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FORM

Alabama Department of Revenue

2210AL

2015

Instructions for Form 2210AL

Underpayment of Estimated Tax Penalty for Individuals

INSTRUCTIONS

Form 2210AL is designed to calculate underpayment of estimated tax penalty

Section C). You can either use the Annualized Income Installment Method from

as prescribed in Section 40-2A-11 and 40-18-80 of the Code of Alabama 1975.

Schedule AI or use one-quarter (25%) of your Required Annual Payment to cal-

culate the Required Installments. If you elect to use the Annualized Income In-

Who Must Pay the Underpayment Penalty

stallment Method from Schedule AI, you must complete Schedule AI before you

can complete Part IV.

In general, you may owe the penalty for 2015 if the total of your withholding

Line 1 – If you do not elect to use the Annualized Income Installment Method

and timely estimated tax payments did not equal at least the smaller of:

from Schedule AI to calculate your required installments on line 1, Part IV, enter

1. 90% of your 2015 tax, or

25% (.25) of your Required Annual Payment from line 6, Part I, Form 2210AL, on

2. 100% of your 2014 tax. (Your 2014 tax return must cover a 12-month

line 1, columns (a)-(d). If you use the Annualized Income Installment Method,

period.)

see the instructions that follow for Schedule AI before completing lines 2-12.

Line 2 – Enter the total of the estimated tax paid for 2015 (line 23 of Form 40,

Special rules for certain individuals. Different percentages are used for

line 22 of Form 40NR) by quarters. For column (a) only, enter the amount from

farmers and fishermen, certain higher income taxpayers, and qualified individu-

line 2(a) on line 6(a) also.

als with small businesses.

Farmers and fishermen. If at least two-thirds of your gross income for 2015

NOTE: If the amounts on line 2, columns (a)-(d) are larger than the amounts on

is from farming and fishing, substitute 66-2/3% for 90% in (1) above.

line 1, columns (a)-(d), DO NOT FILE THIS FORM, you do not owe this penalty.

Higher income taxpayers. If your adjusted gross income (AGI) for 2015 was

more than $150,000 ($75,000 if your 2015 filing status is married filing separately),

Line 3 – Do not enter an amount on line 3, column (a). For line 3, column (b),

substitute 110% for 100% in (2) above.

enter the amount from line 9, column (a). For line 3, column (c), enter the amount

from line 9, column (b). For line 3, column (d), enter the amount from line 9, col-

Specific Instructions

umn (c).

Before calculating either of the penalties on Form 2210AL, you will need a

Lines 10-12 (Figure the Penalty)

copy of both your 2014 and 2015 Alabama income tax returns.

When you have completed Part IV, any amounts on line 8, columns (a)-(d),

must be entered into a computation under the heading Figure the Penalty that

NOTE: Please round all amounts to the nearest whole dollar.

follows Part IV.

The amounts on line 8, columns (a)-(d) are the amounts of underpaid Ala-

PART I: UNDERPAYMENT PENALTY

bama income tax for 2015. The underestimation penalty will be calculated on

If you meet all of the criteria for the Underpayment Penalty, you should com-

these amounts by completing lines 10-12 under the heading Figure the Penalty.

plete Form 2210AL to determine the amount of penalty due. There are two meth-

Line 12 (Penalty)

ods available for calculating this penalty – the Short Method from Part III or the

Total the amounts from line 11, columns (a)-(d). This is the amount of your un-

Regular Method from Part IV. If you choose to use the Regular Method, you

derpayment penalty. This amount should be included on the penalty line of Form

must select from one of two options for calculating your quarterly income: (1) the

40 or Form 40NR (line 31 of Form 40 or line 31 of Form 40NR) as well as being

Annualized Income Installment Method from Schedule AI or (2) one-quarter

added to the Amount You Owe line on both forms (line 30 of Form 40 or line 30

(25%) of your Required Annual Payment (Part I, Line 6). Selecting one of these

of Form 40NR).

options is necessary to calculate the required installments needed to compute

your underpayment (Part IV). The underpayment amounts will then be used to

Instructions for Schedule AI –

calculate the penalty.

Annualized Income Installment Method

PART I – Required Annual Payment

Line 1 – Figure your total income for the period minus your adjustments to in-

If you are subject to the underpayment penalty, you must complete Part I in

come for the period. Include your share of partnership or S corporation income

order to determine the amount of your Required Annual Payment. The Required

or loss items for the period.

Annual Payment will be needed to calculate the underpayment penalty regardless

Line 4 – Figure your itemized deductions for the period. If you do not itemize

of the method chosen for calculating the underpayment.

your deductions, skip this line and go to line 7.

Follow the line-by-line instructions in Part I to compute the amount of your Re-

Line 10 – The federal tax liability deduction is located on line 12 of your 2015

quired Annual Payment. If the Alabama income tax withheld plus any estimated

Form 40, or line 14 of your 2015 Form 40NR.

taxes paid for 2015 is equal to or greater than 90% of your current year liability or

Line 12 – If you are filing a Form 40, enter the total of lines 13 and 14 from

100% of your previous year’s tax liability, you are not subject to an underpayment

your 2015 Form 40. If you are filing a Form 40NR, enter the total of lines 15 and

penalty, and are not required to file this form.

16 from your 2015 Form 40NR.

Once you have calculated your Required Annual Payment, you must decide

Line 15 – If you are filing a Form 40, enter the amount from line 18 of your

to use either Method I or Method II to calculate the amount of your underpayment

2015 Form 40. If you are filing Form 40NR, enter the amount from line 19 of your

penalty.

2015 Form 40NR.

METHOD I

Line 19 – Do not enter an amount on line 19, column (a). For line 19, column

(b), enter any amount from line 25, column (a). For line 19, column (c), enter the

Part III – The Short Method

total of line 25, columns (a) and (b). For line 19, column (d), enter the total of line

Most taxpayers will find this is the easiest method to use for computing the Un-

25, columns (a), (b), and (c).

derpayment Penalty. Complete this section if your income and deductions were

Line 21 – Enter 25% (.25) of your Required Annual Payment (line 6, Part I,

evenly distributed for the year, or if your income for the first part of the year was

Form 2210AL). This amount is needed in order to determine the amount of your

significantly higher than your income for the end of the year.

underpayment (overpayment) by quarter.

METHOD II

NOTE: After completing Schedule AI, see instructions for line 2, Part IV.

Part IV – The Regular Method

If you chose Method II, The Regular Method, the first decision you must make

is how to compute the Required Installments (line 11, columns (a)-(d), Part II,

Instructions For Form 2210al - Underpayment Of Estimated Tax Penalty For Individuals - 2015

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