Introduction
Form 2210 is the IRS form that works out whether an individual, estate, or trust underpaid estimated tax. Here's the catch: you can owe a penalty without ever attaching the form, because the IRS often calculates it and mails a bill.
This guide covers U.S. federal obligations for Australian-based individuals, investors, and multinational businesses with U.S. filing requirements. It has nothing to do with ATO forms.
One timing point first. The final Form 2210 and instructions currently published are for tax year 2025. The 2026 form is still a draft and is not for filing, so confirm the status on IRS.gov before you rely on any line reference.
We'll walk through the filing test, Parts I to III, Schedule AI, payment strategies, and waivers.
Key Takeaways
- The IRS may calculate your penalty and send a notice, so many taxpayers never attach Form 2210.
- Penalties run by instalment, so a late full payment doesn't erase an earlier shortfall.
- Withholding, safe harbours, and Schedule AI can cut or remove a penalty.
- Check the current IRS form, thresholds, and rates, not last year's.
What Is Form 2210 and Who Must File It?
What Form 2210 does
Form 2210 figures the penalty for underpaying estimated tax. Its official title is "Underpayment of Estimated Tax by Individuals, Estates, and Trusts," and it is used with Forms 1040, 1040-SR, 1040-NR, and 1041.
The penalty and the form are different things. You can owe the penalty without being required to file the form.
The penalty is calculated per instalment. The IRS looks at the underpaid amount, how long it stayed unpaid, and the published rate for each period. The IRS quarterly table and Revenue Ruling 2026-15 set the 2026 annual rates at:
| Period | Annual rate |
|---|---|
| Jan–Mar 2026 | 7% |
| Apr–Jun 2026 | 6% |
| Jul–Sep 2026 | 7% |
| Oct–Dec 2026 | 7% |
Who may face a penalty
You must make estimated payments if you expect to owe at least $1,000 after withholding and credits. You avoid the penalty if withholding and payments meet a safe harbour:
- 90% of your 2026 tax, or
- 100% of your 2025 tax (the 2025 return must cover 12 months)
- 110% of 2025 tax if 2025 AGI exceeded $150,000 ($75,000 if married filing separately)
Use the smaller applicable amount. You also have no estimated tax requirement if you had no 2025 tax liability, were a U.S. citizen or resident alien all of 2025, and that year covered 12 months.
When Form 2210 is usually not required
The IRS flowchart is simple. If line 4 or line 7 is under $1,000, there's no penalty and no form. If your withholding and payments (line 6) are at least the required amount (line 9), there's no penalty either.
If a penalty may apply and you do not tick any Part II box, you can leave the calculation to the IRS and wait for the notice. That is not the same as having no penalty. You'll still be billed.
Part II filing situations
| Box | Purpose | What to file |
|---|---|---|
| A | Waive the entire penalty | Page 1, with explanation and support |
| B | Waive part of the penalty | Calculate the penalty; file with explanation |
| C | Annualised income method | Parts I–III plus Schedule AI |
| D | Actual withholding dates lower the penalty | Calculate and file |
| E | Joint return in one of the two prior years, not both | Page 1; calculate only if B, C or D also applies |
How to Read the 2026 Form 2210 Instructions
Step 1: Confirm the form and gather records
Check the IRS Form 2210 page to see which revision is current. Right now that's tax year 2025, with a 2026 draft.
Gather:
- Prior-year and current-year returns
- Forms W-2 and 1099
- Withholding records and estimated-payment confirmations
- Income, deduction, and credit information
- Any IRS notices
Step 2: Complete Part I
Part I builds your required annual payment from current-year tax, other taxes, credits, and prior-year figures. The $1,000 threshold applies here: below it, no penalty arises.
Step 3: Use Part II to decide whether to attach
Work through the questions in order. Ticking a waiver box documents your request, but the IRS decides whether to grant it.
Step 4: Complete Part III when required
Part III compares each required instalment with payments credited by its due date, then applies the rate and number of days to any shortfall. The 2026 calendar-year due dates are:
- 15 April 2026
- 15 June 2026
- 15 September 2026
- 15 January 2027
Weekend and legal-holiday deadlines move to the next business day. The penalty period for each instalment runs until payment or 15 April after year-end, whichever comes first. The automatic two-month extension for taxpayers abroad doesn't move that endpoint.
Step 5: Determine how withholding is treated
Withholding is generally treated as paid one-quarter on each due date. If actual dates produce a lower penalty, tick box D. That matters if, for example, you had a large amount withheld in December.
