What is the estimated tax penalty?

Estimated tax penalty is kind of interest you pay if there is shortfall in minimum tax IRS require you to pay during the year of earning itself.This is so because US law requires taxpayers to pay tax in advance if the the estimated taax for the current year is more than $1000.

How much estimated tax penalty Can IRS impose?

IRS can impose tax penalty based of three factors-period of delay, shortfal in tax payements and interest rate which is applicable during the period of delay.

What is form 2210 penalty?

You can use the form 2210 to see if the Estimated tax payments are required to be filed. If you are liable to pay estimated tax underpayment penalty ,you will have to file form 2210 as well. So, form 2210 basically compute if you need to pay the penalty for underpayment of estimated tax.

Calculate Estimated Tax Penalties Easily

Form 2210 calculator for taxpayers who are liable to pay penalty for underpayment of estimated tax is based on the section §6654 of the Internal Revenue Code that is titled “Failure By Individual To Pay Estimated Income Tax.” This provision of law lays down the law for imposition of penalty for the failure to pay proper estimated tax by a taxpayer. Have you read Penalty for Underpayment of Estimated Tax Simplified and 7 faqs on penalty for underpayment of estimated tax , before you attempt to use the calculator given below for better understanding.

Special Rules for Farmers,Fishermen & High Income Group

There are special rules for farmers and fishermen, certain household employers and certain higher income taxpayers. For more information, refer to Publication 505, Tax Withholding and Estimated Tax. You can see the Form 2210.pdf, Underpayment of Estimated Tax by Individuals, Estates, and Trusts, to examine if you owe a penalty for underpaying your estimated tax.Important Points to Note

The law allows IRS to waive the penalty if:

The reason for default of payment of estimated tax was on account of of a casualty event, disaster, or other unusual circumstance and or
You retired (after reaching age 62) or became disabled during the tax year or in the preceding tax year for which you should have made estimated payments, and the underpayment was due to reasonable cause and not willful neglect.

Calculate Estimated Tax Penalty

The aforesaid estimated tax underpayment calculator is based on the latest instruction to file Form 2210.

By Prashant Thakur

Prashant Thakur is a tax advisor . He has written two books on tax laws of India. He regularly writes on his paid-only website http://taxworry.com. He is learning about the Internal Revenue Code of USA as many of clients and readers are of India origin and also are tax resident of USA . So . solving their tax issues require reference to IRC of USA.

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