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Form 2210 with your return. In certain circumstances, the IRS

Date

Payments

will waive all or part of the underpayment penalty. See Waiver of

4/30/17

$2,000

Penalty, earlier.

6/15/17

$3,000

9/15/17

$4,000

Section B—Figure the Penalty

1/15/18

$4,000

Use the penalty worksheet (Worksheet for Form 2210, Part IV,

Section B-Figure the Penalty), later, to figure your penalty for

Line 1a, column (a), shows $4,000. You enter “4/30 $2,000” and

each period by applying the appropriate rate against each

underpayment shown in Section A, line 25. The penalty is

“6/15 $2,000” on line 1b, column (a). The remaining $1,000

figured for the number of days that each underpayment remains

($3,000 – $2,000) of the June 15 payment is entered on line 1b,

unpaid.

column (b), “6/15 $1,000.” Also enter “9/15 $3,000” on line 1b,

column (b), because $3,000 of the $4,000 September payment

Your payments are applied first to any underpayment balance

must be used to fully pay the June underpayment. Continue in

on an earlier installment even if you designate a payment for a

this manner until all your payments are used.

later period. See Example 2. Use lines 3, 6, 9, and 12 of the

Line 3. If more than one payment was applied to an

penalty worksheet to show the number of days an underpayment

underpayment on line 1a, enter the number of days each

remained unpaid. Use lines 4, 7, 10, and 13 to figure the actual

payment was late.

penalty amount by applying the appropriate rate to an

underpayment for the number of days it remained unpaid.

Example 4. Using the same facts as Example 3 above, enter

“15” (number of days from 4/15 to 4/30) and “61” (number of

Example 2. You had a $500 underpayment remaining after

days from 4/15 to 6/15) on line 3, column (a) (see illustration

your April 15 payment. The June 15 installment required a

under Example 5).

payment of $1,200. On June 10, you made a payment of $1,200

to cover the June 15 installment. However, $500 of this payment

Line 4. Make the computation requested on line 4 and enter the

is applied first to the April 15 installment. The penalty for the April

result. If more than one payment was required to fully satisfy an

15 installment is figured from April 15 to June 10 (56 days). The

underpayment amount, make a separate computation for each

amount remaining to be applied to the June 15 installment is

payment. See Example 5 and the example in Pub. 505,

$700.

chapter 4.

Total days per rate period. If an underpayment remained

Example 5. Assume the same facts as in Example 3. On

unpaid for an entire rate period, use the chart below to determine

line 4, enter the penalty for each underpayment: “$3.29” ($2,000

the number of days to enter in each column. The chart is

× (15 ÷ 365) × 0.04) and “$13.37” ($2,000 × (61 ÷ 365) × 0.04).

organized in the same format as the penalty worksheet.

The entries are illustrated below.

Table 2. Chart of Total Days

(a)

4/15/17

Rate Period

(a)

(b)

(c)

(d)

Days: 15

Days: 61

4/15/17

6/15/17

9/15/17

1/15/18

$3.29

$13.37

4/16/17-6/30/17

—

7/1/17-9/30/17

—

Column (a) is fully paid in the first rate period; therefore, lines

10/1/17-12/31/17

—

6, 7, 9, 10, 12, and 13 for column (a) would be blank. Continue

with the underpayment in columns (b), (c), and (d) in the same

1/1/18-4/15/18

105

manner.

For example, if you have an underpayment on line 25, column

Note: If an underpayment balance remains for the remaining

(a), but Table 1 shows you have no payments until after January

rate periods, calculate the penalty using the same steps as

2, 2018, you would enter “76” on line 3, column (a), of the

explained above, but use the dates and interest rates on lines 6

penalty worksheet.

and 7 for rate period 2, lines 9 and 10 for rate period 3, and lines

If you make a payment during a rate period, see Pub.

12 and 13 for rate period 4.

505, chapter 4, Table 4-1, for an easy way to figure the

TIP

Schedule AI—Annualized Income

number of days the payment is late.

Installment Method

Worksheet for Form 2210, Part IV,

If your income varied during the year because, for example, you

Section B—Figure the Penalty

operated your business on a seasonal basis or had a large

capital gain late in the year, you may be able to lower or

Line 1b. If more than one payment was applied to fully pay the

eliminate the amount of one or more required installments by

underpayment amount in a column (line 1a), enter on line 1b the

using the annualized income installment method. Use

date and amount applied up to the underpayment amount. If a

Schedule AI to figure the required installments to enter on Form

payment was more than the underpayment amount, enter the

2210, Part IV, line 18.

excess in the next column with the same date.

If you use Schedule AI for any payment due date, you

Example 3. Your required installment for each payment due

must use it for all payment due dates.

date is $4,000. You made the following estimated tax payments.

CAUTION

To use the annualized income installment method to figure

the penalty, you must do all of the following.

1. Complete Schedule AI, Part I (and Part II, if necessary).

Enter the amounts from Schedule AI, Part I, line 25, columns (a)

-6-

Instructions for Form 2210 (2017)

Instructions For Form 2210 - Underpayment Of Estimated Tax By Individuals, Estates, And Trusts - 2017 Page 6

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