Changes made by the Economic Growth and Tax Relief Reconciliation Act of 2001 affect individuals, estates, trusts and corporations that make estimated tax payments and must be taken into account in figuring any future estimated tax payments for 2001, according to the IRS.
Individuals who use Form 1040-ES, "Estimated Tax for Individuals" or Form 1040-ES(NR), "U.S. Estimated Tax for Nonresident Alien Individuals" should not use the tax rate schedules shown in those forms or in Publication 553, "Highlights of 2000 Tax Changes." The Revised 2001 Tax Rate Schedules are shown below.
The maximum child tax credit has been increased to $600 and the additional child tax credit now may be claimed by taxpayers with one or two qualifying children to the extent of 10% of taxable earned income in excess of $10,000. According to the IRS, the additional child tax credit for taxpayers with three or more qualifying children is figured in the same manner but only if it results in a larger credit than the method used under prior law.
For corporations using Form 1120-W, "Estimated Tax for Corporations," and tax-exempt corporations using Form 990-W, "Estimated Tax on Unrelated Business Taxable Income for Tax-Exempt Organizations," the due date for any tax estimated payments that would otherwise be due in September 2001 has been changed to October 1, 2001. Due dates for all other estimated tax payments remain the same.
For estates and trusts using Form 1041-ES, "Estimated Income Tax for Estates and Trusts," and for tax-exempt trusts using Form 990-W, most of the 2001 income tax rates have been reduced.
For more information on the changes in withholding and estimated tax payments for the second half of 2001, go to the IRS web site at http://ftp.fedworld.gov/pub/irs-pdf/p15t.pdf.
LET US DO
THE WORRYING NEXT YEAR. 