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Instructions For Form 2210: Underpayment of Estimated Tax by Individuals, Estates, and Trusts
Instructions For Form 2210: Underpayment of Estimated Tax by Individuals, Estates, and Trusts
Paperwork Reduction Act Notice. We ask for the information on this form to carry However, if you are required to file
out the Internal Revenue laws of the United States. You are required to give us the Form 2210 because one or more of the
information. We need it to ensure that you are complying with these laws and to allow boxes in Part I applies to you, you must
us to figure and collect the right amount of tax. complete certain lines. If you use the short
You are not required to provide the information requested on a form that is subject method, you must complete lines 1–18
to the Paperwork Reduction Act unless the form displays a valid OMB control number. and enter the penalty on line 21. If you
Books or records relating to a form or its instructions must be retained as long as their use the regular method, you must
contents may become material in the administration of any Internal Revenue law. complete lines 1–14 and lines 22–30 and
Generally, tax returns and return information are confidential, as required by section enter the penalty on line 35.
6103.
The time needed to complete and file this form will vary depending on individual Who Must Pay the
circumstances. The estimated average times are: Underpayment Penalty
Short Method Regular Method In general, you may owe the penalty for
Recordkeeping ..................................................................................... 7 min. 13 min. 1998 if you did not pay at least the smaller
Learning about the law or the form .................................................. 5 min. 38 min.
Preparing the form .............................................................................. 29 min. 2 hr., 7 min.
of:
Copying, assembling, and sending the form to the IRS................. 20 min. 46 min. 1. 90% of the tax shown on your 1998
tax return; or
If you have comments concerning the accuracy of these time estimates or 2. The tax shown on your 1997 tax
suggestions for making this form simpler, we would be happy to hear from you. See the return.
instructions for the tax return with which this form is filed.
Note: In these instructions, “return” refers
to your original return. However, an
General Instructions the new law. See Waiver of Penalty on amended return is considered the original
return if it is filed by the due date
page 2.
(including extensions) of the original
Changes To Note return. Also, a joint return that replaces
Purpose of Form previously filed separate returns is
Increase in Tax Exempt From Use Form 2210 to see if you owe a considered the original return.
Estimated Tax Penalty penalty for underpaying your estimated The penalty is figured separately for
Beginning in 1998, you will not owe a tax and, if you do, to figure the amount each installment due date. Therefore, you
penalty if the tax you owe, after of the penalty. may owe the penalty for an earlier due
subtracting withholding and other credits, date, even if you paid enough tax later to
is less than $1,000. See Exceptions to The IRS Will Figure the make up the underpayment. This is true
the Penalty on this page. Penalty for You even if you are due a refund when you file
your tax return. However, you may be
Avoiding the Penalty Based On Because Form 2210 is complicated, we able to reduce or eliminate the penalty by
Your Prior Year's Tax strongly encourage you to let us figure the using the annualized income installment
penalty. If you owe it, we will send you a method. See the Schedule AI instructions
For 1998, the requirement to avoid the bill. And as long as you file your return by beginning on page 4 for details.
penalty based on your prior year's tax is April 15, 1999, we will not charge you
figured using 100% of the tax on your interest on the penalty if you pay by the Exceptions to the Penalty
1997 return, regardles of your adjusted date specified on the bill.
gross income. See Who Must Pay the You will not have to pay the penalty if
Underpayment Penalty on this page. If you want us to figure the penalty for either 1 or 2 applies:
you, complete your return as usual. Leave 1. You had no tax liability for 1997,
Household Employment Taxes the penalty line on your return blank; do you were a U.S. citizen or resident for the
not file Form 2210. entire year, and your 1997 tax return was
Beginning in 1998, you usually must
include household employment taxes Caution: See Part I of the form. If any (or would have been had you been
when figuring your estimated tax penalty. of the boxes on line 1 apply, you must required to file) for a full 12 months.
See the instructions for line 3. figure the penalty yourself and attach a 2. The total tax shown on your 1998
completed Form 2210 to your return. return minus the amount of tax you paid
Waiver of Penalty through withholding is less than $1,000.
