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Schedule AI—Annualized Income

Total days per rate period. If an underpayment remained

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

Installment Method

determine the number of days to enter in each column. The

chart is organized in the same format as the Penalty

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

Worksheet.

operated your business on a seasonal basis or had a large

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

eliminate the amount of one or more required installments by

Table 2. Chart of Total Days

using the annualized income installment method. Use Schedule

AI to figure the required installments to enter on Form 2210,

Rate Period

(a) 4/15/10 (b) 6/15/10 (c) 9/15/10 (d) 1/15/11

Part IV, line 18.

4/16/10-12/31/10

260

199

107

—

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

1/1/11-4/15/11

105

must use it for all payment due dates.

CAUTION

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

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

To use the annualized income installment method to figure

December 31, 2010, you would enter “260” on line 3, column

the penalty, you must do all of the following.

(a), of the Penalty Worksheet.

1. Complete Schedule AI, Part I (and Part II, if necessary).

Enter the amounts from Schedule AI, Part I, line 25, columns

If you make a payment during a rate period, see Table

(a) through (d), in the corresponding columns of Form 2210,

4-1 (Pub. 505, chapter 4) for an easy way to figure the

TIP

Part IV, line 18.

number of days the payment is late.

2. Complete Part IV to figure the penalty. This includes

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

completing the Penalty Worksheet in the instructions.

the Penalty

3. Check box C in Part II.

4. Attach Form 2210, Parts I, II, IV, and Schedule AI to your

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

return.

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

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

Additional information. See Pub. 505, chapter 4, for more

a payment was more than the underpayment amount, enter the

details about the annualized income installment method and a

excess in the next column with the same date.

completed example. Estates and trusts, see Notice 87-32.

Example 3. Your required installment for each payment

Individuals filing Form 1040NR or 1040NR-EZ. If you are

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

filing Form 1040NR or 1040NR-EZ and you did not receive

payments.

wages as an employee subject to U.S. income tax withholding,

Date

Payments

follow these modified instructions for Schedule AI.

4/30/10

$2,000

1. Skip column (a).

6/15/10

$3,000

2. Beginning with column (b), enter on line 1 your income

9/15/10

$4,000

for the period that is effectively connected with a U.S. trade or

1/15/11

$4,000

business.

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

3. Increase the amount on line 17 by the amount

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

determined by multiplying your income for the period that is not

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

effectively connected with a U.S. trade or business by the

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

following.

1b, column (b), because $3,000 of the $4,000 September

•

In column (b), 72%.

payment must be used to fully pay the June underpayment.

•

In column (c), 45%.

Continue in this manner until all your payments are used.

•

In column (d), 30%.

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

However, if you can use a treaty rate lower than 30%, use

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

the percentages determined by multiplying your treaty rate by

payment was late.

2.4, 1.5, and 1, respectively.

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

4. Enter on line 22, column (b), one-half of the amount from

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

Form 2210, Part I, line 9. In columns (c) and (d), enter

one-fourth of that amount.

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

under Example 5 below).

5. Skip column (b), lines 20 and 23.

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

Part I—Annualized Income Installments

the result. If more than one payment was required to fully

satisfy an underpayment amount, make a separate computation

To figure the amount of each required installment, Schedule AI

for each payment. See the example below and in chapter 4 of

selects the smaller of the annualized income installment or the

Pub. 505.

regular installment (that has been increased by the amount

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

saved by using the annualized income installment method in

line 4, enter the penalty for each underpayment: “3.29” ($2,000

figuring any earlier installments).

× (15 ÷ 365) × .04) and “$13.37” ($2,000 × (61 ÷ 365) × .04).

Line 1

The entries are illustrated below.

For each period (column), figure your total income minus your

(a)

adjustments to income. Include your share of partnership or S

corporation income or loss items for the period.

4/15/10

Days:

If you are self-employed, be sure to take into account the

deduction for one-half of your self-employment tax. To figure

this amount for each period, complete Schedule AI, Part II, and

divide the amount in columns (a) through (d) on line 34 by 8,

3.29

4.8, 3, and 2, respectively.

13.37

Line 2

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

Estates and trusts do not use the amounts shown in columns

lines 6 and 7 for column (a) would be blank. Continue with the

(a) through (d). Instead, use 6, 3, 1.71429, and 1.09091,

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

respectively, as the annualization amounts.

-5-

Instructions for Form 2210

Instructions For Form 2210 - Underpayment Of Estimated Tax By Individuals, Estates, And Trusts - 2010 Page 5

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