IRS Issues Regulations on 2009 Reduced Estimated Tax Options


The IRS on Friday released temporary and proposed regulations relating to reduced estimated income tax payments for qualified individuals with small business income in 2009 (TD 9480 and REG-117501-09). The regulations provide guidance on who is a qualified individual and what is a small business for these purposes.

 

The American Recovery and Reinvestment Act of 2009 reduced the amount of estimated tax that certain individuals must pay for tax years beginning in 2009 from either 100% or 110% of the tax shown on the preceding year’s tax return to 90% (IRC § 6654(d)(1)(D)). The temporary regulations explain who is a qualified individual for these purposes.

 

A qualified individual is any individual whose adjusted gross income on the previous year’s tax return is less than $500,000 and who certifies that more than 50% of the gross income shown on that return is income from a small business. For married taxpayers filing separately, the $500,000 limit is reduced to $250,000.

 

Income from a small business is defined as income from a business with fewer than 500 employees in 2008. The temporary regulations specify that it must be a bona fide business and the individual must be an owner.

 

To certify that he or she is eligible for the reduced estimated taxes, the temporary regulations say the individual must file a certification with the IRS “in the manner and at the time prescribed in forms, publications, or other guidance” (Temp. Treas. Reg. § 1.6654-2T(a)(1)(ii)(D)). One way individuals can make this certification is to check box F in Part II of Form 2210, Underpayment of Estimated Tax by Individuals, Estates, and Trusts.

SPONSORED REPORT

Year-end tax planning and what’s new for 2016

Practitioners need to consider several tax planning opportunities to review with their clients before the end of the year. This report offers strategies for individuals and businesses, as well as recent federal tax law changes affecting this year’s tax returns.

QUIZ

News quiz: IRS warning on cyberattacks and a change in pension rules

Once again, the IRS sounds the alarm about a threat from cyberthieves. See how much you know about this and other recent news with this short quiz.

CHECKLIST

Bolster your data defenses

As you weather the dog days of summer, it’s a good time to make sure your cybersecurity structure can stand up to the heat of external and internal threats. Here are six steps to help shore up your systems.