The California Form 5805 is used to determine if individuals and fiduciaries owe a penalty for underpaying their estimated taxes. This form must be attached to the front of your tax return and is essential for calculating any penalties that may apply due to insufficient estimated tax payments throughout the year. If you think you may need to fill out this form, click the button below to get started!
The California Form 5805 is an essential document for individuals and fiduciaries who need to address potential penalties related to the underpayment of estimated taxes. This form must be attached to the front of your tax return, whether you are filing Form 540, Form 540A, Form 540NR, or Form 541. It serves as a means to determine if you owe a penalty for underpayment and to calculate the amount of that penalty if applicable. The form includes various sections that require you to provide information about your income, tax liability, and any tax withheld. Notably, certain conditions exempt you from penalties, such as if 80% of your income came from wages subject to withholding or if your tax liability was below specific thresholds. Additionally, the form allows you to request a waiver of the penalty under certain circumstances, such as experiencing a disaster or retiring. Understanding the nuances of the California Form 5805 can help ensure compliance with tax obligations and avoid unnecessary penalties.
TAXABLE YEAR
Underpayment of Estimated Tax
CALIFORNIA FORM
1999
by Individuals and Fiduciaries
5805
Attach this form to the FRONT of your Form 540, Form 540A, Form 540NR, or Form 541. Also, fill in the circle for underpayment of esti- mated tax located on Form 540, line 64; Form 540A, line 37; Form 540NR, line 73; or Form 541, line 39, whichever applies.
Name(s) as shown on return
Social security number or FEIN
IMPORTANT: In most cases, the Franchise Tax Board (FTB) can figure the penalty for you and you do not have to complete this form. See General Information B.
If you meet any of the following conditions, you do not owe a penalty for underpayment of estimated tax. Do not complete or file this form if:
•80% of your 1999 California adjusted gross income (AGI) was wages subject to California withholding; or
•80% of your 1998 or 1999 tax liability (not including tax on lump-sum distributions and alternative minimum tax) less credits was paid by the amount of tax withheld from your wages for that year. Do not include the withholding credit or estimated tax payments; or
•The amount of your tax liability (not including tax on lump-sum distributions and alternative minimum tax) less credits (including the withholding credit) but not including estimated tax payments for either 1998 or 1999 was less than $200 (or less than $100 if married filing a separate return); or
•Your 1998 return was for a full 12 months (or would have been if you were required to file) and you did not have any tax liability on that return; or
•The amount of your withholding plus your estimated tax payments, if paid in the required installments, is at least 80% of the tax shown on your 1999 return or 100% of the tax shown on your 1998 return AND you are not using the annualized income installment method.
Part I Questions. All filers must complete this part.
1Are you requesting a waiver of the penalty? If yes, provide an explanation below. If you need additional space,
attach a statement. See General Information C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Yes
No
2 Did you use the annualized income installment method? If yes, see instructions for Part III.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3Was your California withholding not withheld in equal installments and are you able to show the actual amounts withheld
per period and the actual dates withheld? If yes, you must enter the uneven amounts withheld on the spaces provided below.
. . 3
Enter the actual uneven amounts withheld next to the corresponding quarterly payment due date here:
4/15/99 $ ________________; 6/15/99 $ ________________;
9/15/99 $ ________________; 1/15/00 $ ________________ .
4
For estates and trusts: Was the date of death less than two years from the end of the tax year? See General Information E . .
. . 4
Part II Required Annual Payment. All filers must complete this part.
1
Current year tax. Enter your 1999 tax after credits. See instructions
. . . . . . . . . . . . . . . . .
. . . .
. . . . . . . . . . . . . . . . . . . .
Multiply line 1 by 80% (.80)
2
. . . . . . . . . . . . . . . .
3Withholding taxes. Do not include any estimated tax payments on this line. See instructions . . . . . . . . . . . . . . . . . . . . . .
4Subtract line 3 from line 1. If less than $200 (or less than $100 if married filing a separate return), stop here.
You do not owe the penalty. Do not file form FTB 5805 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5Enter the tax shown on your 1998 tax return (105% (1.05) of that amount if the adjusted gross income shown on that return is more than $150,000, or if married filing separate for 1999, more than $75,000). See instructions . . . . .
6Required annual payment. Enter the smaller of line 2 or line 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Short Method
Caution: See the instructions to find out if you can use the short method. If you answered “Yes’’ to Question 2 in Part I, skip this part and go to Part III.
If you answered “No’’ to Question 2 in Part I and you cannot use the short method, go to Worksheet II in the instructions (page 4).
7
Enter the amount, if any, from Part II, line 3 above
8
Enter the total amount, if any, of estimated tax payments you made
9
Add line 7 and line 8
. . . . . . . . . . . . . . . . . . . . . .
