Publication 505 |
2000 Tax Year |
Introduction
The federal income tax is a pay-as-you-go tax. You must pay the tax
as you earn or receive income during the year. There are two ways to
pay as you go.
- Withholding. If you are an employee, your
employer probably withholds income tax from your pay. Tax may also be
withheld from certain other income -- including pensions,
bonuses, commissions, and gambling winnings. In each case, the amount
withheld is paid to the Internal Revenue Service (IRS) in your
name.
- Estimated tax. If you do not pay your tax through
withholding, or do not pay enough tax that way, you might have to pay
estimated tax. People who are in business for themselves generally
will have to pay their tax this way. You may have to pay estimated tax
if you receive income such as dividends, interest, capital gains,
rents, and royalties. Estimated tax is used to pay not only income
tax, but self-employment tax and alternative minimum tax as
well.
This publication explains both of these methods. It also
explains how to take credit on your return for the tax that was
withheld and for your estimated tax payments.
If you did not pay enough tax during the year either through
withholding or by making estimated tax payments, you may have to pay a
penalty. The IRS usually can figure this penalty for you. This
underpayment penalty, and the exceptions to it, are discussed in
chapter 4.
Comments and suggestions.
We welcome your comments about this publication and your
suggestions for future editions.
You can e-mail us while visiting our web site at
www.irs.gov/help/email2.html.
You can write to us at the following address:
Internal Revenue Service
Technical Publications Branch
W:CAR:MP:FP:P
1111 Constitution Ave. NW
Washington, DC 20224
We respond to many letters by telephone. Therefore, it would be
helpful if you would include your daytime phone number, including the
area code, in your correspondence.
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