IRS Form Guide: Form 2210 – Underpayment of Estimated Tax
Certain forms of income require that you pay an estimated tax on them. These include rent, alimony, contest winnings such as the lottery, dividends, and interest on bonds, or self-employment income. Thus is you are divorced or an entrepreneur, you may need to determine your estimated tax payments if they are equal to or greater than $1000 USD.
You would have to pay estimated taxes four times a year. The due dates are the 15th of April, June, September, and January. Missing a payment is a bad idea because the government will note it and enact penalties. They will do the same if you underestimate your taxes and owe them more money.
While the IRS may allow for waivers on certain circumstances, a taxpayer should know what to do if they want to avoid underpayment penalties. You would rather take charge of the situation before it grows into an unpleasant amount due.
Checking If You Owe A Penalty For Underpaying
Form 2210 is a document that you can use to check if you still owe estimated taxes to the IRS and to apply for a waiver. You can use the form as a proactive approach to pay the tax penalty on your next return. Otherwise, the IRS will contact you about the payment due and the extra amount you have to pay for underestimating these taxes.
You should file form 2210 to calculate the most precise amount that you will owe. Having that solid amount means that you can pin down what you need to pay and if you qualify for a waiver. You can also calculate how much of your refund that you will receive if the IRS uses it to pay for estimated taxes. Having a refund will not shield you from penalties. Thus, you must plan accordingly.
When will you owe penalties? When you fail to make a payment on a date that you and the government agreed upon at an earlier time. Consider this example: if you agreed to pay taxes by April 15 but failed to do so, you would have to pay a penalty for delivering the money on June 15.
Farmers and fishermen will also have to fill out the form because their income depends on the relative crops or annual catch that survive natural disasters. Due to such a possibility, however, they don’t have to conform to traditional estimated tax policies. A bad storm or blight could wipe out an entire year’s worth of crops, and overfishing is becoming a serious issue. They either have to pay two-thirds of their previous year’s income or ninety percent of that of the current year’s. As a result, farmers and fishermen get a bit more breathing room.
Let Success Tax Relief Assist With Your Due Dates And More
Success Tax Relief has ample experience to assist you with calculating and paying taxes on your adjusted gross income. We want to ensure that you comply with the law and find the ideal solution.
Contact us today to get started. At Success Tax Relief, we will help you negotiate with the IRS, organize your payments, and optimize your accounts. Our tax professionals are ready to help you with any situation.