Keep payroll and pension withholding records. Nonresident alien filers without U.S. wages follow a different pattern: Part III column (a) is omitted and withholding is spread one-third across the applicable dates.
Step 6: Use Schedule AI for uneven income
Schedule AI annualises income by cumulative period. In the 2026 draft those are 1 January–31 March, 1 January–31 May, 1 January–31 August, and 1 January–31 December. They are not ordinary quarters.
If you use it for one due date, use it for all of them. Then tick box C and attach Parts I–III plus the schedule.
Illustration (fictional numbers): Say you earn nothing until a $60,000 asset sale in November. Equal instalments would assume $15,000 of income each quarter and show early shortfalls. Annualising shows little income through August, so the required early instalments shrink and the penalty may drop or vanish.
How to Avoid Estimated Tax Penalties in 2026
Pay throughout the year
Match withholding and estimated payments to projected liability and the four deadlines. If you have self-employment, investment, rental, foreign, or irregular income, update projections whenever income or deductions shift.
Payment options include:
- Form 1040-ES (nonresident aliens use 1040-ES (NR))
- IRS Direct Pay, which accepts individual estimated payments
- EFTPS (the IRS no longer allows individuals to open new accounts)
Pick the right safe harbour
Hit 90% of current-year tax or 100% (110% for higher earners) of prior-year tax, on time. Prior-year safe harbours suit anyone with a volatile year ahead, since the target is already known.
Adjust withholding
Employees can submit a new Form W-4 for extra withholding. The IRS Tax Withholding Estimator helps complete W-4 or W-4P, but isn't available to nonresident aliens.
Consider annualisation
Schedule AI suits late-year business, property, or capital-gain income. It needs period-by-period records, and you can't cherry-pick the best period.
Build a quarterly process
Keep a payment calendar, save confirmations, and reconcile actual income against projections before each deadline. Before filing, check:
- Reconcile payment dates and amounts
- Review Part II boxes
- Consider Schedule AI
- Retain waiver records
Paying the full balance by the filing deadline stops further collection trouble. It doesn't erase an earlier instalment underpayment.
Waivers, Special Situations, and Professional Review
When a waiver may apply
The IRS may waive all or part of the penalty in two situations:
- Casualty, disaster, or unusual circumstances, where charging the penalty would be inequitable
- Retirement after age 62 or disability, in the payment year or the prior year, with reasonable cause and no wilful neglect
Attach a statement explaining why you missed the requirements and the period covered. Include evidence such as the retirement date and age, disability date, or police and insurance reports. For federally declared disasters, the IRS generally applies postponements automatically.
Special taxpayers and notices
Different groups follow different estimated-tax rules:
- Farmers and fishers with at least two-thirds of gross income from those activities use Form 2210-F
- Estates and trusts face their own rules, including an exception for a decedent's estate during the first two years
- Nonresident aliens follow the 1040-ES (NR) schedule: four equal instalments if they have U.S. wages, otherwise 50%, 25%, and 25%
If a notice arrives:
- CP30 means the IRS charged a penalty. Review the computation and pay by the deadline, or point to uneven income or early withholding.
- CP30A means the IRS reduced or removed a penalty. If you disagree, call the number on the notice.
First Time Abate doesn't cover section 6654, so the Form 2210 waiver criteria are your route.
When professional review is worthwhile
Get help when any of these apply:
- Cross-border income or several withholding sources
- Uneven income during the year
- A waiver request or an IRS notice
- Estate or trust duties
- Doubt about whether to attach Form 2210
Australian-based taxpayers and multinational businesses with U.S. filing obligations can consult VJM Global's U.S.-compliant tax and accounting team, which also helps compile documents and draft responses to IRS notices.
Frequently Asked Questions
Who is required to file Form 2210?
It depends on the IRS flowchart and Part II. Many taxpayers let the IRS calculate any penalty.
Do I need to calculate the underpayment penalty on Form 2210?
Generally only when Part II requires it, such as boxes B, C, or D. Boxes A and E need page 1 only, unless another box also applies.
How can I avoid the Form 2210 underpayment penalty?
Pay enough withholding or estimated tax on time to meet a safe harbour. Keep projections current, use Schedule AI for uneven income, and review records before each deadline.
What is the difference between Form 2210 and Form 2210-F?
Form 2210-F is for qualifying farmers and fishers. Most other individuals, estates, and trusts use Form 2210.
Can I owe an estimated tax penalty even if I am due a refund?
Yes. Falling short at an instalment deadline can trigger a penalty even if the final return shows a refund.
