Form 2210: Underpayment of Estimated Tax by Individuals, Estates, and Trusts (2022)

What Form 2210 Is For

Form 2210 is the IRS form used to calculate whether you owe a penalty for not paying enough estimated tax throughout 2022. Think of it as the "report card" that determines if you paid your taxes on time during the year, rather than waiting until you filed your tax return.

The United States tax system operates on a "pay-as-you-go" basis, meaning you're expected to pay taxes throughout the year as you earn income. If you're an employee, this happens automatically through paycheck withholding. But if you have income that isn't subject to withholding—such as self-employment income, rental income, investment income, or retirement distributions—you're generally required to make quarterly estimated tax payments. Form 2210 calculates the penalty if you didn't pay enough through these methods.

Here's the good news: most taxpayers never need to file this form. The IRS will automatically calculate any penalty for you and send you a bill. You only need to complete Form 2210 yourself in specific situations, such as when you're requesting a waiver of the penalty, using the annualized income method because your income varied during the year, or claiming your withholding was paid unevenly throughout the year.

When You’d Use Form 2210

Late Filing Situations

The standard deadline for filing your 2022 tax return was April 18, 2023 (extended to October 16, 2023, if you requested an extension). Form 2210 is attached to your Form 1040, 1040-SR, 1040-NR, or 1041 when you file.

If you file your 2022 tax return after the April 2023 deadline without an extension, Form 2210 still calculates penalties based on the original quarterly payment due dates throughout 2022 (April 15, June 15, September 15, 2022, and January 15, 2023). Filing late doesn't erase underpayment penalties—it may actually compound your problems by adding late-filing penalties on top of estimated tax penalties.

Amended Return Scenarios

The rules for amended returns depend on timing. If you file an amended return (Form 1040-X) by the original due date of your return, use the amounts shown on your amended return to calculate any underpayment. If you file an amended return after the due date, generally use the amounts from your original return for Form 2210 calculations. However, there's an important exception: if you and your spouse file a joint return after the due date to replace previously filed separate returns, use the joint return amounts to figure your underpayment.

Superseding Returns

If you file a second return before the original deadline, that second return is considered a "superseding" return and replaces the first one entirely for penalty calculation purposes.

Key Rules for 2022

Understanding the "safe harbor" rules is crucial—these are thresholds that, if met, mean you won't owe any penalty regardless of your final tax bill.

The $1,000 Rule

You won't owe a penalty if the total tax shown on your 2022 return minus your withholding is less than $1,000. This is often the easiest way to avoid penalties.

The 90% Rule

You won't owe a penalty if your total withholding and estimated tax payments equal at least 90% of your 2022 tax liability. This rule looks at what you actually owed for 2022.

The Prior-Year Safe Harbor

You won't owe a penalty if your payments equal at least 100% of the total tax shown on your 2021 tax return (which must have covered a full 12 months). This rule is particularly helpful if your income increased significantly in 2022—you can base your payments on the prior year's lower tax liability.

The High-Income Exception

If your adjusted gross income (AGI) on your 2021 return exceeded $150,000 ($75,000 if married filing separately in 2022), the prior-year safe harbor increases to 110% of your 2021 tax, not 100%. This higher threshold applies to higher earners.

Special Rules for Farmers and Fishermen

If at least two-thirds of your gross income for 2021 or 2022 came from farming or fishing, different rules apply. You can avoid penalties by filing your return and paying all tax due by March 1, 2023, or by paying at least 66⅔% (two-thirds) of your 2022 tax by January 15, 2023. Use Form 2210-F instead of Form 2210 in these situations.

Quarterly Payment Due Dates for 2022

Estimated tax payments were due April 15, June 15, September 15, 2022, and January 15, 2023, covering income earned in the preceding months. The penalty is calculated separately for each period, meaning you could owe a penalty for one quarter even if you overpaid in another.

No Penalty Situations

You automatically avoid penalties if you had no tax liability for 2021, were a U.S. citizen or resident alien for all of 2021, and your 2021 return covered 12 months. Additionally, estates of decedents and certain trusts are exempt from penalties for the first two years after death.

Step-by-Step (High Level)

Form 2210 consists of three main parts, though most taxpayers only need to complete Part I to determine if they owe anything.

Step 1: Use the Flowchart (Page 1)

Start with the decision tree at the top of Form 2210. Complete lines 1–7 to see if your underpayment is less than $1,000. If yes, stop—you don't owe a penalty and don't need to file the form. If no, continue to lines 8–9 to see if your payments met the safe harbor rules. If you pass this test, you still don't need to file (unless special circumstances in Part II apply to you).

Step 2: Complete Part I — Required Annual Payment (Lines 1–9)

This section calculates your baseline tax obligation. You'll enter your total tax from your return (line 1), add other taxes like self-employment tax and Additional Medicare Tax (line 2), subtract refundable credits (line 3), and arrive at your current year tax (line 4). Then you'll compare 90% of your 2022 tax to 100% (or 110% for high earners) of your 2021 tax. The smaller amount becomes your "required annual payment."

Step 3: Check Part II — Reasons for Filing

This section has five checkboxes (A through E) for special situations. Most taxpayers skip this entirely. Check Box A if you're requesting a complete penalty waiver due to retirement after age 62, disability, casualty, or unusual circumstances. Check Box B for a partial waiver. Check Box C if you're using the annualized income method (Schedule AI) because your income varied significantly during the year. Check Box D if your withholding was uneven throughout the year. Check Box E if you filed joint for one year but not the other.

