Taxmap/pubs/p595-003.htm#TXMP7369ec03
When Do Fishermen Pay Estimated Tax and File Tax Returns?

Figure 1. Estimated Tax for Fishermen  

When you must pay estimated tax and file your tax return depends on how much of your gross income comes from fishing. See Figure 1 to determine if you have to pay estimated tax. Gross income is discussed later.

Taxmap/pubs/p595-003.htm#TXMP082a70d6 General Rule for Making Estimated Tax Payments

Estimated Tax

You must make estimated tax payments for 2003 if you expect to owe at least $1,000 in tax, after subtracting your withholding and credits, and you expect your withholding and credits to be less than the smaller of the following.

1. 90% of the tax to be shown on your 2003 tax return.
2. 100% of the tax shown on your 2002 tax return. Your 2002 tax return must cover all 12 months for this rule to apply.

If at least two-thirds of your gross income for 2002 or 2003 is from fishing, substitute 662/3% for 90% in (1) above.

If you receive at least two-thirds of your total gross income from fishing in the current or prior year, special estimated tax and return due dates apply to you. See the discussion under Due Dates for Qualified Fishermen, later.

Taxmap/pubs/p595-003.htm#TXMP0d8c85b8 What Is Gross Income?

Gross Income

Gross income is all income you receive in the form of money, goods, property, and services that is not exempt from tax. Gross income is not the same as total income shown on line 22 of Form 1040. On a joint return, you must add your spouse's gross income to your gross income. To decide whether two-thirds of your gross income for 2003 was from fishing, use as your gross income the total amount of the following income (not loss) items from your tax return.

• Wages, salaries, tips, etc., from Form 1040, line 7.
• Taxable interest from Form 1040, line 8a.
• Ordinary dividends from Form 1040, line 9a.
• Taxable refunds, credits, or offsets of state and local income taxes from Form 1040, line 10.
• Alimony from Form 1040, line 11.
• Gross business income from Schedule C (Form 1040), line 7 (includes gross fishing income).
• Gross business receipts from Schedule C–EZ (Form 1040), line 1 (includes gross fishing income).
• Capital gains from Form 1040, line 13a, including gains from Schedule D (Form 1040). Losses are not netted against gains.
• Gains on sales of business property from Form 1040, line 14.
• Taxable IRA distributions, pensions, annuities, and social security benefits.
• Gross rental income from Schedule E (Form 1040), line 3.
• Gross royalty income from Schedule E (Form 1040), line 4.
• Taxable net income from an estate or trust reported on Schedule E (Form 1040), line 37.
• Income from a REMIC reported on Schedule E (Form 1040), line 39.
• Gross farm rental income from Form 4835, line 7.
• Gross farm income from Schedule F (Form 1040), line 11.
• Your distributive share of gross income from a partnership, or limited liability company treated as a partnership, from Schedule K–1 (Form 1065).
• Your pro rata share of gross income from an S corporation from Schedule K–1 (Form 1120S).
• Unemployment compensation from Form 1040, line 19.
• Other income reported on Form 1040, line 21, not included with any of the items listed above.

Taxmap/pubs/p595-003.htm#TXMP238a6650 Percentage From Fishing

Figure your gross income from all sources. Then figure your gross income from fishing. Divide your fishing gross income by your total gross income to determine the percentage of gross income from fishing.

Taxmap/pubs/p595-003.htm#TXMP42805594
Example 1.

James Smith had the following total gross income and fishing gross income in 2003.

Gross Income

	Total	Fishing
Taxable interest	$3,000
Dividends	500
Rental income (Sch E)	41,500
Fishing income (Sch C)	75,000	$75,000
Schedule D	5,000
Total	$125,000	$75,000

Schedule D showed gain from the sale of a rental house carried over from Form 4797 ($5,000) in addition to a loss from the sale of corporate stock ($2,000). However, that loss is not netted against the gain to figure Mr. Smith's total gross income or his gross fishing income. His gross fishing income is 60% of his total gross income ($75,000 ÷ $125,000 = .60). Therefore, based on his 2003 income, he does not qualify to use the special estimated tax payment and return due dates for 2003, discussed next. However, he would qualify if at least two-thirds of his 2002 gross income was from fishing.

Taxmap/pubs/p595-003.htm#TXMP7ae6dd7b
Example 2.

Assume the same facts as in Example 1 except that Mr. Smith received only $21,500, instead of $41,500, rental income. This made his total gross income $105,000. He qualifies to use the special estimated tax payment and return due dates, discussed next, since 71.4% (at least two-thirds) of his gross income is from fishing ($75,000 ÷ $105,000 = .714).

