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IRS.gov Website
Publication 505
taxmap/pubs/p505-024.htm#en_us_publink1000207514

Regular Method for Figuring the Penalty (Part IV)(p50)

rule
You can use the regular method in Part IV of Form 2210 to figure your penalty for underpayment of estimated tax if you paid one or more estimated tax payments earlier than the due date.
You must use the regular method in Part IV of Form 2210 to figure your penalty for underpayment of estimated tax if any of the following apply to you.
Under the regular method, figure your underpayment for each payment period in Section A, then figure your penalty using the Penalty Worksheet in the Instructions for Form 2210. Enter the results on line 27 of Section B.
taxmap/pubs/p505-024.htm#en_us_publink1000207515

Figuring Your Underpayment 
(Part IV, Section A)(p51)

rule
Figure your underpayment of estimated tax for each payment period in Section A following the line-by-line instructions. Complete lines 20 through 26 of the first column before going to line 20 of the next column.
taxmap/pubs/p505-024.htm#en_us_publink1000207516

Required installments—line 18.(p51)

rule
Your required payment for each payment period (line 18) is usually one-fourth of your required annual payment (Part I, line 9). This method—the regular method—is the one to use if you received your income evenly throughout the year.
However, if you did not receive your income evenly throughout the year, you may be able to lower or eliminate your penalty by figuring your underpayment using the annualized income installment method. First complete Schedule AI (Form 2210), then enter the amounts from line 25 of that schedule on line 18 of Form 2210, Part IV. See Annualized Income Installment Method (Schedule AI) on page 52.
taxmap/pubs/p505-024.htm#en_us_publink1000207517

Payments made—line 19.(p51)

rule
Enter in each column the total of: For special rules for figuring your payments, see Form 2210 instructions for line 19.
If you file Form 1040, your withholding is the amount on line 61, plus any excess social security or tier 1 RRTA tax withholding on line 69. If you file Form 1040A, your withholding is the amount on line 38 plus any excess social security or tier 1 RRTA tax withholding included in line 44.
taxmap/pubs/p505-024.htm#en_us_publink1000207518
Actual withholding method.(p51)
Instead of using one-fourth of your withholding for each quarter, you can choose to use the amounts actually withheld by each due date. You can make this choice separately for the tax withheld from your wages and for all other withholding. This includes any excess social security and tier 1 RRTA tax withheld.
Using your actual withholding may result in a smaller penalty if most of your withholding occurred early in the year.
If you use your actual withholding, you must check box D in Form 2210, Part II. Then complete Form 2210 using the regular method (Part IV) and file it with your return.
taxmap/pubs/p505-024.htm#en_us_publink1000256319
Example—regular method.(p51)
Ben and Sally Brown's 2010 tax after credits is $6,871 (Form 1040, line 55). Ben owes self-employment tax of $1,413. Their 2009 AGI was less than $150,000. They do not owe any other taxes. Their only credit is the making work pay credit of $800. Their 2009 tax was $8,116. Go to Figure 4-B on page 57 to see Ben and Sally's completed Form 2210, Part I.
Ben's employer withheld $1,220 income tax and Sally's withheld $364 during 2010 ($1,584 total withholding). They paid no estimated tax for either the first or second period, but they paid $950 each on September 15, 2010, and January 15, 2011, for the third and fourth periods. Because the total of their withholding and estimated tax payments, $3,484 ($1,584 + $950 + $950), was less than both 90% of their 2010 tax (90% x $7,484 = $6,736) and 100% of their 2009 tax ($8,116), they owe a penalty for underpayment of estimated tax. They decide to figure the penalty on Form 2210 and pay it with their $4,400 tax balance ($7,484 - $3,484) when they file their tax return on April 18, 2011.
Their required annual payment (Part I, line 9) is $6,736. Because their income and withholding were distributed evenly throughout the year, they enter one-fourth of their required annual payment, $1,684, in each column of line 18 (go to Figure 4-B (Continued) on page 58). On line 19, they enter one-fourth of their withholding, $396, in the first two columns and $1,346 ($396 withholding (WH) + $950 estimated tax payment (EST)) in the last two columns.
They have an underpayment (line 25) for each payment period.
taxmap/pubs/p505-024.htm#en_us_publink1000207531

