Form 2210 F - What is an underpayment of estimated tax? Underpayment penalties are based on the amount of tax paid during the year compared to the total tax liability. It just means that the amount you paid towards your quarterly estimated tax was less than what you actually owe the irs, resulting in an underpayment penalty. Estimated tax payments may be necessary for income not subject to withholding. Form 2210 helps determine underpayment penalties for insufficient tax payments. While most taxpayers have income taxes automatically withheld every pay period by their employer, taxpayers who earn money that is not subject to withholding (such as self employed income, investment returns, etc) are often required to make estimated tax payments on a quarterly basis.
It just means that the amount you paid towards your quarterly estimated tax was less than what you actually owe the irs, resulting in an underpayment penalty. Estimated tax payments may be necessary for income not subject to withholding. Form 2210 helps determine underpayment penalties for insufficient tax payments. Underpayment penalties are based on the amount of tax paid during the year compared to the total tax liability. What is an underpayment of estimated tax? While most taxpayers have income taxes automatically withheld every pay period by their employer, taxpayers who earn money that is not subject to withholding (such as self employed income, investment returns, etc) are often required to make estimated tax payments on a quarterly basis.