10
Total underpayment for year. Subtract line 9 from line 6. If zero or less, stop here. You do not owe the
penalty. Do not file form FTB 5805
. . . . . . . . . . . . . . . . . . . . . . 10
11
Multiply line 10 by .05
. . . . . . . . . . . . . . . . . . . . . . 11
12• If the amount on line 10 was paid on or after 4/15/00, enter -0-.
• If the amount on line 10 was paid before 4/15/00, enter the result of the following computation:
Amount on
Number of days paid
line 10
X
before 4/15/00
.00022
. . . . . . . . . . . . . . .
13 PENALTY. Subtract line 12 from line 11. Enter the result here and on Form 540, line 64;
Form 540A, line 37; Form 540NR, line 73; or Form 541, line 39. Also fill in the circle for “FTB 5805.’’ . . . . . . . . . . .
13
580599109
23456789012345678901FTB 5805 1999 Side 1
Part III Annualized Income Installment Method Schedule.
Use this schedule ONLY IF you earned taxable income at an UNEVEN RATE during 1999 (See Example A). If you earned your income at approximately the same rate each month (See Example B), then you should not complete this schedule. If you choose to figure the penalty, see the instructions for Worksheet II — Regular Method to Figure Your Underpayment and Penalty, on page 3 of the instructions.
Example A: If you were a commissioned salesperson who earned no income during the first three months of the year, earned most of your income during the following six months, and earned very little during the last three months, you should complete this schedule. You may be able to benefit by using the annualized income installment method. The required installment of estimated tax figured using the annualized method may be less than your required installment figured using the equal installment method.
Example B: If you worked all year and earned a monthly salary that did not change much during the year, you should not complete this schedule.
Note: To complete this schedule correctly, you must first complete Side 1, Part II,
line 1 through line 6.
Estates and trusts, do not use the period ending dates shown to the right.
(a)
(b)
(c)
(d)
Instead, use the following: 2/28/99, 4/30/99, 7/31/99, and 11/30/99. Fiscal-year
1/1/99 to
filers must adjust dates accordingly.
3/31/99
5/31/99
8/31/99
12/31/99
1Enter your adjusted gross income (AGI) for each period. Form 540NR filers, see instructions. Estates or trusts, enter the amount from Form 541, line 20
attributable to each period. See instructions
Annualization amounts. Estates or trusts, see instructions
2.4
1.5
3
Annualized income. Multiply line 1 by line 2
4Enter your itemized deductions for the period shown in each column. If you do not itemize deductions, enter -0- here and on line 6. Estates or trusts,
enter -0- here, skip to line 9, and enter the amount from line 3 on line 9
5
Annualization amounts
6
Annualized itemized deductions. Multiply line 4 by line 5. See instructions
7Enter your standard deduction from your 1999 Form 540 or Form 540NR, line 18; or Form 540A, line 15. Enter the total standard deduction amount
in each column
Enter line 6 or line 7, whichever is larger
Subtract line 8 from line 3
10Figure the tax on the amount in each column of line 9 using the tax table or
the tax rate schedule in the instructions for Form 540, Form 540NR, or Form 541.
Also, include any tax from form FTB 3803. Estates or trusts, see instructions . . .
Enter the total amount of exemption credits from your 1999 Form 540, line 21;
Form 540A, line 18; Form 540NR, line 23; or Form 541, line 22. Enter the total
exemption credit amount in each column. See instructions
12
Subtract line 11 from line 10. Form 540NR filers, complete Worksheet I in the
instructions
13Enter the total credit amount from your 1999 Form 540, line 33 or Form 541, line 23. Form 540NR filers, see instructions. Enter the total amount of credits
14
Subtract line 13 from line 12. If zero or less, enter -0-
15
Applicable percentage
20%
40%
60%
80%
16
Multiply line 14 by line 15
COMPLETE LINE 17 THROUGH LINE 23 OF EACH COLUMN BEFORE YOU TO GO TO
THE NEXT COLUMN.
17
Enter the combined amounts shown on line 23 from all preceding columns . . . .
18
Subtract line 17 from line 16. If zero or less, enter -0-
19
In each column, enter 1/4 of the amount on form FTB 5805, Part II, line 6
20
Enter the amount from line 22 from the preceding column
21
Add line 19 and line 20
22
If line 21 is more than line 18, subtract line 18 from line 21. Otherwise, enter -0-
23Enter line 18 or line 21, whichever is less. Transfer these amounts to Worksheet II — Regular Method to Figure Your Underpayment and
Penalty, line 1
❚❚ 23
Note: If you use the annualized income installment method for one payment due date, you must use it for all payment due dates.
