4.   Underpayment Penalty for 2013

Introduction

If you did not pay enough tax, either through withholding or by making timely estimated tax payments, you will have underpaid your estimated tax and may have to pay a penalty.

You may understand this chapter better if you can refer to a copy of your latest federal income tax return.

No penalty.   Generally, you will not have to pay a penalty for 2013 if any of the following apply.
  • The total of your withholding and timely estimated tax payments was at least as much as your 2012 tax. (See Special rules for certain individuals for higher income taxpayers and farmers and fishermen.)

  • The tax balance due on your 2013 return is no more than 10% of your total 2013 tax, and you paid all required estimated tax payments on time.

  • Your total tax for 2013 (defined later) minus your withholding is less than $1,000.

  • You did not have a tax liability for 2012.

  • You did not have any withholding taxes and your current year tax (less any household employment taxes) is less than $1,000.

IRS can figure the penalty for you.   If you think you owe the penalty, but you do not want to figure it yourself when you file your tax return, you may not have to. Generally, the IRS will figure the penalty for you and send you a bill.

  You only need to figure your penalty in the following three situations.
  • You are requesting a waiver of part, but not all, of the penalty.

  • You are using the annualized income installment method to figure the penalty.

  • You are treating the federal income tax withheld from your income as paid on the dates actually withheld.

However, if these situations do not apply to you, and you think you can lower or eliminate your penalty, complete Form 2210 or Form 2210-F and attach it to your return. See Form 2210 , later.

Topics - This chapter discusses:

  • The general rule for the underpayment penalty,

  • Special rules for certain individuals,

  • Exceptions to the underpayment penalty,

  • How to figure your underpayment and the amount of your penalty on Form 2210, and

  • How to ask the IRS to waive the penalty.

Useful Items - You may want to see:

Form (and Instructions)

  • 2210 Underpayment of Estimated Tax by Individuals, Estates, and Trusts

  • 2210-F Underpayment of Estimated Tax by Farmers and Fishermen

See chapter 5 for information about getting these forms.

General Rule

In general, you may owe a penalty for 2013 if the total of your withholding and timely estimated tax payments did not equal at least the smaller of:

  1. 90% of your 2013 tax, or

  2. 100% of your 2012 tax. (Your 2012 tax return must cover a 12-month period.)

Your 2013 tax, for this purpose, is defined under Total tax for 2013 , later.

Special rules for certain individuals.   There are special rules for farmers and fishermen and certain higher income taxpayers.

Farmers and fishermen.   If at least two-thirds of your gross income for 2012 or 2013 is from farming or fishing, substitute  
662/3% for 90% in (1) above.

  See Farmers and Fishermen , later.

Higher income taxpayers.   If your AGI for 2012 was more than $150,000 ($75,000 if your 2013 filing status is married filing a separate return), substitute 110% for 100% in (2) under General Rule . This rule does not apply to farmers or fishermen.

  For 2012, AGI is the amount shown on Form 1040, line 37; Form 1040A, line 21; and Form 1040EZ, line 4.

Penalty figured separately for each period.   Because the penalty is figured separately for each payment period, you may owe a penalty for an earlier payment period even if you later paid enough to make up the underpayment. This is true even if you are due a refund when you file your income tax return.

Example.

You did not make estimated tax payments for 2013 because you thought you had enough tax withheld from your wages. Early in January 2014, you made an estimate of your total 2013 tax. Then you realized that your withholding was $2,000 less than the amount needed to avoid a penalty for underpayment of estimated tax.

On January 10, you made an estimated tax payment of $3,000, which is the difference between your withholding and your estimate of your total tax. Your final return shows your total tax to be $50 less than your estimate, so you are due a refund.

You do not owe a penalty for your payment due January 15, 2014. However, you may owe a penalty through January 10, 2014, the day you made the $3,000 payment, for your underpayments for the earlier payment periods.

Minimum required each period.   You will owe a penalty for any 2013 payment period for which your estimated tax payment plus your withholding for the period and overpayments applied from previous periods was less than the smaller of:
  1. 22.5% of your 2013 tax, or

  2. 25% of your 2012 tax. (Your 2012 tax return must cover a 12-month period.)

