Figuring Your Required Annual Payment  
(Part I)(p56)

Figure your required annual payment in Part I of Form 2210, following the line-by-line instructions. If you rounded the entries on your tax return to whole dollars, you can round on Form 2210.

The tax on Ivy Fields' 2007 return was $10,000. Her AGI was not more than $150,000. The tax on her 2008 return (Form 1040, line 44) is $11,000. She does not claim any credits or pay any other taxes.

For 2008, Ivy had $1,600 income tax withheld and paid $6,800 estimated tax. Her total payments were $8,400. 90% of her 2008 tax is $9,900. Because she paid less than her 2007 tax ($10,000) and less than 90% of her 2008 tax, and does not meet an exception, Ivy knows that she owes a penalty for underpayment of estimated tax. The IRS will figure the penalty for Ivy, but she decides to figure it herself on Form 2210 and pay it with her $2,600 tax balance when she files her tax return.

Ivy's required annual payment is $9,900 ($11,000 × 90%) because that is smaller than her 2007 tax.

Figure 4-A on page 62 shows page 1 of Ivy's filled-in Form 2210. Her required annual payment of $9,900 is shown on line 9.

If you file a separate return for 2008, but you filed a joint return with your spouse for 2007, see 2007 joint return and 2008 separate returns on page 55 to figure the amount to enter as your 2007 tax on line 8 of Form 2210.