Form Rev 1630 – Fill Out and Use This PDF

REV-1630 (FI) (12-10)

BUREAU OF INDIVIDUAL TAXES

UNDERPAYMENT OF

ESTIMATED TAX BY INDIVIDUALS

2010

PURPOSE & USE: Under Pennsylvania personal income tax law, any individual who reasonably expects annual income for the tax year to exceed $8,000, disregarding income subject to PA withholding, must declare and pay estimated tax.

Usethisformtodetermineifyoupaidenoughestimatedtaxineachof thefourpaymentperiods(Partl).Ifyoudidnotpayenoughtaxinany payment period, then there is an underpayment for that period and a corresponding interest penalty imposed. Use this form to determine if any exceptions to the interest penalty apply (Part II). If an exception does not apply, use this form to calculate the interest due (Part III). Thisformmustbefiledevenifoneoftheexceptionsapplies.Adifferent exception may apply for each payment period.

NOTE: If you are using this form to calculate penalty on your 2010 return, enclose a copy of this form (including applicable worksheet) with Form PA-40.

FARMERS-Therearespecialestimatedtaxpaymentrulesthatapplyto farmers.Theserulesapplytothosewhocultivate,operateormanagea farmforprofitorgain.Afarmisatractoflanddevotedtoagriculture, pasturage,stockraisingorsomealliedindustry.Itincludesdairy,stock and poultry farms.

If you meet both of the following tests, you do not owe interest for underpaying estimated tax:

1)Your gross income from farming for the taxable year is at least 2/3 of your gross income from all sources for the taxable year; and

2)You filed your tax return and paid the entire amount due by March 1ofthefollowingyear,oryoupaidallofyourestimatedtaxbyJan. 18, 2011.

If you meet these tests, please complete REV-1630A, Underpayment ofEstimatedTaxbyIndividualFarmers.Ifyoudonotmeetbothtests, you are not considered a farmer for PA tax purposes. Please complete this form to see if you qualify for any other exceptions to the interest penalty.

WHOMUSTPAYINTERESTFORUNDERPAYMENTOFESTIMATED TAXES:Ifyoudidnotpayanyestimatedtaxordidnotpaythecorrect estimated tax by any due date or if you did not pay the entire 2010 estimatedtaxinonepaymentonorbeforeApril15,2010,youmaybe charged an interest penalty. This is true even if you are due a refund when you file your PA income tax return. Interest is calculated sepa- rately for each due date. Therefore, you owe interest for an earlier payment due date, even if you paid enough tax later to make up for the underpayment.

IMPORTANT: If you are a Pennsylvania resident working in Indiana, Maryland, New Jersey, Ohio, Virginia or West Virginiaand your employer does not withhold PA personal income tax, you are required to make estimated payments.

WHENINTERESTISAPPLIED:Ingeneralandunlessyouqualifyfor the farming exemption, there is an underpayment if your 2010 prepayments were not:

•90 percent of the estimated tax due for the payment period; or

•100 percent of the estimated tax due for the payment period calculated by multiplying the taxable income on Line 11 of 2009 FormPA-40by3.07percent(0.0307).Thisprovisiondoesnotapply ifyoudidnotfileaprioryear’sreturnorifyoufiledyourprioryear’s return as a part-year resident.

CAUTION: You can only use your prior year’s tax liabilities as a safe harboriftheratesfortheprioryearandthecurrentyeararethesame. If the tax rate changes, use the prior year’s income multiplied by the current year’s rate to calculate the safe harbor.

Thetotalestimatedtaxandcreditsfortaxyear2010mustbeequalto or greater than the 2009tax year liability per installment period.

PARTl.CALCULATINGYOURUNDERPAYMENT

Line1a.InsertthetaxliabilityfigurefromLine12ofyour2010PA-40 tax return.

Line 1b. Calculate 90 percent of Line 1a by multiplying Line 1a by 0.90.

Line 2. The credits allowed to reduce the tax due are also used to reduceyourtaxliabilityforthiscalculation.Addtogetherthefollowing lines from Form PA-40: Line 13 (Total PA Tax Withheld), Line 17 (Nonresident Tax Withheld), Line 21 (Tax Forgiveness Credit), Line 22 (Resident Credit) and Line 23 (Total Other Credits). If Line 2 is more than Line 1b, you do not owe a penalty and do not need to complete this form.