Minimum required for higher income taxpayers.   If you are subject to the rule for higher income taxpayers, discussed above, substitute 27.5% for 25% in (2) under General Rule .

When penalty is charged.   If you miss a payment or you paid less than the minimum required in a period, you may be charged an underpayment penalty from the date the amount was due to the date the payment is made. If a payment is mailed, the date of the U.S. postmark is considered the date of payment.

  If a payment is made electronically, the date the payment is shown on your payment account (checking, savings, etc.) is considered to be the date of payment.

Estate or trust payments of estimated tax.   If you have estimated taxes credited to you from an estate or trust (Schedule K-1 (Form 1041)), treat the payment as made by you on January 15, 2014.

Amended returns.    If you file an amended return by the due date of your original return, use the tax shown on your amended return to figure your required estimated tax payments. If you file an amended return after the due date of the original return, use the tax shown on the original return.

  However, if you and your spouse file a joint return after the due date to replace separate returns you originally filed by the due date, use the tax shown on the joint return to figure your required estimated tax payments. This rule applies only if both original separate returns were filed on time.

2012 separate returns and 2013 joint return.    If you file a joint return with your spouse for 2013, but you filed separate returns for 2012, your 2012 tax is the total of the tax shown on your separate returns. You filed a separate return if you filed as single, head of household, or married filing separately.

2012 joint return and 2013 separate returns.    If you file a separate return for 2013, but you filed a joint return with your spouse for 2012, your 2012 tax is your share of the tax on the joint return. You are filing a separate return if you file as single, head of household, or married filing separately.

  To figure your share of the taxes on a joint return, first figure the tax both you and your spouse would have paid had you filed separate returns for 2012 using the same filing status as for 2013. Then multiply the tax on the joint return by the following fraction.
  The tax you would have paid had you filed a separate return  
The total tax you and your spouse would have paid had you filed separate returns

Example.

Lisa and Paul filed a joint return for 2012 showing taxable income of $49,000 and a tax of $6,484. Of the $49,000 taxable income, $41,000 was Lisa's and the rest was Paul's. For 2013, they file married filing separately. Lisa figures her share of the tax on the 2012 joint return as follows.

2012 tax on $41,000 based on a separate return $ 6,286
2012 tax on $8,000 based on a  
separate return
803
Total $ 7,089
Lisa's percentage of total tax  
($6,286 ÷ $ 7,089)
88.67%
Lisa's part of tax on joint return 
($6,484 × 88.67%)
$ 5,749

Form 2210.   In most cases, you do not need to file Form 2210. The IRS will figure the penalty for you and send you a bill. If you want us to figure the penalty for you, leave the penalty line on your return blank. Do not file Form 2210.

  To determine if you should file Form 2210, see Part II of Form 2210. If you decide to figure your penalty, complete Part I, Part II, and either Part III or Part IV of the form and the Penalty Worksheet in the Instructions for Form 2210. If you use Form 2210, you cannot file Form 1040EZ.

  On Form 1040, enter the amount of your penalty on line 77. If you owe tax on line 76, add the penalty to your tax due and show your total payment on line 76. If you are due a refund, subtract the penalty from the overpayment and enter the result on line 73.

  On Form 1040A, enter the amount of your penalty on line 46. If you owe tax on line 45, add the penalty to your tax due and show your total payment on line 45. If you are due a refund, subtract the penalty from the overpayment and enter the result on line 42.

Lowering or eliminating the penalty.    You may be able to lower or eliminate your penalty if you file Form 2210. You must file Form 2210 with your return if any of the following applies.
  • You request a waiver. See Waiver of Penalty , later.

  • You use the annualized income installment method. See the explanation of this method under Annualized Income Installment Method (Schedule AI) .

  • You use your actual withholding for each payment period for estimated tax purposes. See Actual withholding method under Figuring Your Underpayment (Part IV, Section A).

  • You base any of your required installments on the tax shown on your 2012 return and you filed or are filing a joint return for either 2012 or 2013, but not for both years.

Exceptions

Generally, you do not have to pay an underpayment penalty if either:

  • Your total tax is less than $1,000, or

  • You had no tax liability last year.

