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Level 2
posted Apr 17, 2022 8:59:07 AM

Form 2210 - always required with varying income?

If my income varied during the year and I paid estimated taxes, when doesn't Part II Box C apply? Box C says "Your income varied during the year and your penalty is reduced or eliminated" by the annualized method. Any independent consultant or investor has varying income, so do they automatically have to file Form 2210? Does it make a difference if I paid equal quarterly installments and satisfied the safe harbors? 

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1 Best answer
Expert Alumni
Apr 17, 2022 12:29:11 PM

No, you would not need Form 2210 at all if there is no penalty. But, sometimes there is a penalty if each estimated payment is not timely. For example, if you had a large short-term gain in March, making the usual payment might not cover that amount. It is easy to see the quarter the income belongs to, due to the sale date.

5 Replies
Expert Alumni
Apr 17, 2022 9:15:52 AM

Not necessarily. The way around it is by using the annualized method. If you had the greater part of your income in a particular quarter, then this would apply to you.

Level 2
Apr 17, 2022 11:27:02 AM

I know the Annualized  method determines if you have a penalty, but I'm unclear about filing requirements. If I have a lot of income in one quarter but the annualized method says there's no penalty, do I still have to file the 2210 anyway?

Expert Alumni
Apr 17, 2022 12:29:11 PM

No, you would not need Form 2210 at all if there is no penalty. But, sometimes there is a penalty if each estimated payment is not timely. For example, if you had a large short-term gain in March, making the usual payment might not cover that amount. It is easy to see the quarter the income belongs to, due to the sale date.

Returning Member
Apr 10, 2023 9:14:14 PM

If you have slightly varied income per quarter, but it was very nearly the same do you have to use the AI and file 2210 or can you calculate the underpayment penalty and not file 2210 and AI with your return?

Expert Alumni
Apr 11, 2023 6:55:50 AM

Yes, you can file your return without using the annualized income method.  If your income was relatively stable throughout the year, or if your income was greater in the beginning of the year, then this method will not help you. If necessary you can delete this form from your file.

  • If you're using TurboTax Online software and need to delete a form, click here.
  • If you're using TurboTax CD\Download software and need to delete a form, click here. 

Here are the exceptions to the penalty (Form 2210 Instructions:(  Who Must Pay the Underpayment Penalty

Exceptions to the Penalty: You won't have to pay the penalty or file this form if either of the following applies.

  1. You had no tax liability for 2021, you were a U.S. citizen or resident alien for the entire year (or an estate of a domestic decedent or a domestic trust), and your 2021 tax return was (or would have been had you been required to file) for a full 12 months.
  2. The total tax shown on your 2022 return minus the amount of tax you paid through withholding is less than $1,000. To determine whether the total tax is less than $1,000, complete Part I, lines 1 through 7.
    1. What is Form 2210?

@excentr