Waiver of Penalty(p54)

The IRS can waive the penalty for underpayment if either of the following applies.

1. You did not make a payment because of a casualty, disaster, or other unusual circumstance and it would be inequitable to impose the penalty.
2. You retired (after reaching age 62) or became disabled in 2009 or 2010 and both the following requirements are met.
   1. You had a reasonable cause for not making the payment.
   2. Your underpayment was not due to willful neglect.

To request a waiver, complete Form 2210 as follows.

1. Check box A or B in Part II.
   1. If you checked box A, complete only page 1 of Form 2210.
   2. If you checked box B:
      1. Complete line 1 through line 16 (or lines 1 through 9 and 18 through 27 if you use the regular method) without regard to the waiver.
      2. Enter the amount you want waived in parentheses on the dotted line next to line 17 (line 27 for the regular method).
      3. Subtract this amount from the total penalty you figured without regard to the waiver. Enter the result on line 17 (line 27 for the regular method).
2. Attach Form 2210 and a statement to your return explaining the reasons you were unable to meet the estimated tax requirements and the time period for which you are requesting a waiver.
3. If you are requesting a penalty waiver due to retirement or disability, attach documentation that shows your retirement date (and your age on that date) or the date you became disabled.
4. If you are requesting a penalty waiver due to a casualty, disaster, or other unusual circumstance, attach documentation such as police and insurance company reports. See special procedures that apply for federally declared disasters later on this page.

The IRS will review the information you provide and will decide whether or not to grant your request for a waiver.

To request a waiver, you must complete Form 2210-F as follows.

1. Check box A in Part I.
2. Complete line 1 through line 15 without regard to the waiver.
3. Enter the amount you want waived in parentheses on the dotted line next to line 16.
4. Subtract this amount from the total penalty you figured without regard to the waiver. Enter the result on line 16.
5. Attach Form 2210-F and a statement to your return explaining the reasons you were unable to meet the estimated tax requirements.
6. If you are requesting a penalty waiver due to retirement or disability, attach documentation that shows your retirement date (and your age on that date) or the date you became disabled.
7. If you are requesting a penalty waiver due to a casualty, disaster, or other unusual circumstance, attach documentation such as police and insurance company reports.

The IRS will review the information you provide and will decide whether or not to grant your request for a waiver.

Certain estimated tax payment deadlines for taxpayers who reside or have a business in a federally declared disaster area are postponed for a period during and after the disaster. During the processing of your tax return, the IRS automatically identifies taxpayers located in a covered disaster area (by county or parish) and applies the appropriate penalty relief. Do not file Form 2210 or 2210-F if your underpayment was due to a federally declared disaster. If you still owe a penalty after the automatic waiver is applied, we will send you a bill.

Individuals, estates, and trusts not in a covered disaster area but whose books, records, or tax professionals' offices are in a covered area are also entitled to relief. Also eligible are relief workers affiliated with a recognized government or charitable organization assisting in the relief activities in a covered disaster area. If you meet either of these eligibility requirements, you must call the IRS disaster hotline at 1-866-562-5227 and identify yourself as eligible for this relief.

Details on the applicable disaster postponement period can be found at IRS.gov. Enter "disaster relief" in the search box, then select "Tax Relief in Disaster Situations." Select the federally declared disaster that affected you.

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Worksheet 4-1. 2010 Form 2210, Schedule AI—Line 12 Qualified Dividends and Capital Gain Tax Worksheet Note.  To figure the annualized entries for lines 2, 3, and 5 below, multiply the expected amount for the period by the  annualization amount on line 2 of Schedule AI for the same period.                   1. Enter line 11 of your Schedule AI, or line 3 from Worksheet 4-2 1.     2. Enter your annualized qualified dividends for the period 2.         3. Are you filing Schedule D?               □ Yes. Enter the smaller of your annualized amount from line 15 or line 16 of Schedule D. If either line 15 or line 16 is blank or a loss, enter -0-. 3.           □ No. Enter your annualized capital gain distributions from Form 1040, line 13             4. Add lines 2 and 3   4.         5. If you are claiming investment interest expense on Form 4952, enter your annualized amount from line 4g of that form. Otherwise, enter -0-   5.         6. Subtract line 5 from line 4. If zero or less, enter -0- 6.     7. Subtract line 6 from line 1. If zero or less, enter -0- 7.     8. Enter: $34,000 if single or married filing separately, $68,000 if married filing jointly or qualifying widow(er), $45,550 if head of household. 8.     9. Enter the smaller of line 1 or line 8 9.     10. Enter the smaller of line 7 or line 9 10.     11. Subtract line 10 from line 9. This amount is taxed at 0% 11.     12. Enter the smaller of line 1 or line 6 12.     13. Enter the amount from line 11 13.     14. Subtract line 13 from line 12 14.     15. Multiply line 14 by 15% (.15) 15. 16. Figure the tax on the amount on line 7. If the amount on line 7 is less than $100,000, use the Tax Table in the 2010 Form 1040 instructions to figure this tax. If the amount on line 7 is $100,000 or more, use the Tax Computation Worksheet in the 2010 Form 1040 instructions 16. 17. Add lines 15 and 16 17. 18. Figure the tax on the amount on line 1. If the amount on line 1 is less than $100,000, use the Tax Table in the Form 1040 instructions to figure this tax. If the amount on line 1 is $100,000 or more, use the Tax Computation Worksheet in the 2010 Form 1040 instructions 18. 19. Tax on all taxable income. Enter the smaller of line 17 or line 18. Also enter this amount on line 12 of Schedule AI in the appropriate column. However, if you are using this worksheet to figure the tax on the amount on line 3 of Worksheet 4-2, enter the amount from line 19 on Worksheet 4-2, line 4 19.

