You should consider the items in this section when figuring any underpayment penalty for 2008.taxmap/pubs/p505-020.htm#en_us_publink10007496
The penalty for underpayment of 2008 estimated tax is figured at an annual rate of 6% for the number of days the underpayment remained unpaid from April 16, 2008, through June 30, 2008; 5% for the number of days the underpayment remained unpaid from July 1, 2008, through September 30, 2008; 6% for the number of days the underpayment remained unpaid from October 1, 2008, through December 31, 2008; and 5% from January 1, 2009, through April 15, 2009.taxmap/pubs/p505-020.htm#en_us_publink1000150471
Waiver of penalty for certain federally declared disasters.(p54)
Generally, required estimated tax payment deadlines were extended for taxpayers affected by federally declared disasters. You will be granted a waiver of all or part of your underpayment of tax penalty for late payments due to such disaster. See the Instructions for Form 2210, Underpayment of Estimated Tax by Individuals, Estates, and Trusts, for more details.
If you did not pay enough tax, either through withholding or by making estimated tax payments, you will have underpaid your estimated tax and may have to pay a penalty.
You may understand this chapter better if you can refer to copies of your latest federal income tax returns.taxmap/pubs/p505-020.htm#en_us_publink10007503
Generally, you will not have to pay a penalty for 2008 if any of the following situations apply.
- The total of your withholding and estimated tax payments was at least as much as your 2007 tax (or 110% of your 2007 tax if your adjusted gross income (AGI) was more than $150,000, $75,000 if your 2008 filing status is married filing separately), and you paid all required estimated tax payments on time.
- The tax balance due on your return is no more than 10% of your total 2008 tax, and you paid all required estimated tax payments on time.
- Your total 2008 tax (defined on page 55) minus your withholding is less than $1,000.
- You did not have a tax liability for 2007.
- You did not have any withholding taxes and your current year tax less any household employment taxes is less than $1,000.
Special rules apply if you are a farmer or fisherman.
If you think you owe the penalty, but you do not want to figure it yourself when you file your tax return, you may not have to. Generally, the IRS will figure the penalty for you and send you a bill.
You only need to figure your penalty in the following three situations.
- You are requesting a waiver of part, but not all, of the penalty.
- You are using the annualized income installment method to figure the penalty.
- You are treating the federal income tax withheld from your income as paid on the dates actually withheld.
However, if these situations do not apply to you, and you think you can lower or eliminate your penalty, complete Form 2210 or Form 2210-F and attach it to your return. See Form 2210
on page 55.
You may want to see:
Form (and Instructions) 2210: Underpayment of Estimated Tax by Individuals, Estates, and Trusts 2210-F: Underpayment of Estimated Tax by Farmers and Fishermen
See chapter 5 for information about getting these forms.taxmap/pubs/p505-020.htm#en_us_publink10007505
In general, you may owe a penalty for 2008 if the total of your withholding and estimated tax payments did not equal at least the smaller of:
- 90% of your 2008 tax, or
- 100% of your 2007 tax. (Your 2007 tax return must cover a 12-month period.)
Your 2008 tax, for this purpose, is defined under Total tax for 2008
on page 55.
There are special rules for farmers and fishermen, and for certain higher income taxpayers. taxmap/pubs/p505-020.htm#en_us_publink10007507
If at least two-thirds of your gross income for 2007 or 2008 is from farming or fishing, substitute 662/3% for 90% in (1) above.
See Farmers and Fishermen on page 60.taxmap/pubs/p505-020.htm#en_us_publink10007508
If your AGI for 2007 was more than $150,000 ($75,000 if your 2008 filing status is married filing a separate return), substitute 110% for 100% in (2) above. This rule does not apply to farmers or fishermen.
For 2007, AGI is the amount shown on Form 1040, line 37; Form 1040A, line 21; and Form 1040EZ, line 4. taxmap/pubs/p505-020.htm#en_us_publink10007509
Because the penalty is figured separately for each payment period, you may owe a penalty for a payment period even if you later paid enough to make up the underpayment. If you did not pay enough tax by the due date of any of the payment periods, you may owe a penalty even if you are due a refund when you file your income tax return. taxmap/pubs/p505-020.htm#en_us_publink10007510
You did not make estimated tax payments for 2008 because you thought you had enough tax withheld from your wages. Early in January 2009, you made an estimate of your total 2008 tax. Then you realized that your withholding was $2,000 less than the amount needed to avoid a penalty for underpayment of estimated tax.
