Form2210

[jackalope22]

In December 2020 I needed to pull some money for some expenses from my Annuity.

I added this up front with the 1099 form provided $8400. They did not take tax out.

I have never estimated taxes and don't plan to estimate and pay taxes quarterly.

I understand their concept - but the year ended before I couldn't  pay taxes on it anyway and it is showing in the amount I owe.

I'm trying to figure:

1) since the value was is recorded and I will be paying taxes - what kind of penalty could there be for the 30 days.

2) do I need to even complete because I am paying the taxes with what I owe.

I don't want to pay my taxes then find out I owe some crazy penaly that I won't know about?

[DMarkM1]

The penalty for underpayment of taxes is automatically added to your return based on an even income flow throughout the year.  You may pay the penalty as shown on your return and not complete the Form 2210. 

However, the penalty may be reduced a bit with a big chunk of income received a the end of the year and you can see that advantage by completing the interview for the Form 2210.

The penalty will not be any bigger than the original penalty that has been added to your return.  It can only be reduced by the Form 2210.

[jackalope22]

...So you are saying just check the box that says let 'IRS figure the penalty tax' or how do I ignore and get past check error.

The form came up when I did the "check errors" but also has in Red DO NOT  FILE - very confusing.

I'm just worried I will I'll pay my taxes then think I'm okay - then next July the IRS will come back and say I owe them another Trillion in penalties because I didn't include It when I mailed them the check for what I owe and then didn't know I owed them money for months.

[gloriah5200]

I recommend you calculate the Form 2210 underpayment penalty in the software while you are preparing the return and can enter all the answers to the questions, especially if you don't like surprises.

The way you will have the less penalty is if you do the annualized method, which is where you will break down your income and deductions over various periods of the year. 

That way, the annuity distribution won't be included in  your income until the end of the year, when you actually received it.

There is a link below for the instructions for the 2210, if you have questions.

The Form 2210  is not available to be printed or e-filed with your return until 2/25/21. 

IRS Instructions for Form 2210

[Edited 02/18/2021|5:31 pm]