The Internal Revenue Service Other Methods To determine whether the total tax is less
Restructuring and Reform Act of 1998 We realize that there are different ways than $1,000, complete lines 2–12.
made changes in the tax law that may to figure the correct penalty. You do not Special Rules for Farmers and
affect your 1998 tax liability. The IRS will have to use the method prescribed by
waive all or part of the estimated tax Fishermen
Form 2210 as long as you enter the
penalty to the extent the underpayment correct penalty amount on the penalty line If you meet both tests 1 and 2 below, you
of any installment due before August 22, of your return. do not owe a penalty for underpaying
1998, is attributable to changes made by estimated tax.
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Part IV—Regular Method Note: If you treat withholding as paid for
estimated tax purposes when it was Table 1
Use the regular method if you are not actually withheld, you must check the box Payments after 4/15/98 through 12/31/98
eligible to use the short method. on line 1c and complete and attach Form
Date Payments
2210 to your return.
Form 1040NR or 1040NR-EZ Filers
2. Include in your estimated tax
If you are filing Form 1040NR or payments any overpayment of tax from
1040NR-EZ and did not receive wages your 1997 return that you elected to apply
as an employee subject to U.S. income to your 1998 estimated tax. If you file your
tax withholding, the instructions for return by the due date (including
figuring your underpayment and penalty extensions), treat the overpayment as a Table 2
are modified as follows: payment made on April 15, 1998. Payments after 12/31/98 through 4/15/99
1. Skip column (a) in Part IV. 3. If you file your return and pay the
2. In column (b) of line 22 in Part IV, tax due by February 1, 1999, include on Date Payments
enter 1/2 of the amount on line 14 (unless line 23, column (d), the amount of tax you
you are using the annualized income pay with your tax return. In this case, you
installment method). will not owe a penalty for the payment due
3. In column (b) of line 23 in Part IV, by January 15, 1999.
enter the total tax payments made
through June 15, 1998, for the 1998 tax Line 29
year. If you are treating Federal income If line 29 is zero for all payment periods, In each table, list only the payments
tax (and excess social security or railroad you do not owe a penalty. But if you made during the dates shown in the table
retirement tax) as having been withheld checked box 1b, c, or d, in Part I, you heading. Also, apply the following rules:
evenly throughout the year, you are must file Form 2210 with your return. 1. Any withheld Federal income tax
considered to have paid 1/3 of these If line 29 shows an underpayment for and excess social security or railroad
amounts on each payment due date. any payment period, see Waiver of retirement tax should be included. You
4. Skip all lines in column (b) that are Penalty on page 2. In certain are considered to have paid 1/4 of these
shaded in column (a) in Part IV. circumstances, the IRS will waive all or amounts on each payment due date
part of the penalty. unless you can show otherwise.
Section A—Figure Your
Section B—Figure the Penalty For example, if you had Federal income
Underpayment tax withheld from your wages of $4,000
Caution: Read the following instructions during the year, list $1,000 as paid on
Line 22 and examples first before completing 6/15/98, 9/15/98, and 1/15/99 in the
Enter on line 22, columns (a)–(d), the Section B. applicable table. Do not list the
amount of your required installment for Figure the penalty by applying the withholding attributable to the first
the due date shown in each column appropriate rate against each payment due date (4/15/98).
heading. For most taxpayers, this is 1/4 of underpayment shown on line 29. The 2. For Table 2, any balance due of
the required annual payment shown on penalty is figured for the number of days income tax that you pay with your tax
line 14 of Part II. However, it may be to that the underpayment remained unpaid. return is considered a payment for this
your benefit to figure your required The rates are established at various purpose and should be listed. Use the
installments by using the annualized times throughout the year. For example, date you file your return as the payment
income installment method. See the there were two rates in effect for the date, or 4/15/99, whichever is earlier.
Schedule AI instructions beginning on period covered by the 1998 Form 2210. Chart of Total Days per Rate Period.
page 4. If an underpayment remained unpaid for If an underpayment remained unpaid for
Line 23 more than one rate period, the penalty on an entire rate period, use the chart below
that underpayment will be figured using to determine the number of days to enter
Enter the estimated tax payments you both rate periods. in each column. The chart is organized in
made plus any Federal income tax
Use lines 31 and 33 to figure the the same format as Form 2210, Part IV,
withheld and excess social security or
number of days the underpayment Section B.
railroad retirement tax paid, for the 1998
tax year. If you are a household employer remained unpaid. Use lines 32 and 34 to
figure the actual penalty amount by Chart of Total Days
and made advance EIC payments,
include those payments as estimated tax applying the rate against the Rate Period (a) (b) (c) (d)
payments, as of the date you paid the underpayment for the number of days it
remained unpaid. 1 (Line 31) 260 199 107 ---
wages to your employee(s).