Line 3. Subtract Line 2 from Line 1a. If the amount is $246 or more, complete Lines 4 through 10. If less than $246, you did not owe estimated income tax and do not have to complete this form.

Line4.SubtractLine2fromLine1b.Thisamountisusedtodetermine if you have an underpayment. If you have an underpayment, the penalty is calculated on this amount.

Line 5. Divide Line 4 by 4 and enter the amount in each of the four Columns a through d.

Fiscalyearfilers.ForColumnausethe15thdayofthefourthmonth of the tax year, for Column b use the 15th day of the sixth month of the tax year, for Column c use the 15th day of the ninth month of the taxyearandforColumndusethe15thdayofthefirstmonthfollowing the close of the tax year.

Line6.Line6representsthetimelypaymentscreditedtoyouraccount for each of the four payment due dates. If you made a payment after the due date, do not include that amount on Line 6. Each column will indicateatotalofyourestimatedpaymentsfortheperiod.Tocalculate theamountstobeenteredonLine6,usethefollowingstepsandinsert the total result for each column in the appropriate column. Do not include any credits from Line 2.

In Column a, enter the amount of 2010 estimated tax payment(s) madeonorbeforeApril15.Includeinyourestimatedtaxpaymentsin Column a any overpayment of tax from your prior year’s return that you elected to apply to this year’s tax. In Column b, enter the amount of2010estimatedpaymentsmadeafterApril15andonorbeforeJune

15.InColumnc,entertheamountof2010estimatedpaymentsmade after June 15 and on or before Sept. 15. In Column d, enter the amount of 2010 estimated payments made after Sept. 15 and on or before Jan. 18, 2011.

If you filed a final return and paid the total tax due by Jan. 31, 2011, enter the amount paid with your return as the fourth installment.

IMPORTANT: Complete Lines 7 through 10 for one payment period before you go to the next payment period.

Line7. If you have an overpayment on Line 10 for the prior payment period, enter that amount. This does not apply to the April 15th payment period (Column a).

Line 8. Add Lines 6 and 7 for each of the columns to determine the total payments applied to the payment period. This figure will be used to determine if you have an underpayment.

Line 9. If Line 5 is greater than Line 8 for any column, calculate the amount of the underpayment for the payment period by subtracting Line 8 from Line 5. If Line 8 is greater than Line 5 for any column, subtract Line 5 from Line 8 and enter it in the appropriate column and onLine7ofthenextpaymentperiod.IfLine5isnotgreaterthanLine 8 for any of the Columns a through d, enter zero on Line 9. If all Columns9athrough9darezero,stophere.Youdonotowetheinterest penalty. If there are overpayments but not in every quarter, go to the applicable columns for Lines 14a and 14b and place an X in each column where an overpayment exists.

Line 10. Calculate the amount of the overpayment for the payment period.EnterthisamountonLine7ofthenextpaymentperiod.Ifyou have an overpayment in the Jan. 18th payment period, donot carry it to any other space on the form.

(Instructions continued on back cover.)

City or Post Office

PART I CALCULATING YOUR UNDERPAYMENT

1a. 2010Tax Liability from Line 12 of Form PA-40. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . .

1b. Multiply the amount on Line 1a by 0.90. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . .

2. Add the amounts reported on Lines 13, 17, 21, 22 and 23 of Form PA-40. . . . . . . . . . . . . . . .

3. Subtract Line 2 from Line 1a. If result is less than $246, stop here. . . . . . . . . . . . . . . . . . . . .

4. Subtract Line 2 from Line 1b. . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . .

State ZIPCode

1a.

1b.

2.

3.

4.

EXCEPTION 1 WORKSHEET – Part II, Line 11 Calculation

A.Divide the amount reported in Part I, Line 2 by 4. Enter the amount in each of the four columns. . . . . . . . . . . . .. . . . . .

B.Enter the estimated payments reported in Part I, Line 6. Enter the payments under the installment period in which they were paid. . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . .

a

April 15, 2010

b

June 15, 2010

c

Sept. 15, 2010

d

Jan. 18, 2011

11.Enter the amounts listed on Exception 1 Worksheet, Line C. For Column a this is the amount from Line C above. For Column b add the amounts of Columns a and b from Line C; for Column c add the amounts from Columns a, b and c; and for Column d add the amounts from Columns a, b, c and d. . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . .

12.Exception 1 – Tax on 2009income using 2010tax rate. See instructions. . . . . . . . . . . . . . . . . . . . .. . . . . . . . . .

11.

12.

EXCEPTION 2 WORKSHEET – Part II, Line 13 Calculation

01/01/10 - 03/31/10 01/01/10 - 05/31/10 01/01/10 - 08/31/10 01/01/10 - 12/31/10

13.Exception 2 - Tax on 2010income over three, five, eight . and 12 month periods. Enter 90 percent of Exception 2 Line B. . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . .

13.

Enter 90%

Enter 90%

Enter 90%

Enter 90%

IfLine9iszeroforallpaymentperiods,youdonotoweinterestpenalty. IfyouhaveanunderpaymentonLine9inanypaymentperiod,continue on to Part II, Exception 1 Worksheet.

NOTE: If there are columns with underpayments, you must complete the rest of this form.

PARTII.CALCULATINGYOUREXCEPTIONS

Line11. Enter the result of Exception 1 Worksheet, Line C.

Line12.Exception1appliesifyour2010estimatedtaxpaymentsand credits equal the tax that would have been due on your 2009income and if you used the current rate. It does not apply if you did not file a return for the prior year or if the prior year’s return was filed as a part-year resident.

To calculate, multiply Pennsylvania taxable income from your 2009 return by 3.07 percent (0.0307). Enter 25 percent of this amount in Column a, 50 percent in Column b, 75 percent in Column c and 100 percent in Column d. If the amount on Line 11 is equal to or greater than the amount on Line 12 in any of the columns, you do not owe interest for that payment period and you should place an X in the applicable line 14a or 14b for that payment period. If the amount on Line 11 is less than the amount on Line 12 for any payment period, continue on to Exception 2 for those periods.

Line13.Exception2appliesifyour2010estimatedtaxpaymentsand credits equal at least 90 percent of the tax on your actual taxable incomefortheperiodsfromJan.1toMarch31;Jan.1toMay31;Jan.1 to August 31; and Jan. 1 to Dec. 31. Enter 90 percent of Exception 2 Worksheet, Line B. If Line 11 is equal to or greater than Line 13, the exception applies for that payment period and you should place an X in the applicable line 14a or 14b for that payment period.

PARTIII.CALCULATINGINTEREST

Usethispartoftheformtocalculatetheamountoftheinterestpenalty due. If one of the exceptions applies for any of the periods, place an X intheboxesunderthecolumnforthatperiod.Youonlyhavetocomplete Lines 14 and 15 for the periods in which interest is due. The under- payment is the amount on Line 9 for the appropriate payment period.

Lines14a,14band14c.

Line 14a. Applies to first, second and third payment periods for calendar year filers and any fiscal filer payments that were due on or before Dec. 31. If no estimated payments were made duringthe year, use the number of days after the estimated payment due date to and including the date of the annual payment or Dec. 31, whichever is earlier. If Dec. 31 is earlier, enter 260 in Column a, 199 in Column b and107inColumnc.Fiscalfilersadjustaccordingtoestimatedpayment due dates.

Line14b. If no estimated payment was made for the fourth payment period, use the number of days after the estimated payment due date to and including date of annual payment or April 18, 2011, whichever isearlier.IfApril18isearlier,enter90inColumnd.Fiscalfilersadjust according to due date of annual return.

14c. Applies to first, second and third payment periods for calendar yearfilersandanyfiscalfilerpaymentsthatweredueafterDec.31.If noestimatedpaymentsweremade,usethenumberofdaysafterDec. 31, 2010to and including date of annual payment or April 18, 2011, whichever is earlier. If April 18 is earlier, enter 108 in each column. Fiscal filers adjust according to due date of annual return.

Ifataxpayerfullypaysanunderpaymentafterarequiredduedatebut prior to or on the next due date, then the number of days after due dateofestimatedpaymentinLines14a,14bor14cmustbeadjusted. Tomaketheadjustment,countthedaysfromtheduedatetothedate of payment.