Less Than $1,000 Due

You do not owe a penalty if the total tax shown on your return minus the amount you paid through withholding (including excess social security and tier 1 railroad retirement (RRTA) tax withholding) is less than $1,000.

Total tax for 2013.   For 2013, your total tax on Form 1040 is the amount on line 61 reduced by the following.

  
  1. Unreported social security and Medicare tax or RRTA tax from Forms 4137 or 8919 (line 57).

  2. Any tax included on line 58 for excess contributions to IRAs, Archer MSAs, Coverdell education savings accounts, and health savings accounts, or any tax on excess accumulations in qualified retirement plans.

  3. The following write-ins on line 60:

    1. Uncollected social security and Medicare tax or RRTA tax on tips or group-term life insurance,

    2. Tax on excess golden parachute payments,

    3. Excise tax on insider stock compensation from an expatriated corporation,

    4. Look-back interest due under section 167(g),

    5. Look-back interest due under section 460(b),

    6. Recapture of federal mortgage subsidy, and

    7. Additional tax on advance payments of health coverage tax credit when not eligible.

  4. Any refundable credit amounts listed on lines 64a, 65, 66, 70, and any credit from Form 8885 included on line 71.

  If you filed Form 1040A, your 2013 total tax is the amount on line 35 reduced by any refundable credits on lines 38a, 39, and 40.

  If you filed Form 1040EZ, your 2013 total tax is the amount on line 10 reduced by the amount on line 8a.

Note.

When figuring the amount on line 60, include household employment taxes only if you had federal income tax withheld from your income or you would owe the penalty even if you did not include those taxes.

Paid through withholding.    For 2013, the amount you paid through withholding on Form 1040 is the amount on line 62 plus any excess social security or tier 1 RRTA tax withholding on line 69. Add to that any write-in amount on line 72 identified as “Form 8689.” On Form 1040A, the amount you paid through withholding is the amount on line 36 plus any excess social security or tier 1 RRTA tax withholding included on line 41. On Form 1040EZ, it is the amount on line 7.

No Tax Liability Last Year

You do not owe a penalty if you had no tax liability last year and you were a U.S. citizen or resident for the whole year. For this rule to apply, your tax year must have included all 12 months of the year.

You had no tax liability for 2012 if your total tax was zero or you were not required to file an income tax return.

Example.

Ray, who is single and 22 years old, was unemployed for a few months during 2012. He earned $6,700 in wages before he was laid off, and he received $1,400 in unemployment compensation afterwards. He had no other income. Even though he had gross income of $8,100, he did not have to pay income tax because his gross income was less than the filing requirement for a single person under age 65 ($9,750 for 2012).He filed a return only to have his withheld income tax refunded to him.

In 2013, Ray began regular work as an independent contractor. Ray made no estimated tax payments in 2013. Even though he did owe tax at the end of the year, Ray does not owe the underpayment penalty for 2013 because he had no tax liability in 2012.

Total tax for 2012.   For 2012, your total tax on Form 1040 is the amount on line 61 reduced by the following.

  
  1. Unreported social security and Medicare tax or RRTA tax from Forms 4137 or 8919 (line 57).

  2. Any tax included on line 58 for excess contributions to IRAs, Archer MSAs, Coverdell education savings accounts, and health savings accounts, or any tax on excess accumulations in qualified retirement plans.

  3. The following write-ins on line 60:

    1. Uncollected social security and Medicare tax or RRTA tax on tips or group-term life insurance,

    2. Tax on excess golden parachute payments,

    3. Excise tax on insider stock compensation from an expatriated corporation,

    4. Look-back interest due under section 167(g),

    5. Look-back interest due under section 460(b),

    6. Recapture of federal mortgage subsidy, and

    7. Additional tax on advance payments of health coverage tax credit when not eligible.

  4. Any refundable credit amounts listed on lines 64a, 65, 66, 70, and credits from Forms 8801 (line 27 only), and 8885 included on line 71.

  If you filed Form 1040A, your 2012 total tax is the amount on line 35 reduced by any refundable credits on lines 38a, 39, and 40.

  If you filed Form 1040EZ, your 2012 total tax is the amount on line 11 reduced by the amount on line 8a.

