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$9.86 ($3,000 × (15 ÷ 365) × .08) and

reduce the column (a) underpayment to

lines 29 and 30. Generally, use the same

$113.97 ($2,000 × (260 ÷ 365) × .08).

zero, see condition 4 and Example 7 on

steps as explained under the instructions

this page. If the payment is more than the

for Rate Period 1. But use the dates and

4/15/07

underpayment, apply only an amount

interest rate shown on lines 29 and 30

Days:

equal to the underpayment and use that

and the payments listed in Table 2.

amount for the line 28 computation.

Line 29

260

Example 4. Your underpayment on

Enter on line 29, column (a), the number

9.86

line 25 was $4,000. You paid $4,000 on

of days from 12/31/07 to the date of the

6/20/07. Enter $57.86 on line 28 ($4,000

113.97

first payment listed in Table 2. If no

× (66 ÷ 365) × .08).

payments are listed in Table 2, enter

4. Additional payments are listed in

“106.”

Example 5. Your underpayment on

Table 1 and the first payment was not

line 25 was $5,000 and you paid $8,000

enough to reduce the underpayment to

Line 30

on 4/30/07. Because your payment was

zero. On line 25, it is helpful to list the

Figure line 30 in the same manner as line

more than your underpayment, you apply

amounts and the payment dates that

28.

$5,000 to the underpayment. Enter

apply to the underpayment for that

$16.44 on line 28 ($5,000 × (15 ÷ 365) ×

Example 9. Assume the same facts

installment period. Then figure the penalty

.08).

as in Example 8 . The return was filed

for each amount listed on line 25. See

and full paid 4/15/08.

Example 7 below.

If there are no payments listed in

Enter “106” on line 29, column (a).

Table 1. The “underpayment” is the

If an underpayment balance remains

Enter $20.27 on line 30 ($1,000 × (106 ÷

entire underpayment balance, which

after applying all the payments, figure the

366) × .07).

equals the amount on line 25, column (a).

penalty on the balance of the

underpayment for the entire period. See

Schedule AI—Annualized

Determine if You Need To Make

Example 8 below.

Additional Computations for

Income Installment Method

Example 7. Your underpayment on

Column (a)

line 25, column (a), is $6,000 and you

If your income varied during the year

Whether you need to make additional

made two payments: $3,500 on 4/30/07

because, for example, you operated your

computations depends on which of the

and $2,500 on 6/1/07. On line 25, you can

business on a seasonal basis, you may

following four conditions applies to you.

enter $6,000 or enter each payment and

be able to lower or eliminate the amount

1. The first (or only) payment listed

date separately, which will correspond

of one or more required installments by

in Table 1 was enough to reduce the

with the two entries on lines 27 and 28

using the annualized income installment

underpayment to zero. There are no

(see illustration below). Because the

method. Use Schedule AI to figure the

further computations to make for column

underpayment was paid with two

required installments to enter on Form

(a). Figure the penalty for any other

payments on two different dates, you

2210, Part IV, line 18.

underpayments shown in columns (b) – (d)

figure the penalty for each payment

If you use Schedule AI for any

of line 25.

separately:

payment due date, you must use it for all

2. No payments are listed in

$11.51 ($3,500 × (15 ÷ 365) × .08) and

payment due dates. To figure the amount

Table 1. Figure the penalty in column (a)

$25.75 ($2,500 × (47 ÷ 365) × .08).

of each required installment, Schedule AI

for the next rate period. See Rate Period

automatically selects the smaller of the

2, on this page.

4/15/07

annualized income installment or the

3. Only one payment is listed in

Days:

regular installment (that has been

Table 1 and it did not reduce the

increased by the amount saved by using

underpayment to zero. Make one more

the annualized income installment

computation for column (a) on lines 27

4/30

3,500

11.51

method in figuring any earlier

and 28. This second computation is to

6/1

2,500

installments).

25.75

figure the penalty on the underpayment

6,000

balance; that is, the portion of the

To use the annualized income

Example 8. Your underpayment on

underpayment that remained unpaid for

installment method, you must do all of the

line 25, column (a), is $8,000 and you

the entire period. In this case, enter

following.

made two payments: $3,000 on 4/30/07

another number in the entry space for

1. Complete Schedule AI, Part I (and

and $4,000 on 6/22/07. Lines 27 and 28

lines 27 and 28, as follows.

Part II, if necessary). Enter the amounts

will each show three entries in column (a),

a. On line 27, enter “260,” the total

from line 25, columns (a) – (d), in the

one for each payment and a third for the

number of days in the period. See Total

corresponding columns of Form 2210,

underpayment balance of $1,000 ($8,000

days per rate period, on page 3.

Part IV, line 18.

− $7,000).

b. On line 28, make the computation

2. Complete Part IV to figure the

and enter the result. In this case,

Line 27 will show “15” days (from

penalty.

however, the “underpayment” in the

4/15 to 4/30), “68” days (from 4/15 to

3. Check box C in Part II.

computation is the remaining balance of

6/22), and “260” days (from 4/15 to

4. Attach both Form 2210 and

the underpayment.

12/31).

Schedule AI to your return.

c. Go to line 29 to figure the penalty

Line 28 will show $9.86, $59.62, and

on the underpayment balance for Rate

Additional information. See Pub. 505,

$56.99, computed as follows:

chapter 4, for more details about the

Period 2.

($3,000 (first payment) × (15 ÷ 365) ×

annualized income installment method

.08), ($4,000 (second payment) × (68 ÷

Example 6. Assume the same facts

and a completed example. Estates and

365) × .08), and ($1,000 (remaining

as in Example 3 (see page 3), with

trusts with short tax years, see Notice

underpayment) × (260 ÷ 365) × .08).

$3,000 being the only payment listed in

87-32.

Table 1. After applying the $3,000

Then figure the penalty for Rate Period

Form 1040NR or 1040NR-EZ filers. If

payment, the underpayment balance is

2 (lines 29 and 30) on the remaining

you are filing Form 1040NR or

$2,000. On line 27, enter “15” and “260”

$1,000.

1040NR-EZ and you did not receive

to reflect the number of days from 4/15 to

Rate Period 2

wages as an employee subject to U.S.

the $3,000 payment (4/30) and the

income tax withholding, follow these

number of days to the end of the rate

If an underpayment balance remains after

modified instructions for Schedule AI.

period. On line 28, enter the penalty for

applying any payments in Table 1, figure

each underpayment:

the penalty attributable to that balance on

1. Skip column (a).

-4-

Instructions For Form 2210 - Underpayment Of Estimated Tax By Individuals, Estates, And Trusts - 2007 Page 4

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