In column (a), enter the tax payment(s) Your payments are applied to any 2 (Line 33) 105 105 105 90
you made by April 15, 1998; in column underpayment balance on an earlier
(b), enter payments you made after April installment. It doesn't matter if you
designate a payment for a later period. For example, if you have an
15 through June 15, 1998; in column (c), underpayment on line 29, column (a), but
enter payments you made after June 15 For example, you had an underpayment
for the April 15 installment of $500. The show no payments in Table 1, you would
through September 15, 1998; and in enter “260” on line 31, column (a).
column (d), enter payments you made June 15 installment required a payment
of $1,200. On June 10, you sent in a The following line-by-line instructions
after September 15, 1998, through apply only to column (a) of Section B. If
January 15, 1999. payment of $1,200 to cover the June 15
installment. However, $500 of this there is an underpayment shown in
When figuring your payment dates and payment is considered to be for the April column (b), (c), or (d) on line 29, complete
the amounts to enter on line 23 of each 15 installment. The penalty for the April lines 31 through 34 for those columns in
column, apply the following rules: 15 installment is figured to June 10 (56 a similar manner.
1. For Federal income tax withheld days). The amount applied to the June 15
and excess social security or railroad installment is $700. Rate Period 1
retirement tax, you are considered to have List your payments for 1998. Before
paid 1/4 of these amounts on each Line 31
figuring your penalty in Section B, it will
payment due date unless you can show be helpful to list the payments you made Enter on line 31, column (a), the number
otherwise. for 1998 as shown in the tables below. of days from 4/15/98 to the date of the
first payment listed in Table 1. If no
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payments are listed, enter “260.” the Chart of Total Days per Rate Period for Rate Period 1. But use the dates and
Example 1. Assume you had an on page 3. interest rate shown on lines 33 and 34
underpayment of $5,000 on line 29 and b. On line 32, make the computation and use only the payments listed in Table
your first payment shown in the table was and enter the result. In this case, 2.
made on 4/30/98 in the amount of $3,000. however, the “underpayment” in the
Line 33
Enter “15” on line 31, column (a) (days computation is the remaining balance of
from 4/15 to 4/30). the underpayment. Enter on line 33, column (a), the number
Example 4. Assume the same facts as of days from 12/31/98 to the date of the
Line 32 first payment listed in Table 2. If no
in Examples 1 and 2. After applying the
Make the computation requested on line $3,000 payment, the underpayment payments are listed in Table 2, enter
32 and enter the result. Note that the balance is $2,000. Line 32, therefore, will “105.”
computation calls for the “underpayment contain a second entry of $113.97 ($2,000 Line 34
on line 29.” The amount you use as the × 260/365 × .08). Go to line 33 to figure
“underpayment” depends on whether or the penalty on the underpayment balance Figure line 34 in the same manner as
not a payment is listed in Table 1. for Rate Period 2. explained for line 32, except use 7%
If there is a payment listed in Table 1. 4. Additional payments are listed in instead of 8%.
On a separate sheet of paper, apply the Table 1 and the first payment was not
payment to the underpayment shown on enough to reduce the underpayment to Schedule AI—Annualized
line 29. The “underpayment” for the zero. On line 29, you may list the Income Installment Method
computation on line 32 is the amount of amounts and the payment dates that
the payment applied to the line 29 apply to the underpayment for that If your income varied during the year
underpayment. If the payment is more installment period. Then figure the because, for example, you operated your
than the underpayment, apply only an penalty for each amount listed on line 29. business on a seasonal basis, you may
amount equal to the underpayment and If an underpayment balance remains after be able to lower or eliminate the amount
use that amount for the line 32 applying all the payments, figure the of one or more required installments by
computation. penalty on the balance of the using the annualized income installment
Example 2. Assume the same facts underpayment for the entire period. See method. Use Schedule AI to figure the
as in Example 1. Because you paid the Chart of Total Days per Rate Period amounts to enter on line 22 of Form 2210.
