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Underpayment penalty and Form 2210

Checked October 17, 2026 · Educational summary

The IRS says the penalty applies if you did not pay enough estimated tax, or you paid late, even if you are due a refund. It is calculated by period. A late or short payment in one period can be penalized even if you catch up later.

How the IRS describes the calculation

The penalty page says the amount depends on:

• the amount of the underpayment,
• the period when the underpayment was outstanding, and
• the published quarterly interest rates for underpayments.

It uses the tax shown on your original return, or on a later return filed on or before the due date including extensions. The IRS also charges interest on penalties. The current quarterly rate was not read for this page, so there is no dollar example and the planner does not estimate a penalty.

Avoiding it

• Owe less than $1,000 on the filed return, or
• pay at least 90% of this year's tax or 100% (110% if the AGI test applies) of last year's tax. See the safe harbor.
• Adjust withholding on Form W-4, or use the Tax Withholding Estimator the IRS mentions.

Reducing or removing it

The IRS says the penalty generally cannot be waived for reasonable cause. It may be removed or reduced for a casualty, a local disaster, or other unusual circumstances. It may also be reduced if you retired after age 62 or became disabled and had reasonable cause, if most of the tax was withheld early in the year, or if income varied during the year (Form 2210, Schedule AI). The IRS asks for a written explanation signed under penalties of perjury. Follow the instructions on the notice or the form.

If you missed a date

Pay what you can. The IRS says paying in full and on time stops further penalties and interest from building on that balance. The IRS also describes payment plans for tax you cannot pay at once. A plan does not, by itself, erase a penalty that already applies.

FAQ

Does the IRS send a bill?

The penalty page says the IRS sends a notice if you owe the penalty.

Do I have to file Form 2210?

It depends. Form 2210 is used to figure the penalty or to ask for a reduction. The IRS says you may not need to file it if withholding covered the required amounts. Read the form instructions for the year you are filing.

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