This form calculates the penalty for underpayment of estimated tax.
There are two possible methods: the Short Method (which you can only use in some cases) and the Regular Method.
We do a fine job on the Short Method.
We also do a fine job on the Regular Method, for most people. However, if you made more than eight estimated tax payments, your Regular Method tax computation is beyond the scope of our program.
If we cannot calculate your penalty for you, don't despair.
There is help from an unexpected source. The IRS volunteers to calculate your underpayment penalty for you. They will send you a bill, and if you then pay the bill promptly, they will not assess additional penalties on the time that passed while they calculated, mailed, and waited for your reply on the bill. You can think of it as a free extension of time to pay, and we suggest that you take the IRS up on it.
(The IRS will calculate your underpayment penalty in any event, and they will send you a bill for the difference if they find one.)
If you want the IRS to calculate your bill, here is what to do: Override the penalty amount on line 27 with zero, and do not file Form 2210 with your tax return. The IRS will take it from there.
Note: If you decide to fill out this form, be sure to visit the Last Year's Data Worksheet to enter amounts from your 2009 tax return. These amounts carry to line 8a and can reduce your penalty significantly.
If you X one of the Waiver Boxes (box B or A), you should also enter a penalty amount on line 17 (Short Method) or 27 (Regular Method). The amount you enter is then subtracted from the penalty calculated by the rest of the form.
If you X the "Annualized installment method" box (box C ), we blank out the Short Method box and place an X in the Regular Method box. If you use this method, we carry the results from Schedule AI, lines 25a through 25d to Form 2210, lines 18a through 18d.
If you X box D, the box for "Treat Taxes Paid When Withheld," we blank out the Short Method box and place an X in the Regular Method box. We also leave out withheld taxes when we calculate line 19a for you.
We'll calculate the amount on line 8a for you if you complete the Last Year's Data Worksheet. The calculation includes all the taxes that make up lines 1 and 2. You should recalculate that amount, though, if any of the following applies to your last year's tax return:
Any increase or decrease in tax as a shareholder in a qualified electing fund; or
Interest due under Tax Code sections 453(l)(3) and 453A(c) on specified installment sales of property.
If you do not make a selection, we use the Short Method.
For whichever method is selected, we blank out the calculations for the part of the form that relates to the other method.
We get the total estimated payments on line 12 from Form 1040 or 1040A, as applicable.
The text to the left of the penalty amount says "Amount Waived" if you entered an amount in the number entry field to the left of the total. Otherwise, this text entry field is blank.
The calculations at the bottom of this form are deceptive. While the instructions on the face of the form make the quarterly penalty calculations appear to be a simple multiplication, the calculations are actually much trickier than that.
If you are doing these calculations yourself, or want to understand what's happening behind the scenes, please see the IRS instructions to Form 2210 for guidance. For an IRS program that may help you if we can't calculate your penalty, see the note at the top of this form.
The total penalty amount is simply the sum of the amounts in the "Portion of penalty" boxes above.
The spaces to the left of the penalty are for amounts waived. If you do not have any amounts waived, then both of these spaces will remain blank. If you have an amount waived, then enter it in the number entry space, and we will put the words "Amount Waived" in the text space.