$3,000 toward the underpayment, enter on page 3. If you use Schedule AI for any payment
$9.86 on line 32 ($3,000 × 15/365 × .08). Example 5. Assume that your due date, you must use it for all payment
Example 3. Assume your underpayment for column (a) is $5,000 due dates. To figure the amount of each
underpayment on line 29 was $5,000 and and that you made two payments: $3,000 required installment, Schedule AI
that you paid $8,000 on 4/30/98. Because on 4/30/98 and $2,000 on 6/22/98. On line automatically selects the smaller of the
your payment was more than your 29, you can enter $5,000 or enter each annualized income installment or the
underpayment, you would apply $5,000 to payment and date separately which will regular installment (increased by the
the underpayment. Enter $16.44 on line correspond with the two entries on lines amount saved by using the annualized
32 ($5,000 × 15/365 × .08). 31 and 32 as explained below. income installment method in figuring any
earlier installments).
If there are no payments listed in Table Line 31 will show two entries in column
1. The “underpayment” is the entire (a) as follows: “15” days (from 4/15 to To use the annualized income
underpayment balance. 4/30); and “68” days (from 4/15 to 6/22). installment method, you must do all three
of the following:
Line 32 will show two entries in column
Determine If You Need To Make (a) as follows: $9.86 ($3,000 × 15/365 × 1. Enter the amount from Schedule
Additional Computations for .08) and $29.81 ($2,000 × 68/365 × .08). AI, line 26, in each column of line 22 of
Column (a) Form 2210.
Example 6. Assume your
underpayment on line 29, column (a), is 2. Check the box on line 1b.
Whether you need to make additional
computations depends on which of the $8,000 and that you made two payments: 3. Attach both Form 2210 and
following four conditions applies to you. $3,000 on 4/30/98 and $3,000 on 6/22/98. Schedule AI to your return.
1. The payment listed in Table 1 Lines 31 and 32 will each show three
entries in column (a); one for each
Additional Information
was enough to reduce the
underpayment to zero. There are no payment, and a third for the See Pub. 505 for more details about the
further computations to make for column underpayment balance of $2,000 ($8,000 annualized income installment method,
(a). Figure the penalty for any other minus $6,000). and a completed example. Estates and
underpayments shown in columns (b)–(d) Line 31 will show “15” days (from 4/15 trusts with short tax years, see Notice
of line 29. to 4/30); “68” days (from 4/15 to 6/22); 87-32.
2. No payments are listed in Table and “260” days (from 4/15/98 to Form 1040NR or 1040NR-EZ Filers
1. You will need to figure the penalty for 12/31/98).
the next rate period. See Rate Period 2 Line 32 will show $9.86, $44.71, and If you are filing Form 1040NR or
on this page. $113.97, computed as follows: $3,000 × 1040NR-EZ and you did not receive
15/365 × .08 (first payment), $3,000 × wages as an employee subject to U.S.
3. The payment listed in Table 1 did income tax withholding, the instructions
not reduce the underpayment to zero, 68/365 × .08 (second payment), and
$2,000 × 260/365 × .08 (remaining for Schedule AI are modified as follows:
and no other payments are listed. Make
one more computation for column (a) on underpayment balance). 1. Skip column (a).
lines 31 and 32. This second computation Then figure the penalty for Rate Period 2. Enter on line 1 your income for the
is to figure the penalty on the 2 (lines 33 and 34). Figure it on the period that is effectively connected with a
underpayment balance; that is, the portion remaining $2,000 balance. U.S. trade or business.
of the underpayment that remained 3. Increase the amount on line 17 by
unpaid for the entire period. In this case, Rate Period 2 the amount determined by multiplying
you would enter another number in the If an underpayment balance remains after your income for the period that is not
entry space for lines 31 and 32, as applying any payments in Table 1, figure effectively connected with a U.S. trade or
follows: the penalty attributable to that balance on business by the following:
a. On line 31, enter “260.” This is the lines 33 and 34. Generally, use the same ● In column (b), 72%.
total number of days in the period. See steps as explained under the instructions ● In column (c), 45%.
● In column (d), 30%.
