Instructions For Form 221 - Underpayment Of Estimated Tax By Individuals

Instructions For Form 221 - Underpayment Of Estimated Tax By Individuals - 2014 Page 5



Annualized Income Installment Worksheet

When figuring the penalty for rate period 3, be sure to

use only the payments listed in Table 3.

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



When figuring the penalty for rate period 4, be sure to

you operated your business on a seasonal basis, you may be able

use only the payments listed in Table 4.

to lower or eliminate the amount of one or more required

installments by using the annualized income installment

NOTE: Penalty compounds annually on January 1 of each

method.

year. Add any penalty outstanding on that date to the

principal amount of the tax (installment underpayment/late

Use the Annualized Income Installment Worksheet on page

payment). The amount added to the principal becomes a part

2 of Form 221, to figure the amounts to enter on line 11 of

of the principal and accrues penalty until paid.

Form 221.

Line 30 - Total Penalty

If you use the Annualized Income Installment Worksheet for

Add the amounts in columns (a), (b), (c), and (d), line 29.

any payment due date, you must use it for all payment due

dates. To figure the amount of each required installment, the

NOTE: You must round the total penalty amount to the

worksheet automatically selects the smaller of the annualize

nearest whole dollar.

income installment or the regular installment (increased by

Enter the total. Also, enter this amount on Arizona Form 140,

the amount saved by using the annualized income

page 2, line 75, or Form 140PY, page 2, line 87, or Form

installment method in figuring any earlier installments).

140NR, page 2, line 82.

For more information about the annualized income

installment method, see federal Publication 505.

Instructions For Form 221 - Underpayment Of Estimated Tax By Individuals - 2014 Page 5