Question: What is meant by "no tax liability" in the exceptions to the estimated tax penalty?
You had no tax liability for the prior year if your total tax was zero or you did not have to file an income tax return.
Your total tax was zero if one of the following three conditions applies:
- Your total tax on Form 1040 (.pdf), U.S. Individual Income Tax Return, was the amount listed on the line labeled "total tax" taking in consideration certain reductions. See the section "No Tax Liability Last Year" in chapter 4 of Publication 505, Tax Withholding and Estimated Tax, for these reductions.
- On Form 1040A (.pdf), U.S. Individual Income Tax Return, it was the amount listed on the line labeled "total tax" reduced by the amount of earned income credit, additional child tax credit and refundable American opportunity credit.
- On Form 1040EZ (.pdf), Income Tax Return for Single and Joint Filers With No Dependents, it was the amount labeled "tax" reduced by the amount of earned income credit.
You did not have to file an income tax return if the section titled "Who Must File" in Publication 501, Exemptions, Standard Deduction, and Filing Information, for the prior tax year shows that you had no filing requirement.
Category: Estimated Tax
Subcategory: Penalty Questions