This schedule automatically selects the smaller of your annualized income installment or your regular installment.
Side 2 FTB 5805 1999
580599209
234567890
Instructions for Form FTB 5805
Underpayment of Estimated Tax by Individuals and Fiduciaries
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;
FTB 5805 Instructions 1999 Page 1
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.
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.
Worksheet I – Prorated Tax for Form 540NR Filers
A
California AGI
_____________
B
______4______
_____2.4_____
_____1.5_____ ______1______
C
Multiply line A by line B
D
Ratio. Divide line C by Part III, line 3
E
Subtract Part III, line 11 from Part III, line 10
F
Multiply line D by line E. Enter the result here and on Part III,
line 12
Page 2 FTB 5805 Instructions 1999
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
76
184
106
107
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.
23456789012345
FTB 5805 Instructions 1999 Page 3
Worksheet II Regular Method to Figure Your Underpayment and Penalty.
Payment Due Dates
Part I Figure Your Underpayment
4/15/99
6/15/99
9/15/99
1/15/00
1 Required Installments. See instructions
2Estimated tax paid and tax withheld. See instructions. For column (a) only, also enter the amount from line 2 on line 6. (If line 2 is equal to or more than line 1 for all payment periods, stop here; you do not owe the penalty. Do not file form FTB 5805 unless you answered “Yes’’ to a question in Part I) . . . . . 2
3 Enter amount, if any, from line 9 of previous column
COMPLETE LINE 3 THROUGH LINE 9 OF ONE COLUMN BEFORE GOING TO THE
NEXT COLUMN.
Add line 2 and line 3
Add amounts on line 7 and line 8 of the previous column
6Subtract line 5 from line 4. If zero or less, enter -0-. For column (a) only,
enter the amount from line 2
7If the amount on line 6 is zero, subtract line 4 from line 5.
Otherwise, enter -0-
8Underpayment. If line 1 is equal to or more than line 6, subtract line 6 from
line 1. Then go to line 3 of next column. Otherwise, go to line 9
9Overpayment. If line 6 is more than line 1, subtract line 1 from line 6.
Then go to line 3 of next column
Part II Figure the Penalty. Complete line 10 through line 15 of one column before going to the next column.
Rate Period 1:
April 15, 1999 — June 30, 1999
Days:
10Number of days FROM the date shown above line 10 TO the date the
amount on line 8 was paid or 6/30/99, whichever is earlier . . . . . . . . . . . . . . . . 10
11 Underpayment
Number of
on line 8
days on line 10
.08
(see instructions)
365
$
Rate Period 2:
6/30/99
July 1, 1999 — December 31, 1999
12Number of days FROM the date shown above line 12 TO the date the
amount on line 8 was paid or 12/31/99, whichever is earlier
. . . . . . . . . . . . . . . 12
13 Underpayment
days on line 12
.07
Rate Period 3:
January 1, 2000 — April 15, 2000
14Number of days FROM the date shown above line 14 TO the date the
amount on line 8 was paid or 4/15/00, whichever is earlier
. 14
15 Underpayment
days on line 14
366
16PENALTY. Add all amounts on line 11, line 13, and line 15 in all columns. Enter the total here, on Form FTB 5805, Side 1, Part II, line 13, and on Form 540, line 64; Form 540A, line 37; Form 540NR, line 73; or Form 541, line 39.
Also fill in the circle on that line
Page 4 FTB 5805 Instructions 1999
Filling out the California Form 5805 requires careful attention to detail to ensure accuracy in reporting underpayment of estimated tax. Follow these steps to complete the form correctly.
California Form 5805 is used to determine if you owe a penalty for underpaying your estimated tax. It is essential for individuals and fiduciaries who may not have met their estimated tax payment obligations during the tax year. This form helps calculate the amount of any potential penalty and must be attached to your tax return.
Most taxpayers do not need to file this form, as the Franchise Tax Board (FTB) can calculate the penalty for you. However, you must complete and submit Form 5805 if you meet specific conditions, such as if you answered "Yes" to any of the questions in Part I of the form, or if you are an estate or trust that has specific requirements for estimated tax payments.
You do not owe a penalty for underpayment of estimated tax if:
If you believe that you have a valid reason for underpaying your estimated tax, you can request a waiver of the penalty. To do this, check "Yes" on Form 5805, Part I, Question 1, and provide a detailed explanation. You must also complete the form through Part II without regard to the waiver and indicate the amount you wish to waive.
The annualized income installment method is a calculation method used if your income varied significantly throughout the year. This method allows you to determine your estimated tax payments based on your actual income for each period rather than assuming a steady income. If you choose to use this method, complete Part III of Form 5805 and attach it to your return.