Step 4: Complete Part III — Penalty Computation (If Required)

Only complete this if you checked boxes B, C, or D in Part II, or if you want to calculate your own penalty rather than letting the IRS do it. Section A calculates your underpayment for each quarter by comparing required installments to actual payments. Section B uses a separate worksheet to calculate the actual penalty based on IRS interest rates, which changed quarterly in 2022 (4% for April–June, 5% for July–September, 6% for October–December, and 7% for January–April 2023).

Step 5: Complete Schedule AI (If Applicable)

This complex schedule is only needed if you checked Box C because your income arrived unevenly during the year. It recalculates your required payments based on when you actually earned income rather than assuming equal quarterly amounts. This can significantly reduce or eliminate your penalty if, for example, you received a large year-end bonus or had seasonal business income.

Common Mistakes and How to Avoid Them

Mistake #1: Filing Form 2210 When You Don't Need To

Many taxpayers unnecessarily complete this form. Remember, the IRS will calculate the penalty automatically in most cases. Only file Form 2210 if you're requesting a waiver, using special calculation methods, or the form's flowchart specifically directs you to file.

Mistake #2: Forgetting Withholding Is Spread Evenly

The IRS treats federal income tax withheld from wages as if it was paid in four equal amounts on each quarterly due date, unless you prove otherwise by checking Box D in Part II. If most of your withholding occurred late in the year but you don't check this box, you'll miss out on penalty reduction.

Mistake #3: Using the Wrong Prior-Year Tax Amount

High earners (AGI over $150,000/$75,000) must use 110%, not 100%, of their prior-year tax for the safe harbor calculation. Missing this adjustment means underpaying and owing penalties.

Mistake #4: Not Considering the Annualized Income Method

If your income was heavily weighted toward the end of 2022—perhaps from bonuses, investment gains, or seasonal business—the regular method unfairly penalizes you. Schedule AI can eliminate or drastically reduce your penalty by accounting for when you actually earned the income and could reasonably have known to make estimated payments.

Mistake #5: Misapplying Payments to Quarters

Payments are applied in chronological order to the earliest unpaid installment first, regardless of which quarter you intended them for. A June payment might partially satisfy your April obligation before covering June. Understanding this prevents calculation errors.

Mistake #6: Not Requesting Warranted Waivers

If you retired after age 62, became disabled, experienced a casualty or federally declared disaster, or faced other unusual circumstances beyond your control, you may qualify for full or partial penalty relief. Don't pay penalties unnecessarily—attach a written explanation to your return and check the appropriate box in Part II.

Mistake #7: Ignoring Estimated Tax Obligations Entirely

Some taxpayers assume that if they'll owe money at tax time, they can just pay it all when they file. But penalties accrue based on when payments should have been made throughout the year. Pay quarterly estimates even if you plan to file late or request an extension.

What Happens After You File

If You Don't File Form 2210

The IRS will calculate any underpayment penalty for you using information from your tax return. You'll receive a notice (typically a CP2000 or similar) explaining the penalty amount, how it was calculated, and payment instructions. If you file your return by the deadline and pay any penalty by the date on the bill, no interest will be charged on the penalty itself. However, if you don't pay by the bill's due date, interest begins accruing.

If You File Form 2210 Calculating Your Penalty

You'll enter the penalty amount on the "Estimated tax penalty" line of your Form 1040, 1040-SR, 1040-NR (line 38 for 2022), or Form 1041 (line 27). This amount becomes part of your total tax due or reduces your refund. The IRS will review your calculations and may adjust them if errors are found, sending you a notice of any changes.

If You Request a Waiver

After filing Form 2210 with Box A or B checked and your written explanation attached, the IRS will review your circumstances. This review can take several months. The IRS may request additional documentation to support your waiver request. If approved, you'll receive a notice showing the waived amount. If denied, you'll receive a bill for the penalty plus interest from the original due date. You have appeal rights if your waiver is denied.

Payment Options

If you owe a penalty, you can pay immediately in full through IRS Direct Pay, credit card, check, or money order. If you can't pay the full amount, you can request an installment agreement online or by submitting Form 9465. Setting up a payment plan reduces future penalties and interest, though both continue accruing until the balance is paid in full.

Amended Returns

If you later amend your 2022 return and the changes affect your estimated tax penalty, you may need to recalculate the penalty. If your amended return increases your tax liability, your underpayment penalty may also increase. Conversely, if your amended return decreases your tax, your penalty may decrease, and you can request a refund of any overpaid penalty amount.

FAQs

Can I completely avoid estimated tax penalties by increasing my withholding at the end of the year instead of making quarterly estimated payments?

What's the actual interest rate for the underpayment penalty, and how is it calculated?

If I overpaid in one quarter but underpaid in another, do they cancel each other out?

I'm retired and living on Social Security and investment income—do I need to make estimated payments?

What's the difference between the underpayment penalty and other tax penalties like late filing or late payment?

Can the underpayment penalty ever be larger than the tax I actually owed?

How do I know if I should use the regular method or the annualized income method on Schedule AI?

For More Information

For More Information: Visit the official IRS page for Form 2210 at IRS.gov/Form2210 or consult Publication 505 (Tax Withholding and Estimated Tax) for comprehensive guidance on estimated tax requirements. All information in this guide is based on official IRS documentation for the 2022 tax year.