Form 2210: Underpayment of Estimated Tax by Individuals, Estates, and Trusts (2024)

What Form 2210 Is For

Form 2210 is the IRS tool that determines whether you owe a penalty for not paying enough estimated tax throughout 2024—and if so, exactly how much that penalty will be. Think of it as the IRS's "report card" for your year-round tax payments.

The U.S. tax system operates on a "pay-as-you-go" basis, meaning you're expected to pay taxes as you earn income, not just at tax time. If you're an employee, this happens automatically through paycheck withholding. But if you have income without withholding—such as self-employment earnings, investment income, rental income, or substantial capital gains—you're generally required to make quarterly estimated tax payments.

Form 2210 calculates whether your combined withholding and estimated payments met the IRS's minimum requirements. The good news? Most taxpayers never need to file this form. The IRS will typically calculate any penalty for you automatically and send you a bill. You only need to complete Form 2210 if you're requesting a waiver, using special calculation methods, or want to figure the penalty yourself rather than waiting for the IRS to do it.

The form applies to individuals filing Form 1040, 1040-SR, or 1040-NR, as well as estates and trusts filing Form 1041. It's designed to determine not just whether you underpaid, but also by how much and for which quarterly periods—since penalties are calculated separately for each payment due date.

When You'd Use Form 2210 (Late/Amended Returns)

You must file Form 2210 in these specific situations:

• Box B (Partial Waiver): You're requesting a waiver of part of your penalty due to retirement after age 62, disability, casualty, disaster, or unusual circumstances
• Box C (Annualized Income Method): Your income fluctuated significantly during the year, and using the annualized income installment method reduces your penalty
• Box D (Actual Withholding Dates): Your withholding wasn't spread evenly throughout the year (for example, you had a large bonus in November), and calculating the penalty using actual withholding dates lowers it
• Box E (Joint/Separate Filing Change): You filed a joint return for either 2023 or 2024 but not both years

For amended returns: If you file an amended return by your original filing deadline (including extensions), use the amounts from your amended return to calculate underpayment. If you amend after the deadline, use your original return figures. If you and your spouse file a joint return after the due date to replace previously filed separate returns, use the joint return amounts.

Late filing considerations: You can still request a waiver or use special calculation methods even after the filing deadline, but you'll need to attach Form 2210 to your return. If you file by April 15, 2025, and later receive a penalty bill, the IRS won't charge interest on the penalty if you pay by the date on the bill.

Key Rules for 2024

The Safe Harbor Rules—Your Best Defense:

You will NOT owe a penalty if you meet any of these criteria:

1. The $1,000 Rule: Your total tax liability minus withholding is less than $1,000
2. The 90% Rule: You paid at least 90% of your 2024 tax through withholding and estimated payments
3. The Prior Year Rule: You paid at least 100% of your 2023 total tax (your 2023 return must cover 12 months)
4. High-Income Exception: If your 2023 adjusted gross income exceeded $150,000 ($75,000 if married filing separately), the prior year rule increases to 110% of your 2023 tax
5. Zero Prior Year Tax: You had no tax liability for 2023, were a U.S. citizen or resident for the full year, and your 2023 return covered 12 months

2024 Quarterly Payment Due Dates:

• 1st Payment: April 15, 2024 (for income January 1–March 31)
• 2nd Payment: June 17, 2024 (for income April 1–May 31)
• 3rd Payment: September 16, 2024 (for income June 1–August 31)
• 4th Payment: January 15, 2025 (for income September 1–December 31)

Special Rules for Farmers and Fishers:
If at least two-thirds of your 2023 or 2024 gross income came from farming or fishing, you avoid the penalty entirely by filing Form 1040 and paying your full tax by March 3, 2025. Otherwise, use Form 2210-F.

How Penalties Are Calculated:
Penalties are figured separately for each quarterly period based on the underpayment amount, how many days it remained unpaid, and the IRS's quarterly interest rate (8% for most of 2024, dropping to 7% for January-April 2025). This means you might owe a penalty for early quarters even if you paid enough later to cover your full annual tax.