Figuring Your Required Annual Payment (Part I)

Figure your required annual payment in Part I of Form 2210, following the line-by-line instructions. If you rounded the entries on your tax return to whole dollars, you can round on Form 2210.

Example.

The tax on Lori Lane's 2012 return was $12,400. Her AGI was not more than $150,000 for either 2012 or 2013. The tax on her 2013 return (Form 1040, line 55) is $13,044. Line 56 (self-employment tax) is $8,902. Her 2013 total tax is $21,946.

For 2013, Lori had $1,600 income tax withheld and made four equal estimated tax payments ($1,000 each). 90% of her 2013 tax is $19,751. Because she paid less than her 2012 tax ($12,400) and less than 90% of her 2013 tax ($19,751), and does not meet an exception, Lori knows that she owes a penalty for underpayment of estimated tax. The IRS will figure the penalty for Lori, but she decides to figure it herself on Form 2210 and pay it with her taxes when she files her tax return.

Lori's required annual payment is $12,400 (100% of 2012 tax) because that is smaller than 90% of her 2013 tax.

Different 2012 filing status.    If you file a separate return for 2013, but you filed a joint return with your spouse for 2012, see 2012 joint return and 2013 separate returns , earlier, to figure the amount to enter as your 2012 tax on line 8 of Form 2210.

Short Method for Figuring the Penalty (Part III)

You may be able to use the short method in Part III of Form 2210 to figure your penalty for underpayment of estimated tax. If you qualify to use this method, it will result in the same penalty amount as the regular method. However, either the annualized income installment method or the actual withholding method, explained later, may result in a smaller penalty.

You can use the short method only if you meet one of the following requirements.

  • You made no estimated tax payments for 2013 (it does not matter whether you had income tax withholding).

  • You paid the same amount of estimated tax on each of the four payment due dates.

If you do not meet either requirement, figure your penalty using the regular method in Part IV of Form 2210 and the Penalty Worksheet in the instructions.

Note.

If any payment was made before the due date, you can use the short method, but the penalty may be less if you use the regular method. However, if the payment was only a few days early, the difference is likely to be small.

You cannot use the short method if any of the following apply.

  • You made any estimated tax payments late.

  • You checked box C or D in Part II of Form 2210.

  • You are filing Form 1040NR or 1040NR-EZ and you did not receive wages as an employee subject to U.S. income tax withholding.

If you use the short method, you cannot use the annualized income installment method to figure your underpayment for each payment period. Also, you cannot use your actual withholding during each period to figure your payments for each period. These methods, which may give you a smaller penalty amount, are explained under Figuring Your Underpayment (Part IV, Section A).

Complete Part III of Form 2210 following the line-by-line instructions in the Instructions for Form 2210.

Regular Method for Figuring the Penalty (Part IV)

You can use the regular method in Part IV of Form 2210 to figure your penalty for underpayment of estimated tax if you paid one or more estimated tax payments earlier than the due date.

You must use the regular method in Part IV of Form 2210 to figure your penalty for underpayment of estimated tax if any of the following apply to you.

  • You paid one or more estimated tax payments on a date after the due date.

  • You paid at least one, but less than four, installments of estimated tax.

  • You paid estimated tax payments in un- 
    equal amounts.

  • You use the annualized income installment method to figure your underpayment for each payment period.

  • You use your actual withholding during each payment period to figure your payments.

Under the regular method, figure your underpayment for each payment period in Section A, then figure your penalty using the Penalty Worksheet in the Instructions for Form 2210. Enter the results on line 27 of Section B.

Figuring Your Underpayment (Part IV, Section A)

Figure your underpayment of estimated tax for each payment period in Section A following the line-by-line instructions in the Instructions for Form 2210. Complete lines 20 through 26 of the first column before going to line 20 of the next column.

Required installments—line 18.   Your required payment for each payment period (line 18) is usually one-fourth of your required annual payment (Part I, line 9). This method—the regular method—is the one to use if you received your income evenly throughout the year.

  However, if you did not receive your income evenly throughout the year, you may be able to lower or eliminate your penalty by figuring your underpayment using the annualized income installment method. First complete Schedule AI (Form 2210), then enter the amounts from line 25 of that schedule on line 18 of Form 2210, Part IV. See Annualized Income Installment Method (Schedule AI), later.