For calendar year taxpayers, the due dates for estimated tax installments in 1999 were:
For fiscal-year filers, the due dates will vary based on your fiscal year calendar.
The penalty for underpayment is calculated based on the amount of underpayment and the number of days it remained unpaid. Different rates apply depending on the time period. If an installment remains unpaid for more than one rate period, the penalty will be calculated using the applicable rates for each period.
If you file an amended return, you must use the amounts from the original return to calculate your penalty if the amended return is filed after the due date. If you file it on or before the due date of your original return, use the figures from the amended return to determine your penalty.
Missing Required Attachments: One common mistake is failing to attach the California 5805 form to the front of your Form 540, Form 540A, Form 540NR, or Form 541. This form must be included to ensure that the Franchise Tax Board (FTB) processes your underpayment correctly.
Incorrectly Filling Out Personal Information: Another frequent error involves providing inaccurate personal details, such as the name(s) or social security number. It's crucial to double-check that this information matches what is on your tax return to avoid processing delays.
Ignoring Eligibility for Penalty Waivers: Many taxpayers overlook the possibility of waiving the penalty for underpayment. If you qualify under certain conditions, such as having no tax liability in the previous year, you should not complete the form. Understanding these criteria can save you time and effort.
Failure to Complete Part I: All filers are required to complete Part I of the form. Skipping this section can lead to incomplete submissions. This part includes important questions that determine whether you need to proceed with calculating the penalty.
The California 5805 form is essential for individuals and fiduciaries who may owe a penalty for underpaying their estimated taxes. However, it's often accompanied by several other forms and documents that help clarify and complete the tax filing process. Below is a list of related forms that you might encounter when dealing with the California 5805.
Understanding these forms can significantly ease the tax filing process and help ensure compliance with California tax laws. If you are unsure about which forms you need, consider consulting a tax professional to guide you through your specific situation.
The California Form 5805 is similar to the IRS Form 2210, which is used for calculating penalties for underpayment of estimated tax for individuals. Both forms serve the same purpose: to determine if a taxpayer owes a penalty for not paying enough tax throughout the year. The IRS Form 2210 provides a detailed calculation method, including options for annualized income, similar to what is available in California's Form 5805. Both forms require the taxpayer to report their income and estimated tax payments to assess whether they have met the required payment thresholds.
Another document that parallels the California Form 5805 is the IRS Form 1040-ES. This form is specifically for estimated tax payments and is used by individuals who expect to owe tax of $1,000 or more when they file their return. Like Form 5805, it helps taxpayers calculate their estimated tax payments based on their expected income for the year. Both forms require similar information regarding income and deductions, making them critical for individuals who need to manage their tax obligations proactively.
The California Form 5805 also resembles the IRS Form 8862, which is used to claim the Earned Income Credit after disallowance. While the purpose of these forms differs, they both require taxpayers to provide detailed information about their financial situation to determine eligibility for specific tax benefits or to assess penalties. Each form includes sections that ask for income details and tax liability calculations, which are essential for ensuring compliance with tax laws.
Lastly, the California Form 540, which is the standard individual income tax return, shares similarities with Form 5805. Both forms require taxpayers to report their income, deductions, and credits. However, Form 540 is used to file annual income tax returns, while Form 5805 specifically addresses underpayment of estimated taxes. Despite their different purposes, the forms are interconnected, as the information on Form 5805 can affect the overall tax liability reported on Form 540.
When filling out the California 5805 form, here are four important things to keep in mind:
Conversely, avoid these common mistakes:
In reality, most taxpayers do not need to fill out this form. The Franchise Tax Board (FTB) can calculate any penalties for underpayment and send a bill after you file your return.
This form is applicable to both individuals and fiduciaries, including estates and trusts, who may have underpaid their estimated taxes.
There are several conditions under which you may not owe a penalty. For instance, if your withholding covers at least 80% of your tax liability, you can avoid penalties.
Simply filing the form does not ensure a waiver. You must provide a valid reason for the waiver request, such as facing a casualty or disaster.
In fact, if you retired after age 62 or became disabled, you may request a waiver for underpayment due to reasonable cause.
This method is only for those who earned income at an uneven rate during the year. If your income was stable, you do not need to use this method.
You only need to attach it if you meet specific conditions, such as requesting a waiver or using the annualized income installment method.
Penalty rates can vary throughout the year. It's important to check the specific rates that apply to your underpayment period.
Payments are applied to any previous underpayment first, regardless of how you designate them. This can affect how penalties are calculated.
If you file an amended return after the original due date, you must still use the original amounts to calculate any penalties.
Key Takeaways for Filling Out and Using the California 5805 Form