Estate and Trust Exemptions:
No penalty applies to a decedent's estate or qualifying trust for any tax year ending before 2 years after the decedent's death.

Step-by-Step (High Level)

The Form 2210 process follows a logical flowchart that first determines whether you owe a penalty, then calculates the amount:

Step 1: Determine If You Need to File

Work through the flowchart on page 1 of Form 2210:

• Calculate your current year tax (Part I, lines 1-4)
• If less than $1,000, stop—no penalty and no filing required
• Compare your withholding (line 6) to your required annual payment (line 9)
• If withholding equals or exceeds the required payment, stop—no penalty

Step 2: Check for Exceptions

Review Part II to see if any boxes apply:

• Do you qualify for a waiver (retirement, disability, casualty, unusual circumstances)?
• Did your income vary significantly throughout the year?
• Was your withholding concentrated in certain periods rather than spread evenly?
• Did your filing status change between 2023 and 2024?

Step 3: Complete Part I (Required Annual Payment)

• Line 1: Enter your 2024 tax after credits
• Line 2: Add other taxes (self-employment tax, Additional Medicare Tax, Net Investment Income Tax)
• Line 3: Subtract refundable credits
• Line 4: Calculate current year tax
• Line 5: Multiply line 4 by 90%
• Line 6: Enter withholding taxes only (not estimated payments)
• Line 8: Calculate maximum required payment based on 2023 tax
• Line 9: Enter the smaller of line 5 or line 8—this is your required annual payment

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

• Section A: For each quarterly period, calculate your required installment (typically 25% of line 9), enter payments made, and determine any underpayment
• Section B: Use the penalty worksheet to apply the appropriate interest rate to each underpayment for the number of days it remained unpaid

Step 5: Consider Schedule AI (Annualized Income Method)

If your income was uneven—perhaps you had seasonal business income, a large year-end bonus, or significant capital gains late in the year—Schedule AI lets you recalculate required payments based on your actual income flow. This can significantly reduce or eliminate your penalty.

Step 6: File Appropriately

• If boxes B, C, or D apply: File complete Form 2210 with your tax return
• If only box A or E applies: File only page 1
• If no boxes apply but you want to calculate the penalty yourself: Complete the form but you're not required to file it—just enter the penalty on your return

Common Mistakes and How to Avoid Them

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

Many taxpayers complete Form 2210 unnecessarily. If you don't check any boxes in Part II, let the IRS calculate the penalty—they'll send you a bill. You'll save time and avoid calculation errors.

Mistake #2: Forgetting the Prior Year Safe Harbor

Taxpayers often focus on the 90% rule but overlook that paying 100% (or 110% for high earners) of last year's tax completely protects you, regardless of how much your income increased.

Mistake #3: Confusing Withholding with Estimated Payments

Line 6 of Part I asks only for withholding, not estimated tax payments. Include only amounts withheld from wages (Form 1040, line 25d), Social Security, pensions, or other income—not the quarterly payments you made yourself. Those go elsewhere in the calculation.

Mistake #4: Not Using the Annualized Method When Income Varies

If you received most of your income late in the year, the regular method unfairly assumes you earned it evenly throughout. Schedule AI can dramatically reduce your penalty by accounting for when you actually earned the money. Don't overlook this option if your income was lumpy.

Mistake #5: Incorrectly Applying Payment Dates

Payments are automatically applied first to the earliest underpayment, even if you intended them for a later quarter. Also, withholding is presumed to be paid in equal amounts on each quarterly due date unless you prove otherwise by checking box D.

Mistake #6: Missing Out on Waivers

If you retired after age 62, became disabled, experienced a casualty or disaster, or faced other unusual circumstances, you may qualify for partial or complete waiver of the penalty. Always check boxes A or B and attach an explanation if you qualify.