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Worksheet 4-2. 2010 Form 2210, Schedule AI—Line 12 Foreign Earned Income Tax Worksheet Before you begin: If Schedule AI, line 11, is zero for the period, do not complete this worksheet.             1. Enter the amount from line 11 of Schedule AI for the period 1. 2. Enter the annualized amount* of foreign earned income and housing amount excluded or deducted (from Form 2555, lines 45 and 50, or Form 2555-EZ, line 18) in figuring the amount entered for the period on line 1 of Schedule AI 2. 3. Add lines 1 and 2 3. 4. Tax on the amount on line 3. Use the Tax Table, Tax Computation Worksheet, Form 8615,** Qualified Dividends and Capital Gain Worksheet,*** or Schedule D Tax Worksheet,*** whichever applies. See the 2010 Instructions for Form 1040, line 44, to find out which tax computation method to use. (Note. You do not have to use the same method for each period on Schedule AI.) 4. 5. Tax on the amount on line 2. If the amount on line 2 is less than $100,000, use the Tax Table in the 2010 Form 1040 instructions to figure this tax. If the amount on line 7 is $100,000 or more, use the Tax Computation Worksheet in the 2010 Form 1040 instructions 5. 6. Subtract line 5 from line 4. Enter the result here and on line 12 of Schedule AI. If zero or less, enter -0- 6.           * To figure the annualized amount for line 2, multiply the exclusion or deduction for the period by the annualization amount on line 2 of Schedule AI for the same period.     ** If you use Form 8615 to figure the tax on line 4 above, enter the amount from line 3 above on line 4 of Form 8615. If the child's parent files Form 2555 or 2555-EZ, enter the amounts from lines 3 and 4 of the parent's Foreign Earned Income Tax Worksheet on lines 6 and 10, respectively, of Form 8615. Complete the rest of Form 8615 according to its instructions. Then complete lines 5 and 6 above.     *** Enter the amount from line 3 above on line 1 of the Qualified Dividends and Capital Gain Tax Worksheet (or Worksheet 4-1 in this chapter) or the Schedule D Tax Worksheet, whichever worksheet you use to figure the tax on line 4 above. Complete that worksheet through line 6 (line 10 if you use the Schedule D Tax Worksheet). Next, determine if you have a capital gain excess.     Figuring capital gain excess. To find out if you have a capital gain excess for the appropriate period, subtract line 11 of Schedule AI from line 6 of Worksheet 4-1 or your Qualified Dividends and Capital Gain Tax Worksheet (line 10 of your Schedule D Tax Worksheet). If the result is more than zero, that amount is your capital gain excess.      No capital gain excess. If you do not have a capital gain excess, complete the rest of Worksheet 4-1, Qualified Dividends and Capital Gain Tax Worksheet, or the Schedule D Tax Worksheet according to the worksheet's instructions. Then complete lines 5 and 6 above.      Capital gain excess. If you have a capital gain excess, complete a second Worksheet 4-1, Qualified Dividends and Capital Gain Tax Worksheet, or Schedule D Tax Worksheet (whichever applies) as instructed above but in its entirety and with the following additional modifications. Then complete lines 5 and 6 above.     Make the modifications below only for purposes of filling out Worksheet 4-2 above.     a. Reduce (but not below zero) the amount you otherwise would enter on line 3 of your Worksheet 4-1, line 3 of your Qualified Dividends and Capital Gain Tax Worksheet, or line 9 of your Schedule D Tax Worksheet by your capital gain excess.     b. Reduce (but not below zero) the amount you otherwise would enter on line 2 of your Worksheet 4-1, line 2 of your Qualified Dividends and Capital Gain Tax Worksheet, or line 6 of your Schedule D Tax Worksheet by any of your capital gain excess not used in (a) above.     c. Reduce (but not below zero) the amount on your Schedule D (Form 1040), line 18, by your capital gain excess.     d. Include your capital gain excess as a loss on line 16 of your Unrecaptured Section 1250 Gain Worksheet in the 2010 Instructions for Schedule D (Form 1040).