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2011

Department of the Treasury

Internal Revenue Service

Instructions for Form 2210

Underpayment of Estimated Tax by Individuals, Estates, and Trusts

•

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

Section references are to the Internal Revenue Code unless

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

otherwise noted.

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

General Instructions

your tax return.

•

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

What’s New

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

the Penalty Worksheet on page 5 of the instructions. Enter the

Temporary decrease in employee’s share of payroll tax.

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

Social security tax is withheld from an employee’s wages at the

penalty” line on your tax return.

•

rate of 4.2% (down from 6.2%) up to the social security wage

If you use the annualized income installment method,

limit of $106,800. There is no change to Medicare withholding.

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

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

The same reductional applies to the net earnings from

Penalty Worksheet on page 5 of the instructions. Enter the

self-employment — the temporary rate will be 10.4% (down from

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

12.4%) up to the social security wage limit of $106,800.

penalty” line on your tax return.

Advance earned income credit. The advance earned income

credit (EIC) was eliminated. If you are a household employer

Who Must Pay the

and made advance EIC payments, you do not include those

Underpayment Penalty

payments as estimated tax payments.

Refundable claim of right credit. If you are reclaiming a

In general, you may owe the penalty for 2011 if the total of your

credit for repayment of amounts you included in your income in

withholding and timely estimated tax payments did not equal at

an earlier year under a claim of right, you should include the

least the smaller of:

credit in Part I, line 3 of Refundable credits.

1. 90% of your 2011 tax, or

Future developments. The IRS has created a page on

2. 100% of your 2010 tax. (Your 2010 tax return must cover

IRS.gov for information about Form 2210 and its instructions, at

a 12-month period.)

Information about any recent

developments affecting Form 2210 (such as legislation enacted

Special rules for certain individuals. Different percentages

after we release it) will be posted on that page.

are used for farmers and fishermen, and certain higher income

taxpayers.

Purpose of Form

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

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

income for 2010 or 2011 is from farming and fishing, substitute

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

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

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

page 2 to see if you qualify.

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 2010 was more than $150,000 ($75,000 if your 2011

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

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

penalty is figured separately for each installment due date.

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

The IRS Will Figure the Penalty for You

details, see the Schedule AI instructions beginning on page 6.

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 17, 2012, no interest will be

separate returns is considered the original return.

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

on the bill.

Exceptions to the Penalty

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

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

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

applies.

not file Form 2210.

•

You had no tax liability for 2010, you were a U.S. citizen or

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 2010 tax return was (or

We realize that there are different ways to figure the correct

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

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

months.

•

as long as you enter the correct penalty amount on the

The total tax shown on your 2011 return minus the amount of

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

complete certain lines and enter the penalty on the “Estimated

Estates and trusts. No penalty applies to either of the

tax penalty” line of your return.

following.

Mar 08, 2012

Cat. No. 63610I

Instructions For Form 2210 - Underpayment Of Estimated Tax By Individuals, Estates, And Trusts - 2011

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