If you underpaid your taxes, you may face a penalty from the Internal Revenue Service. Typically taxes are withheld from your employer, but if you are self-employed and have to file quarterly, there's a possibility you accidentally underestimated how much you owe. The penalty for underpayment of estimated tax for 2010 is figured at the annual rate of 4 percent for the number of days the underpayment remained unpaid from April 16, 2010, through April 15, 2011.
Download Form 2210, underpayment of estimated tax by individuals, estates and trusts.
Print Form 2210.
Complete Form 2210. Pay particular attention to the flow chart at the top of the form, which walks you through whether you need to complete the form at all. If you have to complete the form, make sure you work through each section in order because the form contains many options where you may not owe taxes at all.
Attach Form 2210 to your tax return.
If you owe less than $1,000 in taxes, after subtracting withholdings and credits, you will not owe an underpayment penalty. In addition, you won't owe a penalty if you paid at least 90 percent of the tax due for the year or 100 percent of the taxes due in the return for the prior year. The penalty may be waived if the underpayment was due to a disaster, casualty or other circumstance, or if you retired or became disabled during the tax year. If you checked box B, C, or D in Part II, you must figure out the penalty yourself using the form. If you did not check one of those boxes, the IRS will calculate the penalty for you.
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