Payments made—line 19.   Enter in each column the total of:
  • Your estimated tax paid after the due date for the previous column and by the due date shown at the top of the column, and

  • One-fourth of your withholding.

For special rules for figuring your payments, see Form 2210 instructions for line 19.

  If you file Form 1040, your withholding is the amount on line 62, plus any excess social security or tier 1 RRTA tax withholding on line 69. If you file Form 1040A, your withholding is the amount on line 36 plus any excess social security or tier 1 RRTA tax withholding included in line 41.

Actual withholding method.    Instead of using one-fourth of your withholding for each quarter, you can choose to use the amounts actually withheld by each due date. You can make this choice separately for the tax withheld from your wages and for all other withholding. This includes any excess social security and tier 1 RRTA tax withheld.

  Using your actual withholding may result in a smaller penalty if most of your withholding occurred early in the year.

  If you use your actual withholding, you must check box D in Form 2210, Part II. Then complete Form 2210 using the regular method (Part IV) and file it with your return.

Worksheet for Form 2210, Part IV, Section B—Figuring the Penalty

Figure the amount of your penalty for Section B using the Penalty Worksheet in the Form 2210 instructions. The penalty is imposed on each underpayment amount shown on Form 2210, Section A, line 25, for the number of days that it remained unpaid.

For 2013, there are four rate periods—April 16 through June 30, July 1 through September 30, October 1 through December 31, and January 1, 2014 through April 15, 2014. A 3% rate applies to all four periods.

Payments.    Before completing the Penalty Worksheet, it may be helpful to make a list of the payments you made and income tax withheld after the due date (or the last day payments could be made on time) for the earliest payment period an underpayment occurred. For example, if you had an underpayment for the first payment period, list your payments after April 15, 2013. You can use the table in the Form 2210 instructions to make your list. Follow those instructions for listing income tax withheld and payments made with your return. Use the list to determine when each underpayment was paid.

  If you mail your estimated tax payments, use the date of the U.S. postmark as the date of payment.

Line 1b.   Apply the payments listed to underpayment balance in the first column until it is fully paid. Apply payments in the order made.

Figuring the penalty.   If an underpayment was paid in two or more payments on different dates, you must figure the penalty separately for each payment. On line 3 of the Penalty Worksheet enter the number of days between the due date (line 2) and the date of each payment on line 1b. On line 4 figure the penalty for the amount of each payment applied on line 1b or the amount remaining unpaid. If no payments are applied, figure the penalty on the amount on line 1a.

Aid for counting days.    Table 4-1 provides a simple method for counting the number of days between a due date and a payment date.
  1. Find the number for the date the payment was due by going across to the column of the month the payment was due and moving down the column to the due date.

  2. In the same manner, find the number for the date the payment was made.

  3. Subtract the due date “number” from the payment date “number.

  For example, if a payment was due on June 15 (61), but was not paid until September 1 (139), the payment was 78 (139 – 61) days late.

Table 4-1.Calendar To Determine the Number of Days a Payment Is Late

Instructions. Use this table with Form 2210 if you are completing Part IV, Section B. First, find the number for the payment due date by going across to the column of the month the payment was due and moving down the column to the due date. Then, in the same manner, find the number for the date the payment was made. Finally, subtract the due date number from the payment date number. The result is the number of days the payment is late.

Example. The payment due date is June 15 (61). The payment was made on November 4 (203). The payment is 142 days late (203 – 61).

