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further computations to make for column

one for each payment, and a third for the

2. Check the box on line 1b.

(a). Figure the penalty for any other

underpayment balance of $2,000 ($8,000

3. Attach both Form 2210 and

underpayments shown in columns (b) – (d)

minus $6,000).

Schedule AI to your return.

of line 30.

Line 32 will show “15” days (from 4/15

Additional Information

2. No payments are listed in Table

to 4/30); “68” days (from 4/15 to 6/22);

1. You will need to figure the penalty for

and “260” days (from 4/15/02 to

See Pub. 505 for more details about the

the next rate period. See Rate Period 2

12/31/02).

annualized income installment method,

on this page.

and a completed example. Estates and

Line 33 will show $7.40, $33.53, and

3. The payment listed in Table 1 did

$85.48, computed as follows: $3,000 ×

trusts with short tax years, see Notice

not reduce the underpayment to zero,

15/365 × .06 (first payment), $3,000 ×

87-32.

and no other payments are listed.

68/365 × .06 (second payment), and

Form 1040NR or 1040NR-EZ

Make one more computation for column

$2,000 × 260/365 × .06 (remaining

Filers

(a) on lines 32 and 33. This second

underpayment balance).

computation is to figure the penalty on the

If you are filing Form 1040NR or

Then figure the penalty for Rate Period

underpayment balance; that is, the

1040NR-EZ and you did not receive

2 (lines 34 and 35) on the remaining

portion of the underpayment that

wages as an employee subject to U.S.

$2,000 balance.

remained unpaid for the entire period. In

income tax withholding, the instructions

this case, you would enter another

Rate Period 2

for Schedule AI are modified as follows.

number in the entry space for lines 32

1. Skip column (a).

If an underpayment balance remains after

and 33, as follows:

2. Enter on line 1 your income for the

applying any payments in Table 1, figure

a. On line 32, enter “260.” This is the

the penalty attributable to that balance on

period that is effectively connected with a

total number of days in the period. See

U.S. trade or business.

lines 34 and 35. Generally, use the same

Total days per rate period on page 3.

3. Increase the amount on line 17 by

steps as explained under the instructions

b. On line 33, make the computation

the amount determined by multiplying

for Rate Period 1. But use the dates and

and enter the result. In this case,

your income for the period that is not

interest rate shown on lines 34 and 35

however, the “underpayment” in the

effectively connected with a U.S. trade or

and use only the payments listed in

computation is the remaining balance of

business by the following.

Table 2.

•

the underpayment.

In column (b), 72%.

Line 34

•

Example 4. Assume the same facts as

In column (c), 45%.

•

Enter on line 34, column (a), the number

in Examples 1 and 2. After applying the

In column (d), 30%.

of days from 12/31/02 to the date of the

However, if you can use a treaty rate

$3,000 payment, the underpayment

first payment listed in Table 2. If no

balance is $2,000. Line 33, therefore, will

lower than 30%, use the percentages

payments are listed in Table 2, enter

determined by multiplying your treaty rate

contain a second entry of $85.48 ($2,000

× 260/365 × .06). Go to line 34 to figure

“105.”

by 2.4, 1.5, and 1, respectively.

the penalty on the underpayment balance

4. Enter in line 22, column (b),

Line 35

the amount from line 15 on page 1 of

for Rate Period 2.

Figure line 35 in the same manner as

4. Additional payments are listed in

Form 2210. In columns (c) and (d), enter

explained for line 33, except use 5%

of that amount.

Table 1 and the first payment was not

instead of 6%.

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

enough to reduce the underpayment to

zero. On line 30, you may list the

Schedule AI—Annualized

Part I—Annualized Income

amounts and the payment dates that

Income Installment Method

apply to the underpayment for that

Installments

installment period. Then figure the penalty

If your income varied during the year

for each amount listed on line 30. If an

Line 1

because, for example, you operated your

underpayment balance remains after

business on a seasonal basis, you may

Figure your total income for the period

applying all the payments, figure the

be able to lower or eliminate the amount

minus your adjustments to income for the

penalty on the balance of the

of one or more required installments by

period. Include your share of partnership

underpayment for the entire period. See

using the annualized income installment

or S corporation income or loss items for

Total days per rate period on page 3.

method. Use Schedule AI to figure the

the period.

required installments to enter on line 23 of

If you are self-employed, be sure to

Example 5. Your underpayment for

Form 2210.

take into account the deduction for

column (a) is $5,000 and you made two

If you use Schedule AI for any

one-half of your self-employment tax. To

payments: $3,000 on 4/30/02 and $2,000

payment due date, you must use it for all

figure this amount for each period,

on 6/22/02. On line 30, you can enter

payment due dates. To figure the amount

complete Part II of Schedule AI and divide

$5,000 or enter each payment and date

of each required installment, Schedule AI

the amount in each column on line 34 by

separately which will correspond with the

automatically selects the smaller of the

8, 4.8, 3, and 2, respectively.

two entries on lines 32 and 33 as

annualized income installment or the

explained below.

Line 2

regular installment (increased by the

Line 32 will show two entries in column

Estates and trusts, do not use the

amount saved by using the annualized

(a) as follows: “15” days (from 4/15 to

amounts shown in columns (a) – (d).

income installment method in figuring any

4/30); and “68” days (from 4/15 to 6/22).

Instead, use 6, 3, 1.71429, and 1.09091,

earlier installments).

Line 33 will show two entries in column

respectively, as the annualization

To use the annualized income

(a) as follows: $7.40 ($3,000 × 15/365 ×

amounts.

installment method, you must do all three

.06) and $22.36 ($2,000 × 68/365 × .06).

of the following.

Example 6. Your underpayment on

1. Enter the amount from Schedule

line 30, column (a), is $8,000 and you

AI, line 25, in each column of line 23 of

made two payments: $3,000 on 4/30/02

Form 2210.

and $3,000 on 6/22/02. Lines 32 and 33

will each show three entries in column (a);

-4-

Instructions For Form 2210 - Underpayment Of Estimated Tax By Individuals, Estates, And Trusts - 2002 Page 4

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