On January 10, you made an estimated tax payment of $3,000, which is the difference between your withholding and your estimate of your total tax. Your final return shows your total tax to be $50 less than your estimate, so you are due a refund.
You do not owe a penalty for your payment due January 15, 2009. However, you may owe a penalty through January 10, 2009, the day you made the $3,000 payment, for your underpayments for the earlier payment periods.taxmap/pubs/p505-020.htm#en_us_publink10007511
You will owe a penalty for any 2008 payment period for which your estimated tax payment plus your withholding for the period and overpayments for previous periods was less than the smaller of:
- 22.5% of your 2008 tax, or
- 25% of your 2007 tax. (Your 2007 tax return must cover a 12-month period.)
If you are subject to the rule for higher income taxpayers, discussed earlier, substitute 27.5% for 25% in (2) above.
If you miss a payment or you paid less than the minimum required in a period, you may be charged an underpayment penalty from the date the amount was due to the date the payment is made. taxmap/pubs/p505-020.htm#en_us_publink10007514
If you have estimated taxes credited to you from an estate or trust (Schedule K-1 (Form 1041), box 13, code A), treat the payment as made by you on January 15, 2009. taxmap/pubs/p505-020.htm#en_us_publink10007515
If you file an amended return by the due date of your original return, use the tax shown on your amended return to figure your required estimated tax payments. If you file an amended return after the due date of the original return, use the tax shown on the original return.
However, if you and your spouse file a joint return after the due date to replace separate returns you originally filed by the due date, use the tax shown on the joint return to figure your required estimated tax payments. This rule applies only if both original separate returns were filed on time. taxmap/pubs/p505-020.htm#en_us_publink10007516
If you file a joint return with your spouse for 2008, but you filed separate returns for 2007, your 2007 tax is the total of the tax shown on your separate returns. You filed a separate return if you filed as single, head of household, or married filing separately. taxmap/pubs/p505-020.htm#en_us_publink10007517
If you file a separate return for 2008, but you filed a joint return with your spouse for 2007, your 2007 tax is your share of the tax on the joint return. You are filing a separate return if you file as single, head of household, or married filing separately.
To figure your share of the taxes on a joint return, first figure the tax both you and your spouse would have paid had you filed separate returns for 2007 using the same filing status as for 2008. Then multiply the tax on the joint return by the following fraction.
| ||The tax you would have paid had you filed a separate return|| |
|The total tax you and your spouse would have paid had you filed separate returns|taxmap/pubs/p505-020.htm#en_us_publink10007519
Lisa and Paul filed a joint return for 2007 showing taxable income of $49,000 and a tax of $6,571. Of the $49,000 taxable income, $41,000 was Lisa's and the rest was Paul's. For 2008, they file married filing separately. Lisa figures her share of the tax on the 2007 joint return as follows.
|2007 tax on $41,000 based on a separate return||$ 6,680|
|2007 tax on $8,000 based on a |
|Lisa's percentage of total tax |
($6,680 ÷ $ 7,493)
|Lisa's part of tax on joint return|
($6,571 × 89.15%)
In most cases, you do not need to file Form 2210. The IRS will figure the penalty for you and send you a bill. If you want us to figure the penalty for you, leave the penalty line on your return blank. Do not file Form 2210.
To determine if you should file Form 2210, see Part II of Form 2210. If you decide to figure your penalty, complete Part I, Part II, and either Part III or Part IV of Form 2210. If you use Form 2210, you cannot file Form 1040EZ.
On Form 1040, enter the amount of your penalty on line 76. If you owe tax on line 75, add the penalty to your tax due and show your total payment on line 75. If you are due a refund, subtract the penalty from the overpayment and enter the result on line 72.
On Form 1040A, enter the amount of your penalty on line 48. If you owe tax on line 47, add the penalty to your tax due and show your total payment on line 47. If you are due a refund, subtract the penalty from the overpayment and enter the result on line 44.taxmap/pubs/p505-020.htm#en_us_publink10007520
You may be able to lower or eliminate your penalty if you file Form 2210. You must file Form 2210 with your return if any of the following applies.
- You request a waiver. See Waiver of Penalty on page 60.
- You use the annualized income installment method. See the explanation of this method under Annualized Income Installment Method (Schedule AI) beginning on page 57.
- You use your actual withholding for each payment period for estimated tax purposes. See Actual withholding method under Figuring Your Underpayment (Part IV, Section A) on page 57.
- You base any of your required installments on the tax shown on your 2007 return and you filed or are filing a joint return for either 2007 or 2008, but not for both years.