Worksheet for Form 2210, Part IV, Section B—Figuring Your Penalty(p51)

rule
Figure the amount of your penalty for Section B using the Penalty Worksheet in the Form 2210 instructions. The penalty is imposed on each underpayment shown in Section A, line 25, for the number of days that it remained unpaid.
For 2010, there are two rate periods—the 4% rate is in effect from April 16, 2010, through December 31, 2010, and the 3% rate is in effect from January 1, 2011, through April 15, 2011. Use the Penalty Worksheet to figure the penalty and enter the result in Section B, line 27 of Form 2210.
taxmap/pubs/p505-024.htm#en_us_publink1000248777

Payments.(p51)

rule
Before completing the Penalty Worksheet, it may be helpful to make a list of the payments you made and income tax withheld after the due date (or the last day payments could be made on time) for the earliest payment period an underpayment occurred. For example, if you had an underpayment for the first payment period, list your payments after April 15, 2010. You can use the table in the Form 2210 instructions to make your list. Follow those instructions for listing income tax withheld and payments made with your return. Use the list to determine when each underpayment was paid.
If you mail your estimated tax payments, use the date of the U.S. postmark as the date of payment.
taxmap/pubs/p505-024.htm#en_us_publink1000249015

Line 1b.(p51)

rule
Apply the payments listed to underpayment balance in the first column until it is fully paid. Apply payments in the order made.
taxmap/pubs/p505-024.htm#en_us_publink1000248800
Example 1.(p51)
In the previous example for Ben and Sally Brown (see Example—regular method under Figuring Your Underpayment (Part IV, Section A) on this page), they determined that they had an underpayment for all four payment periods. See their completed Section A in Figure 4-B (Continued) on page 58.
Their $1,584 withholding (WH) is considered paid in four equal installments of $396, one on each payment due date. Therefore, they must make estimated tax payments (EST) of $1,288 ($1,684 required installment - $396 WH) each period. However, they made only two estimated tax payments—$950 on September 15, 2010, and $950 on January 15, 2011. They plan to file their return and pay their balance due on April 18, 2011. Ben and Sally are considered to have made the following payments for tax year 2010.
Payment AmountPayment Date
$396 WH4/15/10
$396 WH6/15/10
$396 WH9/15/10
$950 EST9/15/10
$396 WH1/15/11
$950 EST1/15/11
Deposit
When completing line 1b of the worksheet combine all payments made on the same date to reduce your computations.
Ben entered the underpayment amount from line 25 of Form 2210 on line 1a of their Penalty Worksheet for each column. On line 1b, column (a) he entered "6/15/10 – 396" and "9/15 – 892." Their combined payment for 9/15/10 was $1,346 ($396 WH + $950 EST). They used $892 of the 9/15 payment to fully pay the underpayment on line 1a, column (a). He entered "9/15/10 – 454" (the remainder of their September payment) and "1/15/11 – 1,230" from January to fully pay the underpayment in column (b). Ben entered their remaining payment "1/15/11 – 116" on line 1b in column (c).
taxmap/pubs/p505-024.htm#en_us_publink1000249017

Figuring the penalty.(p51)

rule
If an underpayment was paid in two or more payments on different dates, you must figure the penalty separately for each payment. On line 3 of the Penalty Worksheet enter the number of days between the due date (line 2) and the date of each payment on line 1b. On line 4 figure the penalty for the amount of each payment applied on line 1b or the amount remaining unpaid. If no payments are applied, figure the penalty on the amount on line 1a.
taxmap/pubs/p505-024.htm#en_us_publink1000207532
Aid for counting days.(p51)
Table 4-1 (see page 53) provides a simple method for counting the number of days between a due date and a payment date.
  1. Find the number for the date the payment was due by going across to the column of the month the payment was due and moving down the column to the due date.
  2. In the same manner, find the number for the date the payment was made.
  3. Subtract the due date "number" from the payment date "number."
For example, if a payment was due on June 15 (61), but was not paid until September 1 (139), the payment was 78 (139 – 61) days late.
taxmap/pubs/p505-024.htm#en_us_publink1000207533

Table 4-1. Calendar To Determine the Number of Days a Payment Is Late

Instructions. Use this table with Form 2210 if you are completing Part IV, Section B. First, find the number for the payment due date by going across to the column of the month the payment was due and moving down the column to the due date. Then, in the same manner, find the number for the date the payment was made. Finally, subtract the due date number from the payment date number. The result is the number of days the payment is late.

Example. The payment due date is June 15 (61). The payment was made on November 4 (203). The payment is 142 days late (203 – 61).

