California Form 5805 – Fill Out and Use This PDF

Name(s) as shown on return

Social security number or FEIN

General Information

A Purpose

Use form FTB 5805 to see if you owe a penalty for underpaying your estimated tax and, if you do, to figure the amount of the penalty.

B Who Must File

Generally, you do not have to complete this form. The Franchise Tax Board (FTB) can figure the amount of any penalty for you and send you a bill after you have filed your return. If the FTB figures your penalty and sends you a bill, you must pay the penalty within 15 days of the billing to avoid additional interest charges.

Important: If you answered “Yes” to any of the questions in Part I (estates and trusts, see General Information E), you must complete this form and attach it to the front of your return.

C Waiver of the Penalty

You may request a waiver of the penalty if:

•You underpaid an estimated tax installment due to a casualty, disaster, or other unusual circumstance and it would be inequitable to impose the penalty; or

•You retired after age 62 or became disabled in 1998 or 1999 and your underpayment was due to reasonable cause.

To request a waiver:

•Check “Yes” on form FTB 5805, Part I, Question 1, and in the space provided, explain why you are requesting a waiver of the estimate penalty. If you need additional space, attach a statement;

•Complete form FTB 5805 through Part II, line 12 (Worksheet II, line 15 if you use the regular method) without regard to the waiver. Write the amount you want waived in parenthesis on the dotted line next to Part II, line 13 (Worksheet II, line 16 if you use the regular method). Subtract this amount from the total penalty you figured without regard to the waiver, and enter the result on Part II, line 13 (Worksheet II, line 16 if you use the regular method);

•Fill in the circle on Form 540, line 64;

Form 540NR, line 73; or Form 541, line 39; and

•Attach form FTB 5805 to the front of your return on top of any check, money order, Form W-2, Form 1099, or other special documentation.

D Annualized Income

Installment Method

If your income varied during the year and you use the annualized income installment method to determine your estimate payment requirements, you must complete form FTB 5805, including Side 2. Attach it to the front of your return on top of any check, money order, Form W-2, Form 1099, or other special documentation. Also fill in the circle on your return for underpayment of estimated tax.

E Estates and Trusts

Estates and trusts are required to make quarterly estimated tax payments. Estates and grantor trusts, which receive the residue of the decedent’s estate, are required to make estimated income tax payments for any year ending two or more years after the date of the decedent’s death. If you answered “Yes” to Question 4, complete Part I only and attach form FTB 5805 to the front of your return.

Note: Exempt trusts should use form FTB 5806, Underpayment of Estimated Tax by Corporations.

F Nonresidents and New Residents

The penalty for the underpayment of estimated tax applies to nonresidents and new residents. See the conditions listed in the box labeled “Impor- tant” on Side 1 of form FTB 5805.

G Farmers and Fishermen

You are considered a farmer or fisherman if at least two-thirds (2/3) of your annual gross income for 1998 or 1999 is from farming or fishing. Farmers and fishermen are required to make one estimate payment. For calendar year taxpayers, the due date is January 15, 2000. If you file Form 540 or Form 541 and pay the entire tax due by March 1, 2000, you do not owe a penalty for underpaying estimated tax. Otherwise, use form FTB 5805F, Underpayment of Estimated Tax by Farmers and Fishermen, to figure your penalty.

H Due Dates for Estimated Tax Installments

If you are a calendar year taxpayer, the estimated tax installment due dates for 1999 were:

• First quarter

— April 15, 1999

•Second quarter — June 15, 1999

• Third quarter

— September 15, 1999

•Fourth quarter — January 15, 2000

Fiscal-year filers must pay estimated tax installments on the 15th day of the 4th, 6th, and 9th months of their fiscal year, and the 1st month of the following fiscal year.

The penalty is figured separately for each due date. Therefore, you may owe a penalty for an earlier installment due date, even if you pay enough tax later to make up the underpayment.

If a due date falls on a Saturday, Sunday, or legal holiday, use the next business day.

I Filing an Early Return in Place of the 4th Installment

If you file your 1999 tax return by February 1, 2000, and pay the entire balance due, you do not have to make your last estimate payment. Fiscal- year filers must file their return and pay their tax before the first day of the 2nd month after the end of their taxable year.

J Amended Return

If you file an amended return:

•On or before the due date of your original return, use the tax, credit and other amounts shown on your amended return to figure your penalty for underpayment of estimated tax.

•After the due date of the original return, you must use the amounts shown on the original return to figure the penalty.

K Penalty Rates

The rates used to determine the amount of your penalty are established at various dates through- out the year. If an installment of estimated tax for any quarter remained unpaid or underpaid for more than one rate period, the penalty for that underpayment will be figured using more than one rate when applicable.

The following rates apply to the 1999 computation period:

•8% 4-15-99 through 6-30-99

•7% 7-1-99 through 12-31-99

•8% 1-1-00 through 6-30-00

Fiscal-year filers: the rates for the periods 7/1/00 through 12/31/00 and 1/1/01 through 3/15/01 will be determined by the FTB in March 2000 and September 2000, respectively.