Tax Year 2013
Day of 2013 2013 2013 2013 2013 2013 2013 2013 2013 2014 2014 2014 2014
Month April May June July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr.
1   16 47 77 108 139 169 200 230 261 292 320 351
2   17 48 78 109 140 170 201 231 262 293 321 352
3   18 49 79 110 141 171 202 232 263 294 322 353
4   19 50 80 111 142 172 203 233 264 295 323 354
5   20 51 81 112 143 173 204 234 265 296 324 355
6   21 52 82 113 144 174 205 235 266 297 325 356
7   22 53 83 114 145 175 206 236 267 298 326 357
8   23 54 84 115 146 176 207 237 268 299 327 358
9   24 55 85 116 147 177 208 238 269 300 328 359
10   25 56 86 117 148 178 209 239 270 301 329 360
11   26 57 87 118 149 179 210 240 271 302 330 361
12   27 58 88 119 150 180 211 241 272 303 331 362
13   28 59 89 120 151 181 212 242 273 304 332 363
14   29 60 90 121 152 182 213 243 274 305 333 364
15 0 30 61 91 122 153 183 214 244 275 306 334 365
16 1 31 62 92 123 154 184 215 245 276 307 335  
17 2 32 63 93 124 155 185 216 246 277 308 336  
18 3 33 64 94 125 156 186 217 247 278 309 337  
19 4 34 65 95 126 157 187 218 248 279 310 338  
20 5 35 66 96 127 158 188 219 249 280 311 339  
21 6 36 67 97 128 159 189 220 250 281 312 340  
22 7 37 68 98 129 160 190 221 251 282 313 341  
23 8 38 69 99 130 161 191 222 252 283 314 342  
24 9 39 70 100 131 162 192 223 253 284 315 343  
25 10 40 71 101 132 163 193 224 254 285 316 344  
26 11 41 72 102 133 164 194 225 255 286 317 345  
27 12 42 73 103 134 165 195 226 256 287 318 346  
28 13 43 74 104 135 166 196 227 257 288 319 347  
29 14 44 75 105 136 167 197 228 258 289   348  
30 15 45 76 106 137 168 198 229 259 290   349  
31   46   107 138   199   260 291   350  

Annualized Income Installment Method (Schedule AI)

If you did not receive your income evenly throughout the year (for example, your income from a shop you operated at a marina was much larger in the summer than it was during the rest of the year), you may be able to lower or eliminate your penalty by figuring your underpayment using the annualized income installment method. Under this method, your required installment (Part IV, line 18) for one or more payment periods may be less than one-fourth of your required annual payment.

To figure your underpayment using this method, complete Form 2210, Schedule AI. Schedule AI annualizes your tax at the end of each payment period based on your income, deductions, and other items relating to events that occurred from the beginning of the tax year through the end of the period.

If you use the annualized income installment method, you must check box C in Part II of Form 2210. Also, you must attach Form 2210 and Schedule AI to your return.

If you use Schedule AI for any payment due date, you must use it for all payment due dates.

Completing Schedule AI.   Follow the Form 2210 instructions to complete Schedule AI. For each period shown on Schedule AI, figure your income and deductions based on your method of accounting. If you use the cash method of accounting (used by most people), include all income actually or constructively received during the period and all deductions actually paid during the period.

Note.

Each period includes amounts from the previous period(s).

  • Period (a) includes items for January 1 through March 31.

  • Period (b) includes items for January 1 through May 31.

  • Period (c) includes items for January 1 through August 31.

  • Period (d) includes items for the entire year.

Farmers and Fishermen

If you are a farmer or fisherman, the following special rules for underpayment of estimated tax apply to you.

  1. The penalty for underpaying your 2013 estimated tax will not apply if you file your return and pay all the tax due by March 3, 2014. If you are a fiscal year taxpayer, the penalty will not apply if you file your return and pay the tax due by the first day of the third month after the end of your tax year.

  2. Any penalty you owe for underpaying your 2013 estimated tax will be figured from one payment due date, January 15, 2014.

  3. The underpayment penalty for 2013 is figured on the difference between the amount of 2013 withholding plus estimated tax paid by the due date and the smaller of:

    1. 662/3% (rather than 90%) of your 2013 tax, or

    2. 100% of the tax shown on your 2012 return.

Even if these special rules apply to you, you will not owe the penalty if you meet either of the two conditions discussed under Exceptions .

See Who Must Pay Estimated Tax in chapter 2 for the definition of a farmer or fisherman who is eligible for these special rules.

Form 2210-F.   Use Form 2210-F to figure any underpayment penalty. Do not attach it to your return unless you check a box in Part I. However, if none of the boxes apply to you and you owe a penalty, you do not need to attach Form 2210-F. Enter the amount from line 16 on Form 1040, line 77 and add the penalty to any balance due on your return or subtract it from your refund. Keep your filled-in Form 2210-F for your records.

