Declarations of estimated tax by individuals

Authority: IC 6-8.1-3-3

Affected: IC 6-3-4-4

Sec. 91. Declarations of Estimated Tax By Individuals. An individual who does not have Indiana Adjusted Gross Income Tax or County Adjusted Gross Income Tax withheld from his wages on a regular basis is required to file a Declaration of Estimated Tax if he owes $100.00 or more of Indiana Adjusted Gross Income Tax or County Adjusted Gross Income Tax. Specifically, he will declare the amount of tax estimated for the current year and submit quarterly payments to prepay the tax. Also, individuals who have tax withheld by an employer are required to file a declaration if they have income other than wages in excess of $5,000.00 which is not covered by withholding. The following schedule illustrates the determination of the declared amount: (A) Total Estimated Income in current year $ (B) Total Exemption $ (C) Amount subject to tax (line A less line B) $ (D) Amount of State Tax (line C x 2%) $ (E) Estimated State Tax Withheld by employer (if any) $ (F) Amount of State Declaration (line D less line E) (Enter this amount on Form IT-40, in the space for total State Estimated Tax) $ (G) Estimated Amount of County Tax (line C x appropriate county tax rate) $ (H) Estimated County Tax Withheld by employer (if any) $ (I) Amount of County Declaration (line G, less line H) (Enter this amount on Form IT-40 in the space provided for County Declaration of Estimated Tax) $

An individual subject to estimated tax must, when filling out his tax return for the previous year, make a Declaration of Estimated Tax for the current year; i.e., 1978 estimated tax must be declared and shown on the 1977 income tax return. The taxpayer is then required to add one fourth (1/4) of the declared estimated tax to his tax due for the preceding year. The remainder of his estimated tax due is to be made in three quarterly payments. The subsequent quarterly payments are to be made on voucher form ES-40.

If a taxpayer has estimated his tax in the previous year he will receive vouchers and envelopes with his return for quarterly payments of his estimated tax. If this is his first year to estimate, the vouchers and envelopes will be sent to him after he makes a declaration on his individual income tax return. EXAMPLE: Mr. Smith, while completing his 1977 Indiana return in March of 1978, determines that he will owe the State $100.00 of Indiana Adjusted Gross Income Tax for 1978. He then declares $100.00 for 1978 on the appropriate line of his 1977 return and includes $25.00 [one fourth (1/4) of his 1978 estimated tax] with his payment of 1977 taxes. He pays the remaining three fourths (3/4) of his estimated tax in three (3) quarterly payments of $25.00 (June 15, September 15, and January 15).

A declaration may be made after the Individual Income Tax Return has been filed by filling out a voucher which the Department of Revenue will furnish on request, along with a remittance in the appropriate amount. To amend an estimate, a voucher should be submitted with the necessary changes and remittance reflecting same. No other form is necessary.

However, an estimated tax payment may not be made on a prior-year return. If the taxpayer is not filing a current-year return, then estimated payments must be made on a voucher. NOTE: The Department does not send quarterly notices of estimated tax due, but rather it is the responsibility of the taxpayer to send in his payments with the appropriate voucher.

PENALTIES:

A penalty may be assessed for failure to make sufficient payment of estimated tax. Penalty is computed at a rate of 8% per annum on the amount of unpaid tax.

EXCEPTIONS:

If at least two-thirds (2/3) of total gross income from all sources is attributable to farming or fishing (including oyster farming) a declaration of estimated tax need not be made if the individual's income tax return is filed any time on or before March 1 of the succeeding year (IRC §6073b).

In addition, the Department will not assess penalty for underpayment of estimated tax if the taxpayer falls within the exceptions of IRC §6654d.