It's not exactly clear what the error might be so below is the general information for entering the 2210 and using the annualized method.
There is an annualized method available that may reduce the underpayment penalty if you received a large amount of income in the last quarter of the year.
Each Period for the annualized method:
- 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.
The first three periods could be calculated by your total income for the year without any large amount of income in the last quarter (assumes the rest of the year was equal in income) then divide by 12 and multiply by the number of months in each period. In the last quarter add any large income received in this period.
Generally, you can avoid the penalty if your total timely estimated payments and withholdings are greater than or equal to the lesser of:
- 90% of the total tax after credits for the current year, or
- 100% of the total tax after credits in the prior year
- See one exception below.
You can also avoid the penalty if the amount you owe is less than $1,000 as long as any estimated tax payments you made are timely.
Note: High-income taxpayers. If your adjusted gross income (line 11 of your 2023 Form 1040) is greater than $150,000 (or $75,000 if you're married and file a separate return from your spouse), you can avoid a penalty by paying at least 110% of your total tax from the prior year.
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