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2010

Department of the Treasury

Internal Revenue Service

Instructions for Form 2210

Underpayment of Estimated Tax by Individuals, Estates, and Trusts

line 27 of the form, and on the “Estimated tax penalty” line on

Section references are to the Internal Revenue Code unless

your tax return.

otherwise noted.

General Instructions

Who Must Pay the

Underpayment Penalty

What’s New

In general, you may owe the penalty for 2010 if the total of your

Decreased estimated tax payments for qualified individuals

withholding and timely estimated tax payments did not equal at

with small businesses. This special provision has expired for

least the smaller of:

tax years beginning after December 31, 2009.

1. 90% of your 2010 tax, or

Worksheet for figuring the penalty using the regular

2. 100% of your 2009 tax. (Your 2009 tax return must cover

method is now in the instructions. You will find the

a 12-month period.)

Worksheet for Form 2210, Part IV, Section B — Figure the

Special rules for certain individuals. Different percentages

Penalty on page 4. In these instructions, it will be referred to as

are used for farmers and fishermen, and certain higher income

the Penalty Worksheet.

taxpayers.

Purpose of Form

Farmers and fishermen. If at least two-thirds of your gross

income for 2009 or 2010 is from farming and fishing, substitute

Generally, use Form 2210 to see if you owe a penalty for

% for 90% in (1) above. See Farmers and fishermen

underpaying your estimated tax and, if you do, to figure the

beginning on this page to see if you qualify.

amount of the penalty. Even if you are not required to file Form

2210, you can use it to figure your penalty if you wish to do so.

Higher income taxpayers. If your adjusted gross income

In that case, enter the penalty on your return, but do not file

(AGI) for 2009 was more than $150,000 ($75,000 if your 2010

Form 2210.

filing status is married filing separately), substitute 110% for

100% in (2) above.

Who Must File Form 2210

Penalty figured separately for each required payment. The

penalty is figured separately for each installment due date.

Use the flowchart at the top of page 1 of Form 2210 to see if

you must file this form.

Therefore, you may owe the penalty for an earlier due date

even if you paid enough tax later to make up the underpayment.

If box B, C, or D in Part II is checked, you must figure

This is true even if you are due a refund when you file your tax

the penalty yourself and attach Form 2210 to your

return. However, you may be able to reduce or eliminate the

return.

CAUTION

penalty by using the annualized income installment method. For

details, see the Schedule AI instructions beginning on page 5.

The IRS Will Figure the Penalty for You

Return. In these instructions, “return” refers to your original

If you did not check box B, C, or D in Part II, you do not need to

return. However, an amended return is considered the original

figure the penalty or file Form 2210. The IRS will figure any

return if it is filed by the due date (including extensions) of the

penalty for underpayment of estimated tax and send you a bill.

original return. Also, a joint return that replaces previously filed

If you file your return by April 18, 2011, no interest will be

separate returns is considered the original return.

charged on the penalty if you pay the penalty by the date shown

Exceptions to the Penalty

on the bill.

You will not have to pay the penalty if either of the following

If you want us to figure the penalty for you, complete your

applies.

return as usual. Leave the penalty line on your return blank; do

•

You had no tax liability for 2009, you were a U.S. citizen or

not file Form 2210.

resident alien for the entire year (or an estate of a domestic

Other Methods of Figuring the Penalty

decedent or a domestic trust), and your 2009 tax return was (or

would have been had you been required to file) for a full 12

We realize that there are different ways to figure the correct

months.

penalty. You do not have to use the method used on Form 2210

•

The total tax shown on your 2010 return minus the amount of

as long as you enter the correct penalty amount on the

tax you paid through withholding is less than $1,000. To

“Estimated tax penalty” line of your return.

determine whether the total tax is less than $1,000, complete

However, if you are required to file Form 2210 because one

Part 1, lines 1 through 7.

or more of the boxes in Part II applies to you, you must

Estates and trusts. No penalty applies to either of the

complete certain lines and enter the penalty on the “Estimated

following.

tax penalty” line of your return.

•

A decedent’s estate for any tax year ending before the date

•

If you use the short method, complete Part I, check the

that is 2 years after the decedent’s death.

box(es) that applies in Part II, and complete Part III. Enter the

•

A trust that was treated as owned by the decedent if the trust

penalty on line 17 and on the “Estimated tax penalty” line on

will receive the residue of the decedent’s estate under the will

your tax return.

(or if no will is admitted to probate, the trust primarily

•

If you use the regular method, complete Part I, check the

responsible for paying debts, taxes, and expenses of

box(es) that applies in Part II, complete Part IV, Section A, and

administration) for any tax year ending before the date that is 2

the Penalty Worksheet on page 4 of the instructions. Enter the

years after the decedent’s death.

penalty on line 27 of the form, and on the “Estimated tax

Farmers and fishermen. If you meet both tests 1 and 2

penalty” line on your tax return.

•

below, you do not owe a penalty for underpaying estimated tax.

If you use the annualized income installment method,

complete Part I, check the box(es) that applies in Part II, and

1. Your gross income from farming or fishing is at least

complete Schedule AI, Part IV, Section A, and the Penalty

two-thirds of your annual gross income from all sources for

Worksheet on page 4 of the instructions. Enter the penalty on

2009 or 2010.

Cat. No. 63610I

Instructions For Form 2210 - Underpayment Of Estimated Tax By Individuals, Estates, And Trusts - 2010

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