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Schedule IT-2220 Instructions

Who Should File?

11. Enter in columns (a) through (d) the quarterly installment due dates corresponding

Schedule IT-2220 must be completed and attached to the annual corporate Form

IT-20, IT-20G, IT-20NP, or IT-20SC anytime the corporation did not pay the required

to the estimated income tax payments for your tax year.

amount of gross, adjusted gross, or supplemental net income tax in any particular

If filing on a calendar year basis, the installment due dates for corporate income

quarter, or the corporation meets an exception to the penalty for underpayment as

tax payments are April 20, June 20, September 20 and December 20 of the taxable

provided for in Indiana Code 6-3-4-4.1.

year. Fiscal year and short tax year filers must remit by the twentieth day of the fourth,

sixth, ninth, and twelfth months of the taxable year. Short period filers see note follow-

What is the Required Amount?

ing line 22 instructions.

Corporations having annual income tax liabilities exceeding $1,000 are subject

12. Enter the amount of estimated taxes paid by the due date of the installment for each

to an underpayment penalty if they fail to file estimated tax payments or fail to remit a

sufficient amount on a quarterly basis.

quarter. Payments made after the quarterly due date must be reported in the following

Quarterly payments for: 1) gross income tax are due anytime the annual gross

quarter when paid. If you are carrying forward an overpayment credit from the previ-

income tax exceeds $1,000 for a taxable year, or 2) whenever the adjusted gross in-

ous year, add that amount together with the installment amount paid for the first avail-

come tax liability (after credit for tax imposed on gross income) exceeds the annual

able quarter to which the carryover credit is posted. Do not include any credits claimed

on line 6. STOP. Complete lines 13 through 16 in each column before proceeding to

gross income tax by $1,000 or more. Also, quarterly estimated payments for supple-

mental net income tax are due anytime the annual supplemental net income tax is $1,000

the next column.

or more for the year.

13. Enter the remaining overpayment, if any, from line 16 of the preceding quarter, as

The qualified estimated payments should equal 25% of the total income tax due

for the year. To avoid the penalty, the quarterly estimate must equal at least twenty

adjusted after deducting any previous <underpayment> balance.

percent (20%) of the total income tax liability for the current taxable year or twenty-

15. Divide line 10 by four (4) and enter the result in each column. NOTE: Short period

five percent (25%) of the final income tax liability for the prior taxable year.

The Indiana Code does not provide corporations an exception to the pen-

filers must apply the instructions following line 22 instructions.

alty for underpayment of estimated taxes using either an annualized income or

adjusted seasonal method.

16. Subtract line 15 from line 14 for each column. If line 14 is less than line 15, enter

the resulting underpayment in <brackets>. If line 15 is equal to or greater than line 14,

PART I - How to Figure Underpayment of Corporate Taxes

the difference is an overpayment and you have met an exception to the penalty for the

This schedule must be used by Form IT-20, IT-20G, IT-20NP, IT-20S and IT-

quarter. See instructions for line 13.

After completion of all four columns, if none of the quarters show an un-

20SC filers in determining whether or not the minimum amount of tax was paid timely.

derpayment, stop here and attach schedule to your return. Otherwise proceed to

1. Enter the annual adjusted gross income tax from Schedule B of Form IT-20 and IT-

Part III to recompute your actual underpayment.

20S, Schedule A of Forms IT-20SC, or Schedule C of Form IT-20NP.

PART III - How to Figure the Penalty

2. Enter the annual gross income tax from Schedule A of Form IT-20 or IT-20G (sched-

The penalty for the underpayment of estimated taxes is assessed on a quarterly

ule A and B of Form IT-20NP). If total gross income tax is less than $1,000, enter zero.

basis on the difference between the amount paid for each quarter and twenty-five per-

cent (25%) of the final tax liability for the current year. If any underpayment is shown

Form IT-20SC filers enter zero.

on line 16 continue by completing lines 17 through 21 in each column before

3. Subtract line 2 from line 1. Enter zero if difference is less than $1,000.

proceeding to the next column.

4. Enter the annual supplemental net income tax from Schedule C of Form IT-20,

17. Enter the remaining overpayment, if any, from line 20 of the preceding quarter, as

adjusted after deducting any previous <underpayment> balance.

Schedule B of Forms IT-20S and IT-20SC, or Schedule D of Form IT-20NP. If total

supplemental net income tax is less than $1,000, enter zero. Form IT-20G filers enter

19. Enter current year’s quarterly tax due: divide line 7, in Part I, by four (4) and enter

zero.

result in each column.

5. Add lines 2, 3 and 4. If the total is zero, STOP. You owe no penalty and you do not

20. Subtract line 19 from line 18. If line 18 is less than line 19, enter the resulting

need to complete this schedule.

underpayment in <brackets>. If line 18 is greater than line 19, the difference is carried

6. Enter your total tax reduction (non-refundable) credits (college credit, neighborhood

as an overpayment to line 17 of the next column after deducting any remaining <under-

payments> shown on line 20 of the preceding columns.

assistance credit, etc.) reported on line 55 of Form IT-20; line 16 of Form IT-20G; line

34 of Form IT-20NP or line 24 of Form IT-20SC. Also include applicable WH-18

21. Multiply the amount of <underpayment> on line 20 for each column by 10%

withholding credits and any gross income tax paid on sales of real estate. Do not enter

if an exception to penalty for the quarter was not met on line 16. Enter zero on

estimated tax payments, extension payments, or prior year’s overpayment credit. In no

line 21 if line 16 is zero or greater for the quarter.

case may the total of tax reduction credits exceed the total tax on line 5.

22. Add the amounts on line 21 for all quarters and enter result here. This is your total

7. Subtract line 6 from line 5. This is your current year’s tax liability. If zero, STOP.

You do not owe any underpayment penalty.

underpayment penalty due. Carry this amount to the appropriate line on the front of

Form IT-20, IT-20G, IT-20NP, IT-20S or IT-20SC.

PART II - How to Figure Exception to Underpayment Penalty

Short Period Returns: Lines 15 and 19 must be changed to correspond with your

I.C. 6-3-4-4.1(e) prescribes two exceptions to the penalty for underpayment. If

required to pay quarterly, the estimate should include either at least 20% of the total

short period return. Do not enter 25% of line 7 or 10; instead, divide lines 7 and 10 by

3 for returns consisting of three quarterly periods. Divide lines 7 and 10 by 2 for returns

income tax liability for the taxable year or 25% of the final income tax liability for the

previous tax year.

consisting of two quarterly periods. Use the entire amount from lines 7 and 10 for

returns consisting of one quarterly period. For lines 11 through 21, complete only those

If the previous year was for a period of less than twelve months, the exception

may be met by demonstrating what the liability would have been if a twelve-month

columns corresponding with the number of quarters being filed.

return had been filed. For example, if the previous year was for 6 months, double the

total tax for that year and enter 25% of this total. If last year’s tax was zero, enter zero

on line 9.

9. Enter 100% of your prior year’s final income tax liability (total tax less non-refund-

able credits and any withholding and gross tax credits) before applying estimated tax

credits.

Instructions For Schedule It-2220 - Penalty For Underpayment Of Corporate Income Taxes

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