Call the FTB’s automated toll-free phone service to get updated penalty rates. Call the number below, select personal income tax information, follow the recorded instructions, and enter code number 403 when instructed.

The automated toll-free phone service is available in English and Spanish to callers with touch-tone telephones 24 hours a day, seven days a week.

From within the
United States, call	(800) 338-0505

From outside the United States,

call (not toll free) . . . . . . . . . . . . (916) 845-6600

Specific Line Instructions

Part II — Computing the Required Annual Payment

Use this part to figure the amount of estimated tax that you were required to pay.

Certain high-income taxpayers are required to use 105% (instead of 100%) of the tax shown on their previous year’s return in the computation of the required annual payment. See the instructions for line 5.

Line 1 – Enter your tax liability (excluding any tax on lump-sum distributions) from your 1999 Form 540, line 34; Form 540A, line 23;

Form 540NR, line 43; or Form 541, line 25.

Line 3 – Enter the amounts from your 1999

Form 540, line 38 and line 41; Form 540A, line 24 and line 27; Form 540NR, line 47 and line 50; or Form 541, line 28.

Line 5 – Enter your tax liability (excluding any tax on lump-sum distributions) from your 1998 Form 540, line 34; Form 540A, line 23;

Form 540NR, line 43; or Form 541, line 25.

If the adjusted gross income shown on your 1998 California tax return is more than $150,000, or more than $75,000 if married filing separate, then enter 105% (1.05) of the tax liability from your 1998 return on line 5.

Short Method

You may use the short method only if you are a calendar year taxpayer and:

1.You made no estimated tax payments or your only payments were California income tax withheld; or

2.You paid estimated tax in four equal amounts on the due dates.

Note: If any payment was made earlier than the due date, you may use the short method, but using it may cause you to pay a larger penalty than using the regular method. If the payment was only a few days early, the difference is likely to be small.

You may not use the short method if either of the following apply:

1.You made any estimated tax payment late; or

2.You answered “Yes” to Part I, Question 3.

If you can use the short method, complete Part II, line 1 through line 10 to figure your total underpayment for the year, and line 11 through line 13 to figure the penalty.

Part III – Annualized Income Installment Method

If your income varied during the year, you may be able to lower or eliminate the amount of one or more required installments by using the annualized income installment method. Use

Part III to figure the required installment amount to enter on Worksheet II – Regular Method to Figure Your Underpayment and Penalty, line 1 (page 4).

Complete line 1 through line 16 to figure your current year tax, per quarter, based on your income as you earned it. Then, complete line 17 through line 23 to figure your required installment for each quarter. (The total of all amounts entered on line 23 should equal the amount from Part II, line 6.)

If you use the annualized income installment method for any payment due date, you must use it for all payment due dates. To figure the amount of each required installment, Part III automatically selects the smaller of the annualized income installment or the regular installment (increased by the amount saved by using the annualized income installment method in figuring earlier installments).

Note: If you are filing Form 540NR, see

Form 540NR Instructions for Part III at the end of this section.

Line 1 – For the period, figure your total income minus your adjustments to income for the period. Include your share of partnership or S corpora- tion income or loss items for the period.

Line 2 – Form 541 filers. Do not use amounts shown in column (a) through column (d). Instead, use 6, 3, 1.71429, and 1.09091, respectively, as the annualization amounts.

Line 6 – Multiply line 4 by line 5 and enter the result on line 6. Your annualized itemized deductions are limited if, in any quarter, line 3 is greater than:

•$239,628 (married filing joint or qualifying widow(er)); or

•$119,813 (single or married filing separate); or

•$179,720 (head of household).

Use the following worksheet to figure the amount to enter on line 6 for each period line 3 reaches the above amounts.

1Enter the amount from

Part III, line 4 . . . . . . . . . . . . . . . 1_______

2Using California amounts, add the amounts on federal Schedule A, line 4, line 13 and line 19 plus any gambling

losses included on line 27 . . . . . . 2_______

3Subtract line 2 from line 1 . . . . . 3_______

4Enter the number from

Part III, line 5 . . . . . . . . . . . . . . . 4_______

5Multiply the amount on line 1

by line 4 . . . . . . . . . . . . . . . . . . . 5_______

Note: If the amount on line 3 is zero, stop here and enter the amount from line 5 on Part III, line 6.

6Multiply the amount on line 3

by the number on line 4

6_______

7Multiply the amount on

line 6 by 80% (.80) . . . . . . . . . . . 7_______

8Enter the amount from

Part III, line 3 . . . . . . . . . . . . . . . 8_______

9Enter the amount shown

above for your filing status . . . . . 9_______

10Subtract line 9 from line 8 . . . . . 10_______

11Multiply the amount on

line 10 by 6% (.06) . . . . . . . . . . . 11_______

12Enter the smaller of line 7 or

line 11 . . . . . . . . . . . . . . . . . . . . . 12_______

13Subtract line 12 from line 5. Enter the result here and on

Part III, line 6 . . . . . . . . . . . . . . . 13_______

Line 10 – Form 541 filers. Figure the tax on the amount in each column of line 9 using the tax table or tax rate schedule in your tax booklet. Also, include any tax from:

•FTB 5870A, Tax on Accumulation Distribution of Trusts; or

•IRC Section 453A tax.