If the taxpayer partially pays an underpayment after a required due date but prior to or on the next due date, that partial payment is considered a reduction, on the payment date, to the oldest payment period’s underpayment. For such situation, the taxpayer will need to adjust this part accordingly.

EXAMPLEOFWHENESTIMATEDUNDERPAYMENTAPPLIES:

Current withholding and credits must be less than the smaller of the following to be penalized for estimated underpayment:

• $3,239 (90 percent of the tax liability on the current return); or

•$3,502 (PA taxable income on prior year’s return multiplied by the current year’s tax rate).

In this case, $1,344 is less than both safe harbors.

SincethecurrentPAtaxliabilityminuscurrentwithholdingandcredits is at least $246,and since the current year withholding and allowable credits are less than $3,239, the taxpayer should fill out Form REV-1630 to determine if there is an underpayment of estimated tax. Please see the department’s website for additional examples of when theunderpaymentofestimatedtaxpenaltyisapplicableandwhenthe exceptions apply.

DETERMININGIFTHEREISANUNDERPAYMENTANDHOWTHE DEPARTMENTDETERMINESTHEDECLARATION

A taxpayer makes an underpayment of quarterly estimated tax liability whenever he fails to declare and pay all or any part of the amount declared as the quarterly estimated payment on a timely basis.

DETERMINING THE UNDERPAYMENT AMOUNT UPON WHICH THEADDITIONOFINTERESTMAYBEASSESSED

The amount to be considered is that the taxpayer should have paid in estimated taxes if the taxpayer could have used the PA Tax Liability (Line 12) as shown on his PA-40 tax return.

The underpayment is the difference between the tax liability times 90 percent, minus any credits for the applicable payment period (calculatedbydividing90percentofLine12ofFormPA-40minusany withholdingandcredits,bythenumberofestimatedpaymentperiods) and the estimated payments paid on time for that payment period.

IMPORTANT:TheamountscalculatedineachofthecolumnsonLines 12 and 13 for Exceptions 1 and 2 cannot be used to determine the underpaymentpenalty.YoumustuseLine9inthiscalculation.However, if you had no estimated tax payment requirements for a previous tax year due to the tax liability being below the threshold required for estimated tax payments to be made, or because you were eligible for 100percentTaxForgiveness,specialexceptionsapplyandyoumaynot owe penalties for the payment periods prior to meeting the estimated payment requirements.

Special exceptions only apply if a taxpayer files an original or amended PA-40ESR(I),DeclarationofEstimatedorEstimatedWithholdingIncome, and makes the full estimated tax payment due in the first period in which it is determined the estimated payment requirements were met for a year following a year in which no estimated payments were due or required to be made.

IfthePA-40ESRisnotfiledinthecorrectpaymentperiod,orifthefull amount of the estimated tax payment is not made in that period, the special exception does not apply for any payment periods, and the estimated underpayment penalty will apply for all payment periods in which the estimated tax underpayment exists.

In situations where conditions exist for the exception to apply, complete the Exception 2 worksheet to indicate the quarters in which the income (Line A) was earned and the tax liability (Line B) for those periods. Place an X in the applicable box on Line 14a to indicate that you do not owe a penalty for each payment period the special exception applies. You must also complete the “SPECIAL EXCEPTION INFORMATION” section in PART III by entering the information requested for Lines A and B.

BILLINGTHEADDITIONOFINTEREST

The interest to be added to the taxpayer’s tax liability for an under- payment is to be billed per quarter. The interest to be added is based upon the amount of the underpayment per payment period.

Interest is assessed upon the underpayment amount until the taxpayer has made payments for the applicable payment period that equal the amount of the declared estimated payment liability. However, interest may not be imposed beyond the 15th day of the fourth month of the closeofthetaxpayer’staxableyear(typicallyApril15th)foranyquarter.

If a taxpayer makes a late payment for a payment period in which an underpayment exists and his total payments for that period are less than the amount of the declared estimated tax liability orthe required estimated amount, interest is billed upon the underpayment amount. However, as soon as a taxpayer makes a late payment for a payment periodinwhichanunderpaymentexists,theunderpaymentisreduced by the late payment amount even if the total payment amount is less than the amount of the taxpayer’s declared estimated tax liability.

When the taxpayer has made payments for the underpayment period equal to his declared estimated tax liability, the department does not impose interest for that payment period.