Publication 505
taxmap/pubs/p505-019.htm#en_us_publink1000194804If you didn’t 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. |
taxmap/pubs/p505-019.htm#en_us_publink1000194809
Generally, you won’t have to pay a penalty for 2017 if any of the
following apply.
- The total of your withholding and timely estimated tax payments was at least as much as your 2016 tax. (See
Special rules for certain individuals, later, for higher income taxpayers and farmers and fishermen.)
- The tax balance due on your 2017 return is no more than 10% of your total 2017 tax, and you paid all required estimated tax payments on time.
- Your
total tax for 2017 minus your withholding is less than $1,000.
- You didn’t have a tax liability for 2016.
- You didn’t have any withholding taxes and your current year tax (less any household employment taxes) is less than $1,000.
If you think you owe the penalty, but you don’t 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 don’t 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.
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.
In general, you may owe a penalty for 2017 if the total of your withholding and timely estimated tax payments didn’t equal at least the smaller of:
- 90% of your 2017 tax, or
- 100% of your 2016 tax. (Your 2016 tax return must cover a 12-month
period.)
Your 2017 tax, for this purpose, is defined under
Total tax for 2017, later.
There are special rules for farmers and fishermen and certain higher income
taxpayers.
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If at least two-thirds of your gross income for 2016 or 2017 is from farming or
fishing, substitute
662/3% for 90% in (1) above.
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If your AGI for 2016 was more than $150,000 ($75,000 if your 2017 filing status
is married filing a separate return), substitute 110% for 100% in (2) under
General Rule, later. This rule does not apply to farmers or fishermen.
For 2016, AGI is the amount shown on Form 1040, line 37; Form 1040A, line 21; and Form 1040EZ, line 4.
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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.
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You didn’t make estimated tax payments for 2017 because you thought you
had enough tax withheld from your wages. Early in January 2018, you made an
estimate of your total 2017 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 don’t owe a penalty for your payment due January 16, 2018. However, you may owe a penalty through January 10, 2018, the day you made the $3,000 payment, for your underpayments for the earlier payment
periods.
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You will owe a penalty for any 2017 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:
- 22.5% of your 2017 tax, or
- 25% of your 2016 tax. (Your 2016 tax return must cover a 12-month
period.)
If you are subject to the rule for higher income taxpayers, discussed above,
substitute 27.5% for 25% in (2) under
General Rule, later.
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.
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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, 2018.
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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.
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If you file a joint return with your spouse for 2017, but you filed separate
returns for 2016, your 2016 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.
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If you file a separate return for 2017, but you filed a joint return with your
spouse for 2016, your 2016 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 2016 using the same filing status as for 2017. 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 |
Lisa and Paul filed a joint return for 2016 showing taxable income of $49,000
and a tax of $6,426. Of the $49,000 taxable income, $41,000 was Lisa's and the
rest was Paul's. For 2017, they file married filing separately. Lisa figures her
share of the tax on the 2016 joint return as follows.
| 2016 tax on $41,000 based on a separate return | $ 6,028 |
2016 tax on $8,000 based on a
separate return
| 803 |
| Total | $ 6,831 |
Lisa's percentage of total tax
($6,028 ÷ $6,831)
| 88.24% |
Lisa's part of tax on joint return
($6,426 × 88.24% (0.8824))
| $ 5,670 |
In most cases, you don’t 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. Don’t 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 can’t file Form
1040EZ.
On Form 1040, enter the amount of your penalty on line 79. If you owe tax on line 78, add the penalty to your tax due and show your total payment on line 78. If you are due a refund, subtract the penalty from the overpayment and enter the result on line
75.
On Form 1040A, enter the amount of your penalty on line 51. If you owe tax on line 50, add the penalty to your tax due and show your total payment on line 50. If you are due a refund, subtract the penalty from the overpayment and enter the result on line
47.
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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), later.
- 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), later.
- You base any of your required installments on the tax shown on your 2016 return and you filed or are filing a joint return for either 2016 or 2017, but not for both
years.
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