When you must pay estimated tax and file your tax return depends on whether you receive at least two-thirds of your total gross income from fishing in the current or prior year. Gross income is discussed later.

General Rule For Making Estimated Tax Payments

You must make estimated tax payments for 2000 if you expect to owe at least $1,000 in tax for 2000, 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 2000 tax return.
2. 100% of the tax shown on your 1999 tax return. Your 1999 tax return must cover all 12 months.

If at least two-thirds of your gross income for 1999 or 2000 is from fishing, substitute 66 2/3% for 90% in (1) above.

What Is 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 2000 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.
• Taxable interest.
• Ordinary dividends.
• Taxable refunds of state and local taxes.
• Alimony received.
• 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 13, and Schedule D (Form 1040). Losses cannot be netted against gains.
• Gains on sales of business property from Form 4797 and shown on Schedule D.
• 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, Schedule E (Form 1040), line 36.
• Income from a REMIC reported on Schedule E (Form 1040), line 38.
• Gross farm rental income from Form 4835, line 7 (includes gross fishing income from Schedule E (Form 1040)).
• 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 as reported on Form 1099-G.
• Other income reported on Form 1040, line 21, not reported with any of the items listed above.

Percentage From Fishing

Figure your gross income from all sources as listed earlier. 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.

Example 1. James Smith had the following total gross income and fishing gross income in 2000.

Gross Income

	Total	Fishing
Taxable interest	$43,000
Dividends	500
Rental income (Sch E)	1,500
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 x $125,000 = .60). Therefore, based on his 2000 income, he does not qualify to use the special estimated tax payment and return due dates for 2000, discussed next. However, he does qualify if at least two-thirds of his 1999 gross income was from fishing.

Example 2. Assume the same facts as in Example 1 except that Mr. Smith received only $23,000, instead of $43,000, taxable interest. 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 x $105,000 = .714).

Table 2. Estimated Tax for Fishermen

Due Dates for Qualified Fishermen

If at least two-thirds of your gross income for 1999 or 2000 was from fishing, you are a qualified fisherman and can choose either of the following options for your 2000 tax.

• Make your required annual payment, discussed next, by January 16, 2001, and file your Form 1040 by April 16, 2001.
• File your Form 1040 by March 1, 2001, 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.

Required annual payment. If at least two-thirds of your gross income for 1999 or 2000 was from fishing, the required annual payment due by January 16, 2001, is the smaller of the following amounts.

• 66 2/3% (.6667) of your total tax for 2000.
• 100% of the total tax shown on your 1999 return. (The return must cover all 12 months.)

2001 tax. If at least two-thirds of your gross income for 2000 or 2001 is from fishing, for your 2001 tax, you can choose either of the following options. Due Dates for Nonqualified Fishermen, Estimated Tax Penalty for 2000, Other Filing Information for 2000

• Make your required annual payment by January 15, 2002, and file your Form 1040 by April 15, 2002.
• File your Form 1040 by March 1, 2002, and pay all the tax due.

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.

Due Dates for Nonqualified Fishermen

If less than two-thirds of your gross income for 1999 and 2000 was from fishing, you cannot use these special estimated tax payment and return due dates for your 2000 tax year. Instead, you should have made quarterly estimated tax payments on April 17, June 15, and September 15, 2000, and on January 16, 2001. You must file your return by April 16, 2001.

If less than two-thirds of your gross income for 2000 and 2001 is from fishing, you cannot use these special estimated tax payment and return due dates for your 2001 tax year. You generally must make quarterly estimated tax payments on April 16, June 15, and September 17, 2001, and on January 15, 2002. You must file your return by April 15, 2002.

For more information on estimated taxes, see Publication 505.

Estimated Tax Penalty for 2000

If you did not pay all your required estimated tax for 2000 by January 16, 2001, or file your 2000 return and pay the tax by March 1, 2001, 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 16 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.

Due Dates for Nonqualified Fishermen, Estimated Tax Penalty for 2000, Other Filing Information for 2000

Do not ignore a penalty notice, even if you think it is in error. Occasionally, 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 test. 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 test.

Other Filing Information for 2000

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.

Extension of time to file Form 1040. If you do not choose to file your 2000 return by March 1, 2001, the due date for your return will be April 16, 2001. 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 15, 2001.

You can get this extension in either of the following ways.

1. File a paper Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return, by April 16, 2001, showing an accurate estimate of your 2000 tax liability. (The filing of Form 4868 does not extend the time to pay the tax.)
2. Make an electronic payment of any part of your estimate of income tax due by April 16, 2001, using either of the following methods.
   1. File Form 4868 electronically or by TeleFile and make a payment by authorizing a direct debit (automatic withdrawal) from your checking or savings account.
   2. Make a credit card payment by phone or Internet.

For more information, see the instructions for Form 4868.

This extension does not extend the March 1, 2001, filing 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 16, 2001, and you file your tax return after March 1, 2001, 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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