Mistake #7: Calculating Penalties for the Wrong Time Periods

Each quarterly period has different interest rate periods within it (rates changed throughout 2024). Using Table 4-1 in the instructions helps track the exact number of days and applicable rates—don't estimate or round.

What Happens After You File

If You File Form 2210:

• Enter the penalty amount from line 19 on your tax return (Form 1040/1040-SR/1040-NR, line 38, or Form 1041, line 27)
• The penalty is added to your total tax due or reduces your refund
• Pay the penalty with your tax return by the filing deadline to avoid additional interest charges

If You Don't File Form 2210:

• The IRS will calculate any penalty automatically during processing
• You'll receive a notice (typically CP2000 or similar) showing the penalty amount
• If you file by April 15, 2025, no interest accrues on the penalty if you pay by the notice date
• The penalty becomes part of your tax account balance

If You Requested a Waiver:

• The IRS reviews your explanation and supporting documentation
• If approved, the penalty is partially or fully removed
• If denied, you'll receive a notice with the penalty amount due
• You can appeal a denial through the IRS Independent Office of Appeals

Interest Charges:
Interest accrues on unpaid penalties from the notice date forward. The interest rate equals the federal short-term rate plus 3 percentage points, adjusted quarterly.

Payment Options:

• Pay in full immediately through IRS Direct Pay, EFTPS, or your IRS online account
• Request a payment plan (installment agreement) if you cannot pay in full
• The penalty and interest continue to accrue until paid in full

Disputing a Penalty:
If you disagree with an IRS-calculated penalty:

• Respond within the timeframe on your notice (usually 30-60 days)
• Provide documentation showing why the penalty doesn't apply
• File Form 843 (Claim for Refund) if you've already paid a penalty you believe was incorrect

FAQs

Q: Can the IRS waive my underpayment penalty?

Yes, but only in limited circumstances. The penalty may be waived or reduced if you retired after age 62 or became disabled and the underpayment was due to reasonable cause; if the underpayment resulted from a casualty, federally declared disaster, or unusual circumstance; or if your withholding wasn't spread evenly throughout the year. You cannot get a waiver simply for not knowing you needed to make estimated payments.

Q: How is the penalty rate determined for 2024?

The penalty uses the federal short-term interest rate plus 3 percentage points, adjusted quarterly. For 2024, the rate was 8% annually for most quarters, dropping to 7% for January-April 2025. The IRS publishes updated rates quarterly on IRS.gov.

Q: What if I'm self-employed and this is my first profitable year?

If you had no tax liability in 2023 (and were a U.S. citizen or resident for the full year with a 12-month return), you won't owe a penalty for 2024 regardless of how much you underpaid. Starting in 2025, however, you'll need to make estimated payments based on either 90% of your 2025 tax or 100%/110% of your 2024 tax.

Q: Do state estimated tax payments count toward avoiding the federal penalty?

No. Only federal income tax withholding and federal estimated tax payments count toward meeting the federal requirements. State payments are completely separate.

Q: I received a large bonus in December. Can I avoid the penalty?

If substantial withholding came from your December bonus, you can reduce or eliminate your penalty by checking box D and calculating the penalty using actual withholding dates rather than the assumption that withholding was spread equally. Complete Form 2210 with this option.

Q: What's the difference between Form 2210 and Form 2210-F?

Form 2210-F is specifically for farmers and fishers whose income from farming or fishing represents at least two-thirds of their gross income. These taxpayers have different payment deadlines and percentage requirements. All others use the regular Form 2210.

Q: Can I file Form 2210 electronically?

Yes, if you're e-filing your tax return, Form 2210 can be included electronically. Most tax software will automatically prepare Form 2210 if needed based on your answers to interview questions.

Sources

All information sourced from official IRS publications: Form 2210 (2024), Instructions for Form 2210 (2024), About Form 2210, and Underpayment of Estimated Tax by Individuals Penalty.