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Figuring Estimated Tax Penalty

What form to use to figure out the estimated tax penalty for underpayment?

Form 2210, Underpayment of Estimated Tax by Individuals, Estates, and Trusts, is the form used to figure underpayment penalties. However in most cases, you do not need to file Form 2210. The IRS will figure the penalty for you.

Will the IRS send me a tax bill?

If you owe a tax penalty, the IRS will send you a bill. As long as you have filed your tax return by the due date, the IRS will not charge you interest on the penalty if you pay by the date specified on the bill. If you want the IRS to figure the penalty for you, complete your tax return as usual and leave the penalty line (line 77 of Form 1040) blank.

The flow chart at the top of the form will tell you if you have to file Form 2210.

IRS tax form 2210

Rules for filing the tax form 2210

There are certain circumstances when you must file the Form 2210. These are if you:

  1. Request a waiver of the penalty
  2. Use the annualized income installment method
  3. Use your actual withholding for each payment for estimated tax purposes, or
  4. Base any of your required installments on the tax shown on your prior year's tax return and you filed or are filing a joint return for either the prior year or for the current year but not for both years.

Farmers and fishermen use form 2210F, Underpayment of Estimated Tax by Farmers and Fishermen.

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