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payments on September 15, 2016 and January 17, 2017. On

payment was more than the underpayment amount, enter the

line 19, column (a), enter $2,000 ($1,000 withholding + $1,000

excess in the next column with the same date.

overpayment). In column (b) enter $1,000 (withholding), and in

Example 3. Your required installment for each payment due

columns (c) and (d), enter $1,500 ($1,000 withholding + $500

date is $4,000. You made the following estimated tax payments.

estimated tax payment).

Date

Payments

Line 25

4/30/16

$2,000

6/15/16

$3,000

If line 25 is zero for all payment periods, you don't owe a penalty.

9/15/16

$4,000

But if you checked box C or D in Part II, you must file Form 2210

1/15/17

$4,000

with your return. If you checked box E, you must file page 1 of

Form 2210 with your return. In certain circumstances, the IRS

will waive all or part of the underpayment penalty. See Waiver of

Line 1a, column (a), shows $4,000. You enter “4/30 $2,000” and

Penalty, earlier.

“6/15 $2,000” on line 1b, column (a). The remaining $1,000

($3,000 – $2,000) of the June 15 payment is entered on line 1b,

Section B—Figure the Penalty

column (b), “6/15 $1,000.” Also enter “9/15 $3,000” on line 1b,

Use the Penalty Worksheet, later, to figure your penalty for each

column (b), because $3,000 of the $4,000 September payment

period by applying the appropriate rate against each

must be used to fully pay the June underpayment. Continue in

underpayment shown in Section A, line 25. The penalty is

this manner until all your payments are used.

figured for the number of days that each underpayment remains

Line 3. If more than one payment was applied to an

unpaid.

underpayment on line 1a, enter the number of days each

payment was late.

Your payments are applied first to any underpayment balance

on an earlier installment even if you designate a payment for a

Example 4. Using the same facts as Example 3 above, enter

later period. See Example 2. Use lines 3, 6, 9, and 12 of the

“15” (number of days from 4/15 to 4/30) and “61” (number of

Penalty Worksheet to show the number of days an

days from 4/15 to 6/15) on line 3, column (a) (see illustration

underpayment remained unpaid. Use lines 4, 7, 10, and 13 to

under Example 5).

figure the actual penalty amount by applying the appropriate rate

Line 4. Make the computation requested on line 4 and enter the

to an underpayment for the number of days it remained unpaid.

result. If more than one payment was required to fully satisfy an

Example 2. You had a $500 underpayment remaining after

underpayment amount, make a separate computation for each

your April 15 payment. The June 15 installment required a

payment. See Example 5 and the example in Pub. 505,

payment of $1,200. On June 10, you made a payment of $1,200

chapter 4.

to cover the June 15 installment. However, $500 of this payment

Example 5. Assume the same facts as in Example 3. On

is applied first to the April 15 installment. The penalty for the April

line 4, enter the penalty for each underpayment: “$3.28” ($2,000

15 installment is figured from April 15 to June 10 (56 days). The

× (15 ÷ 366) × 0.04) and “$13.33” ($2,000 × (61 ÷ 366) × 0.04).

amount remaining to be applied to the June 15 installment is

The entries are illustrated below.

$700.

Total days per rate period. If an underpayment remained

(a)

unpaid for an entire rate period, use the chart below to determine

4/15/16

the number of days to enter in each column. The chart is

organized in the same format as the Penalty Worksheet.

Days: 15

Days: 61

$3.28

$13.33

Table 2. Chart of Total Days

Column (a) is fully paid in the first rate period; therefore, lines

Rate Period

(a)

(b)

(c)

(d)

6, 7, 9, 10, 12, and 13 for column (a) would be blank. Continue

4/15/16

6/15/16

9/15/16

1/15/17

with the underpayment in columns (b), (c), and (d) in the same

manner.

4/16/16-6/30/16

—

7/1/16-9/30/16

—

Note: If an underpayment balance remains for the remaining

rate periods, calculate the penalty using the same steps as

10/1/16-12/31/16

—

explained above, but use the dates and interest rates on lines 6

1/1/17-4/15/17

105

and 7 for rate period 2, lines 9 and 10 for rate period 3, and lines

12 and 13 for rate period 4.

For example, if you have an underpayment on line 25, column

Schedule AI—Annualized Income

(a), but Table 1 shows you have no payments until after January

3, 2017, you would enter “76” on line 3, column (a), of the

Installment Method

Penalty Worksheet.

If your income varied during the year because, for example, you

If you make a payment during a rate period, see Pub.

operated your business on a seasonal basis or had a large

505, chapter 4, Table 4-1, for an easy way to figure the

TIP

capital gain late in the year, you may be able to lower or

number of days the payment is late.

eliminate the amount of one or more required installments by

using the annualized income installment method. Use

Worksheet for Form 2210, Part IV,

Schedule AI to figure the required installments to enter on Form

2210, Part IV, line 18.

Section B—Figure the Penalty

If you use Schedule AI for any payment due date, you

Line 1b. If more than one payment was applied to fully pay the

must use it for all payment due dates.

underpayment amount in a column (line 1a), enter on line 1b the

date and amount applied up to the underpayment amount. If a

CAUTION

Instructions for Form 2210 (2016)

Instructions For Form 2210 - Underpayment Of Estimated Tax By Individuals, Estates, And Trusts - 2016 Page 5

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