  
If none of the boxes on Form 2210-F apply to you and you owe a penalty, the IRS can figure your penalty and send you a bill.

Waiver of Penalty

The IRS can waive the penalty for underpayment if either of the following applies.

  1. You did not make a payment because of a casualty, disaster, or other unusual circumstance and it would be inequitable to impose the penalty.

  2. You retired (after reaching age 62) or became disabled in 2012 or 2013 and both the following requirements are met.

    1. You had a reasonable cause for not making the payment.

    2. Your underpayment was not due to willful neglect.

How to request a waiver.   To request a waiver, see the Instructions for Form 2210.

Farmers and fishermen.   To request a waiver, see the Instructions for Form 2210-F.

Federally declared disaster.   Certain estimated tax payment deadlines for taxpayers who reside or have a business in a federally declared disaster area are postponed for a period during and after the disaster. During the processing of your tax return, the IRS automatically identifies taxpayers located in a covered disaster area (by county or parish) and applies the appropriate penalty relief. Do not file Form 2210 or 2210-F if your underpayment was due to a federally declared disaster. If you still owe a penalty after the automatic waiver is applied, we will send you a bill.

  Individuals, estates, and trusts not in a covered disaster area but whose books, records, or tax professionals' offices are in a covered area are also entitled to relief. Also eligible are relief workers affiliated with a recognized government or charitable organization assisting in the relief activities in a covered disaster area. If you meet either of these eligibility requirements, you must call the IRS disaster hotline at 1-866-562-5227 and identify yourself as eligible for this relief.

  Details on the applicable disaster postponement period can be found at IRS.gov. Enter Tax Relief in Disaster Situations. Select the federally declared disaster that affected you.

  

Worksheet 4-1.2013 Form 2210, Schedule AI—Line 12 Qualified Dividends and Capital Gain Tax Worksheet

Note. To figure the annualized entries for lines 2, 3, and 5 below, multiply the expected amount for the period by the  
annualization amount on line 2 of Schedule AI for the same period.
                 
1. Enter line 11 of your Schedule AI, or line 3 from Worksheet 4-2 1.      
2. Enter your annualized qualified dividends for the period 2.          
3. Are you filing Schedule D?            
  Yes. Enter the smaller of your annualized amount from line 15 or line 16 of Schedule D. If either line 15 or line 16 is blank or a loss, enter -0-.
Right brace
3.          
  No. Enter your annualized capital gain distributions from Form 1040, line 13            
4. Add lines 2 and 3   4.          
5. If you are claiming investment interest expense on Form 4952, enter your annualized amount from line 4g of that form. Otherwise, enter -0-   5.          
6. Subtract line 5 from line 4. If zero or less, enter -0- 6.      
7. Subtract line 6 from line 1. If zero or less, enter -0- 7.      
8. Enter: 
$36,900 if single or married filing separately, 
$73,800 if married filing jointly or qualifying widow(er), 
$49,400 if head of household.
Right brace
8.      
9. Enter the smaller of line 1 or line 8 9.      
10. Enter the smaller of line 7 or line 9 10.      
11. Subtract line 10 from line 9. This amount is taxed at 0% 11.      
12. Enter the smaller of line 1 or line 6 12.      
13. Enter the amount from line 11 13.      
14. Subtract line 13 from line 12 14.      
15. Multiply line 14 by 15% (.15) 15.  
16. Figure the tax on the amount on line 7. If the amount on line 7 is less than $100,000, use the Tax Table in the 2013 Form 1040 instructions to figure this tax. If the amount on line 7 is $100,000 or more, use the Tax Computation Worksheet in the 2013 Form 1040 instructions 16.  
17. Add lines 15 and 16 17.  
18. Figure the tax on the amount on line 1. If the amount on line 1 is less than $100,000, use the Tax Table in the 2013 Form 1040 instructions to figure this tax. If the amount on line 1 is $100,000 or more, use the Tax Computation Worksheet in the 2013 Form 1040 instructions 18.  
19. Tax on all taxable income. Enter the smaller of line 17 or line 18. Also enter this amount on line 12 of Schedule AI in the appropriate column. However, if you are using this worksheet to figure the tax on the amount on line 3 of Worksheet 4-2, enter the amount from line 19 on Worksheet 4-2, line 4 19.  