Tax Year 2010
Day of2010201020102010201020102010201020102011201120112011
MonthAprilMayJuneJulyAug.Sept.Oct.Nov.Dec.Jan.Feb.Mar.Apr.
1 164777108139169200230261292320351
2 174878109140170201231262293321352
3 184979110141171202232263294322353
4 195080111142172203233264295323354
5 205181112143173204234265296324355
6 215282113144174205235266297325356
7 225383114145175206236267298326357
8 235484115146176207237268299327358
9 245585116147177208238269300328359
10 255686117148178209239270301329360
11 265787118149179210240271302330361
12 275888119150180211241272303331362
13 285989120151181212242273304332363
14 296090121152182213243274305333364
150306191122153183214244275306334365
161316292123154184215245276307335 
172326393124155185216246277308336 
183336494125156186217247278309337 
194346595126157187218248279310338 
205356696127158188219249280311339 
216366797128159189220250281312340 
227376898129160190221251282313341 
238386999130161191222252283314342 
2493970100131162192223253284315343 
25104071101132163193224254285316344 
26114172102133164194225255286317345 
27124273103134165195226256287318346 
28134374104135166196227257288319347 
29144475105136167197228258289 348 
30154576106137168198229259290 349 
31 46 107138 199 260291 350 
taxmap/pubs/p505-024.htm#en_us_publink1000207540

Example 2.(p52)

rule
Continuing from the previous example for Ben and Sally Brown (see Example 1 under Line 1b on page 51), they figure their penalty. First, they complete lines 3 and 4 for Rate Period 1, which runs from April 16, 2010, to December 31, 2010.
taxmap/pubs/p505-024.htm#en_us_publink1000207543
Penalty for first payment period (April 15, 2010)—column (a).(p52)
Line 1b of their Penalty Worksheet shows "6/15/2010 – 396" and  
"9/15/10 – 892." $396 remained unpaid 61 days (April 16 through June 15, 2010) and $892 remained unpaid 153 days (April 16 through September 15, 2010). On line 3, column (a), they enter "61" and "153," along with the date of each payment.
Next, on line 4, they figure the penalty separately for each underpayment amount, $2.65 ($396 × (61 ÷ 365) × .04) and $14.96 ($892 × (153 ÷ 365) × .04). See their completed Penalty Worksheet on page 59.
taxmap/pubs/p505-024.htm#en_us_publink1000207544
Penalty for second payment period (June 15, 2010)—column (b).(p52)
Line 1b for column (b) shows "9/15/10 – 454" and "1/15/11 – 1,230." $454 remained unpaid until September 15 (92 days). The remaining underpayment of $1,230 was paid January 15. The number of days from June 15 until the end of Rate Period 1 (December 31) is 199. They enter "92" and "199" on line 3, column (b), and figure the penalty separately for each underpayment amount. The remaining 15 days that the $1,230 remained unpaid are part of Rate Period 2 and are entered on line 6, column (b).
taxmap/pubs/p505-024.htm#en_us_publink1000207545
Penalty for third payment period (September 15, 2010)—column (c).(p52)
The $1,684 underpayment on line 1a, column (c), remained fully underpaid until the remaining $116 of the January 15 payment was applied. As in the second payment period, Rate Period 1 ends December 31 (107 days). The remaining 15 days for the $116 payment are entered under Rate Period 2.
There were no remaining payments to apply. The balance of $1,568 ($1,684 – $116) remained unpaid until 4/15/11 (107 days in Rate Period 1 and 105 days in Rate Period 2) (Note. The Browns actually filed and paid their balance due on 4/18/11, but because that is the next business day after the holiday on 4/15/11, the payment is considered to be paid on April 15.) They enter "107" and "107" on line 3, column (c), and "15" and "105" on line 6, column (c). They figure the penalty separately for each underpayment amount on lines 4 and 7.
taxmap/pubs/p505-024.htm#en_us_publink1000207546
Penalty for fourth payment period (January 15, 2011)—column (d).(p52)
Since all payments have been applied, the entire amount remained unpaid 90 days (January 16 through April 15, 2011). They enter that number on line 6, column (d), and figure the penalty for the $1,684 underpayment, entering it on line 7, column (d).
taxmap/pubs/p505-024.htm#en_us_publink1000207547
Total penalty.(p52)
Ben and Sally's total penalty for 2010 on line 8 is $96.41, the total of all amounts on lines 4 and 7 in all columns. See their completed Penalty Worksheet on page 59.
Ben and Sally enter that amount on Form 2210, line 27, and on line 77 of their Form 1040. They also add $96.41 to their $4,000 tax balance and enter the $4,096.41 total on line 76. They file their return on April 18 and include a check for $4,096.41. They keep their completed Form 2210 for their records.