Underpayment Penalty and Estimate tax

Question 1

Estimated Tax and Penalty

Answer 1

Here’s a brief overview of how it works

If you did not pay enough tax throughout the year, either through withholding or by making estimated tax payments, you may have to pay a penalty for underpayment of estimated tax
Most taxpayers will have paid enough tax if they meet one of the following criteria
Their tax after credits (minus any withholding) is less than $1,00014.
They paid at least 90% of the tax for the current year
They paid 100% of the tax shown on the return for the prior year (110% if their AGI was more than $150,000 or $75,000 if they are married and filed a separate return)
If you do not meet any of these criteria, you may owe a penalty

Question 2

Form 2210

Answer 2

IRS Form 2210, titled “Underpayment of Estimated Tax by Individuals, Estates, and Trusts”, is used to determine if you owe a penalty for underpaying your estimated tax and to calculate the amount of the penalty if you do