Line 11 – If your exemption credits were limited by adjusted gross income (AGI), it may be to your advantage to make a separate computation for each period. If you choose, you may complete the exemption credit worksheet in your tax booklet for each period.

Line 13 – Enter the special credits you are entitled to because of events that occurred during the months shown in the column headings.

Credit Limitation – If your special credits were limited by tentative minimum tax (TMT), it may be to your advantage to make a separate computation for each period. If you choose, you may complete a separate Schedule P (540 or 541) for each period.

Form 540NR Instructions for Part III

Use these instructions only if you are filing Form 540NR.

Line 1 – Enter your total adjusted gross income (AGI) for each period. Your total AGI is your AGI for the period from all sources.

Line 12 – As a nonresident or part-year resident, you must figure your tax based on your total income. You then must determine your California tax liability by multiplying the tax by the ratio of California AGI to total AGI. To do this, complete Worksheet I below.

California AGI is all of the income you earned while you were a California resident plus any income received from sources within California while you were a nonresident, less applicable income adjustments. For more information, see the instructions for Schedule CA (540NR), California Adjustments – Nonresident or Part-Year Residents, column E.

Line 13 – Refigure Form 540NR, line 31 through line 42 prorating the credits on line 31 through line 36 using the ratio from Line D of Worksheet I below.

Instructions for Worksheet II – Regular Method to Figure Your Underpayment and Penalty

Part I — Figure Your Underpayment

Line 1 – Enter in column (a) through column (d) the amount of your required installment. For most taxpayers, this is the amount shown on form FTB 5805, Side 1, Part II, line 6 divided by 4. If you use the annualized income installment method, enter the amount from form FTB 5805, Side 2, Part III, line 23.

Line 2 – Enter the estimate payments made by the date at the top of each column.

Include in column (a) any overpayment of tax from your 1998 return that you elected to apply to the 1999 estimated tax.

Divide by 4 the amount you entered on form FTB 5805, Part II, line 3, and enter the result in each column, unless you can show it was withheld otherwise.

Note: If your California withholding was not withheld in equal installments, and you are able to show the actual amounts withheld per period and the dates withheld, you must answer “Yes” to Part I, Question 3 and enter the uneven amounts withheld on the lines provided on Part I, Question 3.

If you file your return and pay the tax due by February 1, 2000, enter the amount of tax paid with your return in column (d). In this case, you will not owe a penalty for the estimate payment due by January 15, 2000.

Line 8 – If line 8 is zero for all payment periods, you do not owe a penalty. But if you checked “Yes” for any question on form FTB 5805, Side 1, Part I, you must file form FTB 5805 with your return.

Part II — Figure the Penalty

Figure the penalty by applying the appropri- ate rate against each underpayment shown on line 8. The penalty is figured for the number of days that the underpayment remained unpaid.

The rates are established at various times throughout the year. If an underpayment remained unpaid for more than one rate period, the penalty on that underpayment will be figured using more than one rate period.

Use line 10, line 12, and line 14 to figure the number of days the underpayment remained unpaid. Use line 11, line 13, and line 15 to figure the actual penalty amount by applying the rate against the underpayment for the number of days it remained unpaid.

Maximum days in a rate period per quarter:

Installment		Days in Rate
	Period 1		Period 2	Period 3
1	76		184	106
2	15		184	106
3			107	106
4				9 1

Payment Application. Your payments are applied to any underpayment balance on an earlier installment. It does not matter if you designate a payment for a later period.

Example: You had an underpayment for the April 15th installment of $500. The June 15th installment required a payment of $1,200. On June 10th, you sent in a payment of $1,200 to cover the June 15th installment. However, $500 of this payment is considered to be for the April 15th installment. The penalty for the April 15th installment is figured to June 10th. The amount of the payment to be applied to the June 15th installment is $700.

Subsequent Payments. For purposes of computing the penalty, it may be helpful to make a list of any payments that you made after the timely payments entered in Part I, line 2. If you made no other payments, follow the line-by-line instructions for Part II.

If you made subsequent payments, you may need to make additional computations for the applicable column on the worksheet. However, if the payment reduced the underpayment to zero, there are no further computations to make for that column. In that case, you count the number of days from the installment due date to the date paid.

If a subsequent payment does not reduce the underpayment to zero, you will need to make an additional computation in the column.

•First, count the number of days from the due date to the date paid and use the underpayment amount from Worksheet II, line 8.

•Second, count the number of days from the payment date to the end of the rate period, and subtract the amount of the subsequent payment from the underpay- ment amount from Worksheet II, line 8.

•Then apply the rate for the applicable period.