Page 4
However, if you can use a treaty rate 12. Enter the smaller of line 7 or shown in the column headings. Include
lower than 30%, use the percentages line 11.................................... the same taxes used to figure line 3 of
determined by multiplying your treaty rate Form 2210 (except self-employment tax)
13. Subtract line 12 from line 5.
by 2.4, 1.5, and 1, respectively. Enter the result here and on and the tax from Form 4972, Tax on
4. Enter in line 22, column (b), 1/2 of Schedule AI, line 6 ................ Lump-Sum Distributions.
the amount from line 14 on page 1 of Individuals, use Form 6251, Alternative
Form 2210. In columns (c) and (d), Line 10 Minimum Tax—Individuals, to figure
enter 1/4 of that amount. alternative minimum tax; estates and
Multiply $2,700 by your total exemptions. trusts, use Schedule I of Form 1041, U.S.
5. Skip column (b), lines 20 and 23. But if line 3 is more than the amount Income Tax Return for Estates and
Part I—Annualized Income shown for your filing status in the table Trusts. Figure alternative minimum
below, use the following worksheet to
Installments figure the amount to enter on line 10.
taxable income based on your income
and deductions during the period shown
Line 1 in the column headings. Multiply this
Figure your total income for the period Single ................................ $124,500 amount by the annualized amounts
minus your adjustments to income for the Married filing jointly or shown on line 2 before subtracting the
period. Include your share of partnership qualifying widow(er) .......... $186,800 alternative minimum tax exemption
or S corporation income or loss items for Married filing separately ... $ 93,400 amount.
the period. Head of household ........... $155,650
Line 16
If you are self-employed, be sure to
take into account the deduction for 1/2 of 1. Enter the amount from Enter the credits you are entitled to
your self-employment tax. To figure this Schedule AI, line 3 ................ because of events that occurred during
amount for each period, complete Part II the months shown in the column
2. Enter the amount shown for headings. Do not annualize any credit.
of Schedule AI and divide the amount in your filing status from the
each column on line 35 by 8, 4.8, 3, and However, when figuring your credits, you
above table............................
2, respectively. must annualize any item of income or
3. Subtract line 2 from line 1..... deduction used to figure the credit. For
Line 2 details, see Rev. Rul. 79-179, 1979-1 C.B.
Estates and trusts, do not use the 4. Divide the amount on line 3 436.
by $2,500 ($1,250 if married
amounts shown in columns (a)–(d). filing separately). If the result Part II—Annualized
Instead, use 6, 3, 1.71429, and 1.09091, is not a whole number, Self-Employment Tax
respectively, as the annualization increase it to the next whole
amounts. number .................................. If you had net earnings from
self-employment during any period,
Line 6 5. Multiply the number on line complete Part II for that period to figure
Multiply line 4 by line 5 and enter the 4 by .02. Enter the result as your annualized self-employment tax.
a decimal but not more
result on line 6. But if line 3 is more than than 1 .................................... If you are married and filing a joint
$124,500 ($62,250 if married filing return, and both you and your spouse had
separately), use the following worksheet 6. Multiply $2,700 by your total net earnings from self-employment,
to figure the amount to enter on line 6. exemptions ............................ complete a separate Part II for each
spouse. Enter on line 13 the combined
1. Enter the amount from 7. Multiply the amount on line 6
Schedule AI, line 4 ................ amounts from line 35 of both Parts II.
by the decimal on line 5........
Line 27a
2. Enter the amount included 8. Subtract line 7 from line 6.
on line 1 for medical and Enter the result here and on To figure your net earnings from
dental expenses, investment Schedule AI, line 10 .............. self-employment on line 27a, multiply your
interest, casualty or theft net profit from all trades or businesses for
losses, and gambling losses . each period by 92.35%. If you completed
Line 12
3. Subtract line 2 from line 1..... the 1998 Annualized Estimated Tax
To compute the tax, use the Tax Table,
Worksheet on pages 23 and 24 of Pub.
Tax Rate Schedules, Schedule D or J, or
4. Enter the number from 505 (Rev. December 1997), carry the
Form 8615.
Schedule AI, line 5 ................ amounts from line 27b of that worksheet
Line 14 to line 27a of Schedule AI.
5. Multiply the amount on line 1
by line 4................................. Enter all of the taxes you owed because
Note: If the amount on line of events that occurred during the months
3 is zero, stop here and enter
the amount from line 5 on
Schedule AI, line 6.
6. Multiply the amount on line 3
by the number on line 4 ........
Page 5