Taxmap/pubs/p595-003.htm#TXMP0c1804cf Due Dates for   Qualified Fishermen

Due Dates, Fishermen

If at least two-thirds of your gross income for 2002 or 2003 was from fishing, you are a qualified fisherman and can choose either of the following options for your 2003 tax.

• Make your required annual payment, discussed next, by January 15, 2004, and file your Form 1040 by April 15, 2004.
• File Form 1040 by March 1, 2004, and pay all the tax due. You are not required to make the annual payment. If you pay all the tax due, you will not be penalized for failure to pay estimated tax.

Taxmap/pubs/p595-003.htm#TXMP4c96fcd2 Required annual payment.

If at least two-thirds of your gross income for 2002 or 2003 was from fishing, only one estimated tax payment is due. The required annual payment is the smaller of the following amounts.

• 662/3% (.6667) of your total tax for 2003.
• 100% of the total tax shown on your 2002 return. (The return must cover all 12 months.)

2004 tax. If at least two-thirds of your gross income for 2003 or 2004 is from fishing, you can choose either of the following options for 2004. Make your required annual payment by January 18, 2005, and file your Form 1040 by April 15, 2005. File Form 1040 by March 1, 2005, and pay all the tax due.

Taxmap/pubs/p595-003.htm#TXMP70747aa0 Fiscal year fishermen.

If you qualify to use these special rules but your tax year does not start on January 1, you can file your return and pay the tax by the first day of the 3rd month after the close of your tax year. Or you can make your required annual payment within 15 days after the end of your tax year. Then file your return and pay any balance due by the 15th day of the 4th month after the end of your tax year.

Taxmap/pubs/p595-003.htm#TXMP4814cb78 Due Dates for   Nonqualified Fishermen

Due Dates, Fishermen

If less than two-thirds of your gross income for 2002 and 2003 was from fishing, you cannot use the special estimated tax payment and return due dates for your 2003 tax year. Instead, you should have made quarterly estimated tax payments on April 15, June 16, and September 15, 2003, and on January 15, 2004. You must file your return by April 15, 2004.

If less than two-thirds of your gross income for 2003 and 2004 is from fishing, you cannot use the special estimated tax payment and return due dates for your 2004 tax year. You generally must make quarterly estimated tax payments on April 15, June 15, and September 15, 2004, and on January 18, 2005. You must file your return by April 15, 2005.

For more information on estimated taxes, see Publication 505.

Taxmap/pubs/p595-003.htm#TXMP5cac9bbf Estimated Tax Penalty   for 2003

Estimated Tax Penalty

If you did not pay all your required estimated tax for 2003 by January 15, 2004, or file your 2003 return and pay the tax by March 1, 2004, you should use Form 2210–F, Underpayment of Estimated Tax by Farmers and Fishermen, to determine if you owe a penalty. If you owe a penalty but do not file Form 2210–F with your return and pay the penalty, you will get a notice from the IRS. You should pay the penalty as instructed by the notice.

If you file your return by April 15 and pay the bill within 21 calendar days (10 business days if the bill is $100,000 or more) after the notice date, the IRS will not charge you interest on the penalty.

Do not ignore a penalty notice, even if you think it is in error.You may get a penalty notice even though you filed your return on time, attached Form 2210–F, and met the gross income from fishing requirement. If you receive a penalty notice for underpaying estimated tax that you think is in error, write to the address on the notice and explain why you think the notice is in error. Include a computation, similar to the one in Example 1 (under Percentage From Fishing, earlier), showing that you met the gross income from fishing requirement.

Taxmap/pubs/p595-003.htm#TXMP5542615e Other Filing Information   for 2003

Taxmap/pubs/p595-003.htm#TXMP4f04117b Payment date on holiday or weekend.

If the last day for filing your return or making a payment falls on a Saturday, Sunday, or legal holiday, your return or payment will be on time if it is filed or made on the next business day. The actual filing and payment due dates provided in this publication generally reflect this adjustment for Saturdays, Sundays, and legal holidays.

Taxmap/pubs/p595-003.htm#TXMP0ed1c879 Extension of time to file Form 1040.

If you choose not to file your 2003 return by March 1, 2004, the due date for your return will be April 15, 2004. However, you generally can get an automatic 4-month extension of time to file your return. Your Form 1040 would then be due by August 16, 2004.

You can get this extension by filing Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return, by April 15, 2004. You also can get an extension by using IRS e-file. Form 4868 does not extend the time for paying taxes. For more information, see the instructions for Form 4868.

This extension does not extend the March 1, 2004, due date for qualified fishermen who did not make the required annual payment and want to avoid an estimated tax penalty. Therefore, if you did not make your required annual payment by January 15, 2004, and you file your tax return after March 1, 2004, you will be subject to a penalty for underpaying your estimated tax, even if you get an extension of time to file Form 1040.

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