go to ine 14b b Subtract ine 13 from ine 1t Is the result less than $1,000 Yes. Stop here. You are not required to make estimated tax payments No. Go to line 15 to figure your required payment the first payment you are required to make is due April 17, 2018, enbar 1% of ine 14a iminus any 14b 15 2017 overpayment that you are applying to this inatalment here, and on your estimated ta payment voucheris) it you are paying by check or money order When fguring your 2018 estimated taxes, and essmaing your deductions, you might wart to take into account that the standad deduction for all ing statuses has increased substansaly and many hemzed deductions have bean eiminated or the daduction amount has been reduced. See the items under What's New 15 Form 1040-ES (2018 Payroll Taxes and Tax Compliance 13-5 Estimated Taxes. (Obj. 3) George Lewis works part-time and operates a business as a sole proprietorship on the side. For 2018, he estimates that his AGI (before consideration of the deduction for the employer's (6) share of the self-employment tax) will be $44.650. Included in this amount is wages of $19.250, net profits from his business of $25,000, and $400 of interest income. George is single and has no dependents. He estimates that his itemized deductions for the year will be $9.500, and that his employer will withhold $3,200 in federal income taxes. George's 2017 tax liability was $6,930. Using this information, complete the Estimated Tax Worksheet below to compute the amount George will be required to make in quarterly estimated payments if he wants to avoid any underpayment penalty for 2018. 2018 Estimated Tax Workssheet Adusted groas income you epect in 2018 inctions Deductions you plan to temze deductions anter the estimated total of your ted deductons Thane include qualitying home mongage e ha e cotrbuons and oce txes up to $10.000 and medical ecenses in acess of 7.5% of your income you don't pian to hemize deductions anter yr standand deduction b you quality for the deductnion under section 1994, et the emated amourt of the deductiln you are allowed on your qualifed business income rom a qualfed trade or bueines eAdd ines 2a and 2b 3 Keeo for Your Rcons Subtract e 2 from line 1 4 Tax. Figure your tax on the amount on ine 3 by uaing the 2018 Tax Rate Schedudes Caution you wil have qualifed didends or a net captal gin or expect to enlude or deducr foreign eamed income or housing see Workshes 2-5 and 2-6 in P 506 to fgure the tar Abemative minimum tax from Ferm 6251 or included on Form 1040A, ne 2 Add ines 4 and 5 Add so hs amourt any other taxes vou espect to include in the 30al on Form 1040, line 44 6 Credits (see inatructons) Do not include any income tax withhoiding on this ine Subtract ine 7 from ine 6 f zero or less ener-0 9Sa-ampleyment tax isee instructions) 10 Other taxes (soe instructiona 11a Add ines 8 through 10 b Eamed inoome eredit, addtonal child tax credit, fuel tax credt net pramium tax enedt refundable American opportunity credit, and refundable credit from Form 8885 Total 2018 estimated tax. Subract ine 11b from Ine 11a zaro or less, enter -0 7 8 9 10 |11a 11b 1te Is2e 126 12a Multiply ine 11p by 90% (00% for famers and fahemen b Required annual payment based on prior year's tax (ee inatructions) eRequired annual payment to avoid a penalty. Enter the amaler of ine 12a or 12b Caution Generaly, if you do not prepay through income tar wiholding and estimaned tax payments) at least the amount on ine 12e, you may owe a penaty for not paying enough esmated tax To avoid a penaty, make sure your estimate on ine 1tc is as accurate an possible Even if you pay the requied annual payment, you may sl oue tax when you e your retum if you prefer, you can pay the amount shown on ane 1te For details see chapter 2 of Pub s0 Income tax wthheld and estimated to be withheld during 2018 (ncluding income tax withholding on pansions, annuties, certain defomad income, n | 120 13 |14a 14a Subtract ine 13 from ine 120 is the resut zero or less? Yes. Stop here You are not required to maka estimated tax payments No. Go to ine 14b b Subtract ine 13 from ine 1t Is the result less than $1,000 Yes. Stop here. You are not required to make estimated tax payments No. Go to line 15 to figure your required payment the first payment you are required to make is due April 17, 2018, enbar 1% of ine 14a iminus any 14b 15 2017 overpayment that you are applying to this inatalment here, and on your estimated ta payment voucheris) it you are paying by check or money order When fguring your 2018 estimated taxes, and essmaing your deductions, you might wart to take into account that the standad deduction for all ing statuses has increased substansaly and many hemzed deductions have bean eiminated or the daduction amount has been reduced. See the items under What's New 15 Form 1040-ES (2018