Worksheet 4-2.2013 Form 2210, Schedule AI—Line 12 Foreign Earned Income Tax Worksheet

Before you begin:If Schedule AI, line 11, is zero for the period, do not complete this worksheet.    
       
1. Enter the amount from line 11 of Schedule AI for the period 1.  
2. Enter the annualized amount* of foreign earned income and housing amount excluded or deducted (from  
Form 2555, lines 45 and 50, or Form 2555-EZ, line 18) in figuring the amount entered for the period on line 1  
of Schedule AI
2.  
3. Add lines 1 and 2 3.  
4. Tax on the amount on line 3. Use the Tax Table, Tax Computation Worksheet, Form 8615**, Qualified Dividends and Capital Gain Tax Worksheet***, or Schedule D Tax Worksheet***, whichever applies. See the 2013 Instructions for Form 1040, line 44, to find out which tax computation method to use. (Note. You do not have to use the same method for each period on Schedule AI.) 4.  
5. Tax on the amount on line 2. If the amount on line 2 is less than $100,000, use the Tax Table in the 2013 Form 1040 instructions to figure this tax. If the amount on line 7 is $100,000 or more, use the Tax Computation Worksheet in the 2013 Form 1040 instructions 5.  
6. Subtract line 5 from line 4. Enter the result here and on line 12 of Schedule AI. If zero or less,  
enter -0-
6.  
       
  * To figure the annualized amount for line 2, multiply the exclusion or deduction for the period by the annualization amount on line 2 of Schedule AI for the same period.  
  ** If you use Form 8615 to figure the tax on line 4 above, enter the amount from line 3 above on line 4 of Form 8615. If the child's parent files Form 2555 or 2555-EZ, enter the amounts from lines 3 and 4 of the parent's Foreign Earned Income Tax Worksheet on lines 6 and 10, respectively, of Form 8615. Complete the rest of Form 8615 according to its instructions. Then complete lines 5 and 6 above.  
  *** Enter the amount from line 3 above on line 1 of the Qualified Dividends and Capital Gain Tax Worksheet (or Worksheet 4-1 in this chapter) or the Schedule D Tax Worksheet, whichever worksheet you use to figure the tax on line 4 above. Complete that worksheet through line 6 (line 10 if you use the Schedule D Tax Worksheet). Next, determine if you have a capital gain excess.  
  Figuring capital gain excess. To find out if you have a capital gain excess for the appropriate period, subtract line 11 of Schedule AI from line 6 of Worksheet 4-1 or your Qualified Dividends and Capital Gain Tax Worksheet (line 10 of your Schedule D Tax Worksheet). If the result is more than zero, that amount is your capital gain excess.  
  No capital gain excess. If you do not have a capital gain excess, complete the rest of Worksheet 4-1, Qualified Dividends and Capital Gain Tax Worksheet, or the Schedule D Tax Worksheet according to the worksheet's instructions. Then complete lines 5 and 6 above.  
  Capital gain excess. If you have a capital gain excess, complete a second Worksheet 4-1, Qualified Dividends and Capital Gain Tax Worksheet, or Schedule D Tax Worksheet (whichever applies) as instructed above but in its entirety and with the following additional modifications. Then complete lines 5 and 6 above.  
  Make the modifications below only for purposes of filling out Worksheet 4-2 above.  
  a. Reduce (but not below zero) the amount you otherwise would enter on line 3 of your Worksheet 4-1, line 3 of your Qualified Dividends and Capital Gain Tax Worksheet, or line 9 of your Schedule D Tax Worksheet by your capital gain excess.  
  b. Reduce (but not below zero) the amount you otherwise would enter on line 2 of your Worksheet 4-1, line 2 of your Qualified Dividends and Capital Gain Tax Worksheet, or line 6 of your Schedule D Tax Worksheet by any of your capital gain excess not used in (a) above.  
  c. Reduce (but not below zero) the amount on your Schedule D (Form 1040), line 18, by your capital gain excess.  
  d. Include your capital gain excess as a loss on line 16 of your Unrecaptured Section 1250 Gain Worksheet in the 2013 Instructions for Schedule D (Form 1040).  


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