Tax Wise Software Hint: For 2010, Form 2210 will be defaulted in the software and $0 will be reflected on line 9. This will prevent volunteer preparers from calculating the estimated tax penalty. Volunteer preparers need to inform taxpayers with a balance due who are meeting the estimated penalty requirements that they may receive a notice from the IRS.
In most cases, taxpayers must make estimated tax payments if they expect to owe at least $1,000 in tax
(after subtracting withholding and credits) and their withholding and credits to be less than the smaller of:
• 90% of the tax shown on the current tax return or
• 100% of the tax shown on the prior year’s tax return (110% for certain higher-income taxpayers; see
An estimated tax penalty may apply if the taxpayer does not make estimated tax payments as required.
There are special situations when a taxpayer will not have to pay a penalty. See Form 2210 Instructions or
Publication 17 for more information.
Do I have to calculate the estimated tax penalty?
Because Form 2210 is complicated, leave the estimated tax penalty line blank on Form 1040. This will not
prevent the IRS from calculating the penalty if it is due. Let the taxpayer know that a penalty may be owed, and if so, the IRS will send a notice. If necessary, the taxpayer can complete the Form 2210 that will be included with the notice.
Mark’s total tax is $1,657 for 2010. His withholding is $417. He owes $1,240. His 2009 tax was $2,000.
Mark will probably be charged an estimated tax penalty because the amount he owes is over $1,000,
and his withholding and credits are less than 90% of his 2010 tax or 100% of his 2009 tax.
From Form 4491, p. 31-10.
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